Transcend President Chris Ambridge, CFA explains how advisors can lessen their workload but boost profits at the same time
If an advisor were to rank their key responsibilities, keeping clients satisfied surely figures at the top of that list. It’s a priority that does not receive enough attention according to many in the profession, as regulatory pressure has meant their focus is often diverted elsewhere. Provisus Wealth Management’s new investment platform Transcend, seeks to ease that burden, allowing advisors to concentrate on adding value for clients through financial planning and tax assistance.
“We can help advisors transition from their existing business structure and focus on financial planning as opposed to compliance, administration or trading,” explains Chris Ambridge, President of Transcend. “It is outsourcing the portfolio management to focus on additional planning services and client retention.”
Transcend’s research shows that a financial advisor’s workload usually breaks down to a 60-40 split between servicing clients and portfolio management/compliance. Using this program means that 60% can increase to 100%.
“If an advisor wants to slow down, but still wants to keep all their clients, we are offering an alternative to the current structure,” says Ambridge. “Essentially it is 40% less work, 40% more pay and they can focus on what makes them better advisors.”
In these fee-conscious times, clients are asking a lot more of advisors and those unable to meet increased demands will be left behind, Ambridge points out.
“Advisors need to adapt or become irrelevant,” he says. “Advisors that fail to react will face severe challenges to their future profitability and growth. Competition will force their hands. To compete successfully advisors must differentiate themselves, otherwise they will have to compete on price to win or retain clients.”
Catering to a wide range of retail investors, it now has $440 million in assets under management and has been selected as one of Profit 500’s Fastest Growing Companies in each of the last three years. Transcend is an offshoot of the Transcend Separately Managed Accounts Program that has proven to be a real success for Provisus. The new entity is especially noteworthy as it offers a pay-for-performance model within its equity pooled fund suite. It’s a novel approach, and one the company’s president believes really sets it apart from its competitors.
“With the advent of CRM2 and more of an onus on cost and performance, we need to put our money where our mouth is,” he says. “If we don’t beat the benchmark, then we won’t get paid. Ask any other money manager out there if they are willing to issue the same edict – I don’t think you’ll find many.”
Under this structure, clients pay a base fee of 0.25%, which covers administrative costs for the equity funds used in a client’s portfolio. If a fund performs better than the benchmark, a performance fee equal to 20% of the fund’s performance above the benchmark. Of course, it will be tougher than others to achieve that target, 2016 being a case in point.
“We were essentially around the benchmark for most of the year, and a little under at the end,” Ambridge says. “We can take hiccups like this though because over a long-term basis we add value.”