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Five Ways to Build Client Partnerships

Rethinking Robo advisors

“Robos a no go,” …. “Is Robo less friend than foe?”

These types of headlines and sentiments seem to be prevailing among a large portion of advisors reluctant to give up or supplement investment management with the latest technology innovation.

Take heed, there’s real grounding in advisor apprehension. Moving to a digital advice provider presents questions surrounding pricing and performance.  What will keep clients from moving to a cheaper platform and jettisoning the advisor relationship, and what if the Robo Advisor outperforms the advisor?

As with many things tech-related, what seems a fear factor often becomes a helpful common practice that frees people up to focus on the things a computer can’t do. Hiding from technology never works.  It will in time become the prevailing practice.  So why not embrace it on some level?  Using a digital advice provider is not an all-or- nothing sum game.  In certain commoditized sectors of the markets, such as developed market equity and bonds, ask yourself, does it really add client value to spend your time on investment management.  What would you do with the extra time if you had it?

At a recent New York Society of Security Analysts author series meeting, Institute for Private Investors Founder Charlotte B. Beyer encouraged advisors to embrace technology.  Using Robo Advisors can create more time for an advisor to build the partnership relationships the ultra-affluent now seek and expect.  “Is Robo eviscerating the advisor business?   I don’t think so,” Ms. Beyer said.

Five Practices

Here are five practices advisors can employ to build partnerships with their clients, excerpted from the new book, Wealth Management Unwrapped, by Ms. Beyer.

  1. Take the time at the start of a potential engagement to determine if the potential client is a proper fit for your practice.  Have clients discuss their investment sophistication and need for control.  Compare where they fall compared to your most successful relationships.
  1. Determine who are the decision-makers in the family.  Be aware of all family dynamics.
  1. Craft an investment policy statement covering the purpose of the wealth in your portfolio; the target return and risk levels; the asset allocation needed to achieve goals; triggers for rebalancing or resetting allocations; and what investments are allowed or aren’t permissible.
  1. Determine clear benchmarks, model them and explain why one is chosen versus another.
  1. Keep an ongoing open dialogue with your clients.  Find out what they’re happy with and where they see need for improvement.  Turn areas of discontent into a positive.  For example, if a client finds meetings too long, create tight, clear agendas and monitor time.  Or, if clients find reports long and confusing, craft executive summaries that are consistent and easily comparable.

We’re now in a time when goals-based investing is becoming more prevalent, and a more comprehensive holistic approach to working with clients is where many see the value in advisor relationships.  So why not consider embracing technology when appropriate, and spend more time on the client?





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