There are a growing number of clients who are re-evaluating relationships with their financial advisers in the wake of the whipsaw market of the past few years. According to the spring survey of the Angus Reid Strategies’ Wealth Management Index, 22% of Canadian investors have contemplated changing their current advisers.
Clients are seeking to actively generate solid investment performance, better use of investment vehicles across broader asset classes and embrace technology. Everything is under examination and many of the rules that have guided clients for a century will give way to new rules.
Clients are demanding substantially more personal attention and value propositions. Less and less will they simply be charged a markup with limited service being offered. All advice and recommendations should only be made after you thoroughly understand the clients’ values, attitudes, money histories, goals and dreams. The reason clients invest in the first place is not to watch their assets grow but to allow them to reach their financial goals. In a world where service is measured by how fast we can navigate push button telephone mazes in order to get to the person you want to speak to, clients appreciate experience.
Nowhere in this list of basic truths does it say clients want to work with counter parties that can do all things. Separation of responsibilities and clearly delineated roles helps differentiate service providers. Clients should not fire financial planners because of market fluctuations unless the planner claimed to be a money manager and did not deliver. It’s appropriate to act as a fiduciary because it’s the right thing to do yet everyone must draw a line somewhere.
Delegating responsibilities builds transparency and transparency should be rewarded with client loyalty. Couple this with a disciplined diversified strategy that rebalances portfolios based on target tolerances that stress the importance of investing to reach goals and not attempting to maximize returns just for the sake of getting returns. Obtaining a return that has a high probability of allowing clients to reach their goals is what is most important. Let the money managers who are paid for performance, obsess about performance.
Many people spend too much time listening to the so called “experts” who, with the advice they provide through the media, encourage people to seek the highest return possible and forget the real purpose of investing. It is not just investment advice being offered but an array of services that can be breathtaking.