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What an Advice-Centric Experience Looks Like

The focus now is on holistic planning, goal setting and having a deeper understanding of the needs of each client and what makes them tick.

By Tim Stinson

If it’s not clear by now, it should be: The future of this industry will belong to the firms and the advisors that provide clients with an advice-centric experience. While commission products still have a place in nearly every portfolio (e.g., insurance), the era of advisors having a mere transactional relationship with their clients has come to an end.

Although various fiduciary rules and legislation are in flux, the fiduciary era is here to stay. Accordingly, the focus now is on holistic planning, goal setting, and having a deeper understanding of the needs of each client and what makes them tick.

As part of this shift, there has been an increased focus on transparency, and with good reason. But if advisors are living up to the spirit of the fiduciary era—operating without any baked-in agendas—being transparent shouldn’t be difficult. Indeed, when the best interests of clients come first and are the basis for each relationship, then transparency happens organically. 

Some advisors, though, may not have this type of relationship with each client, so they need to ask themselves: Do any of my planning and investment selection processes create incentives to recommend specific products or courses of action over others? If the answer is yes, then it’s time to reshape your wealth management business model.

Frankly, conducting that type of audit is pretty easy. The more delicate, but equally important, task will be developing a different rapport with clients, focusing on more empathy and understanding in an effort to uncover more of their needs—needs that they themselves are neither aware of nor able to anticipate. This approach is the future of wealth management, enabling closer, more meaningful engagements, which in turn should lead to the delivery of more candid, powerful and useful advice.

Establishing this type of interplay with a client will not be a problem for many advisors. For others, though, the learning curve could be steep, especially those who, up to now, have made asset management or some other technical experience the backbone of their business. Whatever the case, the best advisors will be able to connect with clients in ways that they never have before.

This idea really hit home for me after a recent conversation I had with my own advisor. Having been in the industry for decades, I always assumed I had a good appreciation of my current and future needs. I was wrong.

I started off by talking about what I wanted my life to look like in 10 years when my wife and I become empty nesters, with our children out on their own after having finished college. When that time comes, I said, I want to downsize. I won’t need the big yard with the basketball court, the pool or the extra rooms.

With that goal in mind, I told him I wanted to take advantage of the current interest rate environment and trade down for a smaller, less expensive house. That would allow me to lower my mortgage payments and put more money toward retirement.

After patiently hearing me out, my advisor told me I was missing the big picture, unable to see that my children will eventually have children of their own. And when that time comes, I’ll want all the things I’m now so eager to give up for my grandchildren: the basketball court, the big yard, the pool and the extra rooms. So why not, he said, keep the house and pay more now to take care of that future need?

That was invaluable advice and wisdom, and from my perspective, worth a full year of fees even if it had nothing to do with any technical aspects related to wealth management. And he was able to provide that service only after listening carefully, putting himself in my shoes and spotlighting a need that I didn’t even know I had.

Times change and marketplaces evolve. In the fiduciary era, this is the type of advice-centric experience clients want from their advisor. I am now more keenly aware of that than ever before.

Tim Stinson is Head of Wealth Management for Cetera Financial Group.

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