Month: February 2015

Joined at the Hip: Advisor and Money Manager

As the world becomes faster and time ever more scarce, advisors are increasingly searching for ways to optimize their practices. Building a close cooperative relationship between yourself and a select group of money managers to oversee your clients’ assets can be mutually beneficial. Both parties must be willing to work toward a common objective with enthusiasm. Money management has become a relationship driven business so the right advisor-investment manager relationship is a necessity.

In the past money managers focused their time on managing portfolios, occasionally presenting to advisors, and left the selling of their products to wholesalers who tended to provide qualitative support. Advisors for the most part remained loyal to managers who delivered not only performance, but also supplied quantitative practice management and development solutions. Now with the emphasis on adding value and relationship building this old separation of responsibilities is dissolving.

Whether the relationship between advisor and manager evolves from a direct connection with a boutique stable of money managers or a Separately Managed Accounts (SMA) platform, several pieces have to be in place to be effective.

Both sides must always keep in mind that everybody is a client, so a commitment to service is paramount. Both parties must work together toward the goal of meeting the investors’ needs. Advisors should expect the money manager to develop a system for delivering superior service and make changes to that system as the relationship evolves. As well, advisors should expect the money managers they work with to be: passionate about the business; have relationship building capabilities that go the extra mile to support investors; be available and respond quickly; admit mistakes and implement appropriate action immediately; and understand your point of view, while be willing to help as needed.

Of course advisors must realize that these relationships are a two-way street as the money manager will have its own expectation of what the advisor is going to deliver. So that there are no misunderstandings in the beginning both sides should be direct and upfront about what to expect. Clear and ongoing communication is imperative. The money manager will expect consistency and must have a high level of confidence that there will be no surprises when they work with you. In return managers will be happy to provide resources that will help advisors capture assets and expand their practice.

Investors should expect their advisor and managers to work together as a team, establishing checks and balances to ensure that potential transgressions do not occur. In order to accomplish these advisors must: understand the manager’s processes; let the manager know what they need; and help the manager build their business. And the money manager should be expected to do the same for the advisor.

A flourishing symbiotic relationship between advisor and money manager are quickly becoming an irreplaceable part of any advisors’ practice. Money managers are providing vital assistance in helping the advisor manage and educate clients. Money managers will need to continually articulate their unique value added proposition. When both parties show professionalism, integrity and teamwork, all sides win.