Zeroing In on the Managed Account Customer

Managed accounts are all the rage. From wirehouses to regional broker/dealers, the drumbeat is the same: Morph into a fee-based business built on managed accounts, or else. But managed accounts may not be right for every client. Here are some classic client types who might best be served with managed accounts and some matching marketing strategy for each. Target: The Disgruntled Investor We were all

Managed accounts are all the rage. From wirehouses to regional broker/dealers, the drumbeat is the same: Morph into a fee-based business built on managed accounts, or else…. But managed accounts may not be right for every client. Here are some classic client types who might best be served with managed accounts and some matching marketing strategy for each.


Target: The Disgruntled Investor

We were all investment geniuses in the bull market. Not any more — the 2002 Phoenix Wealth Management Survey of high-net-worth investors reveals that one client in eight is seeking a new primary advisor. Why? After performance frustrations, the most common reasons for moving on are, “I don't like my advisor's strategies” and “my advisor is not proactive.”

Strategy: The Road Next Traveled — a Second Opinion

One of the best opportunities to acquire high-net-worth clients today is to offer a “second opinion” to prospects whose current advisor has not made a higher level of service available to them. The goal is to demonstrate true financial consulting (asset allocation, manager selection and other financial advice) so that the disgruntled client can come to understand that he has outgrown his less-enlightened advisor.


Target: Business Sellers

Most small businesses — and private practices of doctors, lawyers and dentists — do not have sustainable revenues beyond the founder or principal. But some businesses are saleable, even if there is little cash left over to invest.

Strategy: Help Broker the Sale and Model the Spoils

How many of your clients own a business that could be sold? How many of you have actually ever wondered about that? The point is: If you can become that intimate with the financial life of your clients, you are doing something right. Let's face it: The entrepreneur's dream is to build a successful company and sell to a giant like Microsoft. Help them do so. What can you do to facilitate the transaction? To help sell a client's business, you'll most certainly have to network with other advisors — which is good for business in general. When the sale does involve significant money, your job is to structure an income stream. A systematic investing strategy can help make a compelling case for the sale, especially if you can model the owner's take after taxes.


Target: Insurance, Inheritance, Death Events

A wirehouse advisor I know in North Carolina enjoyed a great client relationship with a married couple — until the husband died and the couple's money was transferred to a major trust company. According to a study by Prince & Associates, less than 5 percent of advisors are retained by subsequent generations when the key owner dies. Yet the retention payoff can be immense.

Strategy: Get a Life in the “Afterlife”

Who is the trustee for each of your top clients? Who makes the decisions if something happens to these clients? What roles are available to you? For example, although your firm might not have trust powers, you could be appointed the investment manager in their wills. What are you doing to show the attorney that you can provide solutions? Are you building relationships with your client's children?

Strategy: Challenge With Estate Planning

Based on the Phoenix Wealth Management Survey, three out of 10 respondents had no estate plan at all, and another three out of 10 had an estate plan that was more than five years old. Discuss estate planning with your clients and make sure your best clients — the so-called centers of influence — know your estate planning capabilities. By doing so, you'll establish yourself as an advisor for the long term and block an easy entry point for your competitors.


Target: Divorce Market

Divorce affects more than 50 percent of all married people in the U.S. This is another center-of-influence-driven market controlled by attorneys and accountants.

Strategy: Take Sides

Do you have relationships with matrimonial attorneys? Ask around for the best. In many cases, one of the two parties in the divorce might not be entirely familiar with investments and finance. Prove to the centers of influence that you know the divorce-related issues and are sensitive to their needs. And understand that as an advocate — like the attorney — you will have to pick a side.


Target: Distribution from Bonuses and Business Profits

Few affluent executives or business owners earn their wealth through salary. Most capture the bulk of their compensation from performance bonuses or profit sharing. Typically, these prospects and clients use those lump sum payments to fund their investments.

Strategy: Timing Is Everything

When will these distributions occur, quarterly or annually? What is the formula that determines the payout? Is business good enough to warrant a payout? Most payouts are made after the books are sorted out at year-end. If so, your timing couldn't be better — it's happening now. Review those clients and offer an updated investment plan.

Writer's BIO:
Steve Gresham is executive vice president, chief sales and marketing officer for the private client group of Phoenix Investment Partners, Ltd. He is the author of The Managed Account Handbook: How to Build Your Financial Advisory Practice Using Separately Managed Accounts and Attract and Retain the Affluent Investor: Winning Tactics for Today's Financial Advisor. Contact him at [email protected]

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