Wealth Management
Having a strategy to acquire new clients is necessary for any financial advisory practive to grow and thrive. Yet, there are multiple paths to accomplishing this goal. Some examples are cold calling, digital marketing, in-person networking, etc.
While the tactics can vary, the principles are the same. This entails identifying your target client, figuring out your unique value proposition, and identifying the best medium to reach prospects in a way that is complementary to your personality.
It can also be helpful to spend more time with your existing clients. This will strengthen these connections and increase the chances of getting a referral. These types of referrals have a higher chance of conversion given a stronger foundation of trust. It’s also a reminder that the most important job of an advisor is to build relationships which can only be done by spending time with clients and prospects.
By making financial planning a family affair, you can increase your chances of serving the next generation. This will give you an opportunity to spend time and build a relationship with multiple family members which could ultimately be assets in terms of recruiting, retention, and finding leads.
Finsum: There are many tactics when it comes to landing new clients for financial advisors. However, many successful strategies have some important principles in common.
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Financial advisors constantly strive to find the perfect balance between serving their existing clients and attracting new ones. Often, they view their core value proposition as managing customized portfolios tailored to each client's unique needs. From this perspective, they believe spending less time constructing bespoke portfolios could negatively impact client relationships. However, a counterintuitive approach suggests the opposite: using model portfolios can create more time for genuinely serving clients.
While it may seem a paradox, spending less time on portfolio construction and more time listening to clients can significantly improve service. Building trust and understanding client needs requires dedicated time for genuine conversations and insightful questions. By freeing time from portfolio management, advisors can focus on building deeper relationships with their clients, focusing on what truly matters most to them.
Moreover, using model portfolios doesn't mean sacrificing portfolio quality. These portfolios are typically managed by professionals with access to a larger team of experts and a more comprehensive range of investment options than most advisors have access to.
Embracing model portfolios as a time-saving tool allows advisors to shift their focus from portfolio construction to client service. This seemingly counterintuitive approach often leads to higher client satisfaction and increased referrals, leading to a more successful practice.
Finsum: Consider how model portfolios can enhance client service for advisors by saving time on portfolio construction and focusing on client relationships.
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The cryptocurrency industry stands on the precipice of a potentially pivotal moment, with several applications for crypto-based ETFs awaiting approval by the US Securities and Exchange Commission (SEC). Recent activities suggest the SEC is actively preparing to issue its decisions, potentially within the next few months.
The world's largest asset manager, including BlackRock, has expressed increasing confidence in the SEC's approval of their spot Bitcoin ETF applications, possibly as early as January 2024. While the outcome remains uncertain, the SEC's recent engagements with applicants and its compressed 21-day public comment window indicate a focused and potentially accelerated decision-making process.
These developments have fueled speculation in the market, with some attributing the recent rise in Bitcoin prices to the anticipated SEC decision. Others cite the upcoming Bitcoin halving event in 2024 as a contributing factor.
Regardless of the specific drivers, the next few months will likely greatly impact the cryptocurrency landscape. The SEC's decisions on these ETF applications could have significant implications for investor access, market liquidity, and the overall development of the crypto asset class.
Finsum: Anticipation for SEC's decision on crypto ETFs grows, hinting at major shifts in market access to crypto-based investment vehicles.
Based on the most recent annuity sales data, it's a good bet they are seeking a combination of growth and protection. According to LIMRA, the financial services research and education organization, sales of registered indexed-linked annuities (RILAs) set a record in the third quarter of 2023 at $12.6 billion, up 19% year-over-year.
In a recent posting on the organization's website, Todd Giesing, assistant vice president LIMRA Annuity Research, stated that "Investors still seem focused on the value of protection and growth potential that RILAs offer."
And while RILA sales set a record, the overall annuity market is also having a good year. In the news release for their most recent U.S. Individual Annuity Sales Survey, LIMRA reported that "With economic conditions continuing to be favorable for annuities, total sales increased 11% year-over-year to $89.4 billion in the third quarter of 2023."
One additional highlight from the survey is worth noting. Fixed indexed annuity (FIA) sales were $23.3 billion in the third quarter, up 9% from the prior year's results.
Finsum: LIMRA reports registered indexed-linked annuities sales, reflecting a strong investor preference for investment growth and protection.
Every industry changes and evolves with time. The financial advice industry is no different as advisors increasingly move towards focusing more on financial planning and serving clients with less emphasis on making investment decisions.
This is now being increasingly handled by asset managers and third parties. Currently, about 10% of advisors use home office model portfolios with minimal modifications. 36% of RIAs and independent broker-dealers are building their own allocations from scratch. Most advisors are taking a blended approach by using these models as a starting point and then offering some customization to suit a clients’ specific needs.
For advisors, the shift makes sense especially as most clients seem to value planning more than performance. Further, it frees up time and energy that can be spent on client service and growing the business. According to Cerulli, advisors who build their own portfolios, spend about 30% of their time on the task.
Another benefit for advisors is that it makes the business more scalable. For advisors who spend considerable time on portfolio management, there is more of a constraint to how many clients can be added. An interesting finding is that firms with large amounts of assets under management are more likely to use model portfolios.
Finsum: Model portfolios are becoming increasingly popular, although most are currently using a blended approach. Here are some of the major benefits to advisors.