Schwab IMPACT
Joe Duran
United Capital CEO Joe Duran

United Capital’s Playbook for Winning Against Consumer Players

CEO Joe Duran provides advisors with six rules for competing against the Vanguards of the world.

Over the past four years, $1 trillion went into exchange traded funds, $900 billion of which went to Vanguard. Nine out of every 10 dollars invested in U.S. mutual funds or ETFs was absorbed by Vanguard. Now, with its Personal Advisor Services, Vanguard is doing to wealth management what it has done to mutual funds and ETFs, said United Capital CEO Joe Duran.

“They are our Amazon,” Duran said, speaking at Schwab’s annual IMPACT Conference in Chicago this week.

The average client in Personal Advisor Services has $2 million. Duran’s concern is that few advisors are willing to break the way they’ve traditionally worked, and if they don’t, it’ll be harder to compete against the Vanguards of the world.

But Duran’s firm has doubled in size every three years. How did the firm do it? Here’s his playbook for winning against the consumer players:

1. Be Where the Clients Are. On average, people spend 3.36 hours a day on cellphones; it’s their portal to the rest of the world. Technology has made humans more powerful than ever, and that has made office hours and geography obsolete.

“Geography and time are becoming irrelevant,” Duran said.

Advisors need to be omnipresent and on demand, and, “You must get real estate on that phone.”

2. You Must Live Where Clients’ Money and Lives Intersect. Duran says advisors too often operate this way: They have a preferred investment methodology, where they’re wed to Dimensional Fund Advisors or BlackRock or their own proprietary stock-picking strategy. They take a one-size-fits-all approach. 

In addition, most advisors develop and deliver a financial plan, but it’s almost certainly wrong. The problem, Duran argues, is that advisors assume clients are the same and assume that markets will be average, which is mathematically impossible.

Instead, Duran suggests focusing on financial life management, charging clients for advice and planning. If you’re charging for these things, you can deliver on other things, and it opens the door for you to become an indispensable part of their life.

3. Understand Clients Better than Anyone Else in the Industry. Advisors who don’t know what their clients want their lives to be like, won’t compete, Duran says. What does the client want to prioritize? Do they have the resources? And are they prepared for life’s surprises? If you can answer these questions for your clients, you can charge 1 percent forever and never lose them.

4. Be a Guide and Coach for Your Clients. Robo advisor technology can play a role in an advisory firm; it can provide scale and engage clients. But clients also need the human interaction.

An investor can use a robo advisor when the stakes are low and the complexity is low. But when the stakes are high and/or complexity is high, you want someone to take the blame. An advisor’s role, Duran said, is to take the blame.

We all know what’s good for us, but it’s really hard to do. Advisors can challenge clients and ask them the questions they don’t ask themselves. They can help clients make rational decisions and optimize those decisions. A robo advisor can’t.

5. Practice at the Top of Your License. Work only your core competency, Duran said. Find out what you’re really great at, own it and outsource everything you’re not exceptional at doing. 

6. Charge for Advice and Guidance. If you charge for investments, then clients will compare you to other investment solutions.

Make sure they get their money back if they’re not happy. Ninety-five percent of clients will accept a new relationship if you deliver a different experience, Duran said.

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