Transitioning to Advisory: The Path to Establishing a Wealth Management Model

Transitioning to Advisory: The Path to Establishing a Wealth Management Model

In recent years, a growing number of advisors have evolved their practices to meet the changing needs of their clients by taking a more holistic approach and moving from transaction-based business models to advisory models. For those yet to transition, good communication is paramount. Having a more robust service offering makes it more important than ever for advisors to have clear conversations with clients about the value they provide. This transparency encourages an open exchange of information to ensure that both parties are working toward the same goal.


Telling Your Transition Story

Change and transition are nearly always for the better, but can also be challenging. The first step in preparing clients for a more robust service offering may be refining the language that describes those services. It is important to have an open, direct dialogue to help position the advice and solutions you offer.

Once there is a clear message to articulate the value of the new model, it’s time to get in front of existing clients to discuss it. In introducing the advisory relationship to clients, an emphasis should be placed on communicating how the resources and capabilities of the firm have expanded to provide clients with an even more comprehensive set of services. Additionally, it is important to proactively address the fee structure of the new model. Clients should know that the fee will be a percentage of total assets and that they will have access to all the services previously offered as well as the additional services that come with the new model. Most importantly, this will reassure clients that advisors’ interests will continue to be aligned with their interests.


Wealth Management Evolved

Once the conversation has begun, some clients may struggle to grasp the nuances of the advisory model. To help clearly articulate the reasoning behind the shift, expanding upon the range of new services to the client is essential. Advisors can focus on the fact that they now offer an integrated wealth management platform which includes portfolio management, banking services, retirement-needs analysis, Social Security strategies, estate planning and risk management as well as management of employee-sponsored and individual retirement plans – all for one fee.


Addressing Questions

Finally, it’s always important to remember that even with an enhanced service offering, clients may have questions. Listed below are a few questions clients might raise and thoughts for crafting a response:


  • Why is the shift being made now?

It’s essential to show clients that wealth management is evolving, as is your practice. Explain that with the evolution of technology and the resources of the firm, you are now better able to solve for goals-based wealth management than you could in prior years.

  • Are the fees really worth it?

Ask about clients’ past exposure to fee structures and whether they are simply looking at the increase, or some relative comparison. Share the wealth-management services the client hasn’t considered and the additional focus on their overall financial plan.

  • Can’t I just go out and hire a money manager directly?

Illustrate for clients that money managers may lack the ”big picture” of your client’s financial situation, goals and family dynamics that typically comes with holistic wealth management services.

  • Why should I pay for underperformance?

Remind clients that at the end of the day, your service is about helping them to meet their long-term goals. Focusing on outcomes rather than benchmarks will help clients stay focused on what’s truly important to them.

  • Should I just manage my own money?

Ask the client how they define the term “manage.” This provides an opportunity to also ask them to explain their buy discipline and sell discipline and how they plan to conduct research. When faced with these questions, they'll be reminded of the complexities of an advisor’s role and that they likely don’t have the time or specialized knowledge to do it alone.


Advisors have excellent resources at their disposal to help them learn how to effectively communicate, confidently transition to an advisory model and ultimately build a greater level of trust with their clients. The real key to success is for financial advisors to recognize that the wealth management model is the destination, and the transition to advisory is a path towards that goal.


Disclosure: Advisors should disclose to the customer all material components of the fee-based program, including the fee schedule, services provided, and the fact that the program may cost more than paying for the services separately. Fee-based programs may not be appropriate for all investors.


Eric Levinson is a Senior National Account Manager at Hartford Funds

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.