Displaying items by tag: advisors

In an article for Investopedia, Roger Wohlner shares some tips from financial advisors on how to convert prospects into clients. In theory, clients simply want an advisor who offers them insight and a plan to achieve their financial goals. In reality, this requires building trust and demonstrating expertise around these topics.

However, the ultimate challenge for advisors is that this must be achieved in a limited time in a competitive atmosphere with so many advisors vying for your clients as well. Wohler recommends that you start off by asking clients about their goals and tolerance for risk in order to build a rapport. One suggestion is to send a small questionnaire to prospects which can help you better communicate with them. He also recommends doing some research online to get a better understanding of who they are. 

Another approach is to ask open-ended questions which will force the client to reveal more about themselves and their personality. It also will give you an opportunity to pursue topics that are more important and meaningful to your client, leading to a more authentic connection. Finally, advisors should try to dig deeper into a client’s motivations and understand their values in order to build trust and form a deeper relationship. Ultimately, it comes down to the client believing that you have their best interests in mind. 

Finsum: Financial advisors need to consistently convert prospects into clients. It can be challenging given a limited amount of time to form connections, but here are some tips. 

Cerulli Associates conducted a survey of ETF issuers which revealed some interesting findings. Already we are seeing fixed income ETFs gaining market share and seeing a surge of inflows due to higher yields and an uncertain economic outlook, but issuers anticipate fixed income ETFs to continue to outpace equity ETFs in coming years.

Within the fixed income ETF universe, they are particularly bullish on active fixed income. This is different from equities where passive funds dominate active in terms of inflows. But, active fixed income funds have a better track record of outperformance. Further, they are able to take advantage of more opportunities in terms of duration and credit quality as compared to passive fixed income funds, leading to better performance. 

According to the survey, issuers expect growth in fixed income ETFs to be driven by institutional advisors and increased familiarity from financial advisors. Based on the findings, Cerulli recommends firms interested in active fixed income products to look for categories with few competitors to offer funds with low fees and attractive pricing. The firm also believes that many fixed income ETF issuers are failing to differentiate their product.

Finsum: Cerulli Associates conducted a survey of ETF issuers and came out with some interesting findings regarding passive and active fixed income funds.

In an article for the FinancialTimes, Moira O’Neill discusses the pros and cons of buying an annuity today. Annuities are increasingly on investors and advisors’ minds because many are now offering yields that are equivalent to long-term returns achieved by equities. Further, inflation is trending lower, while many believe that current elevated rates will prove to be transitory.

From a less quantitative perspective, annuities also offer peace of mind given that there is no variability in terms of returns regardless of what happens with the economy or inflation or monetary policy. This can be appreciated more in the current environment given the rising risk of a recession. 

Given that most annuities operate in perpetuity, a big factor in whether buying an annuity makes sense depends on an investors’ lifespan. The longer they live, the better an annuity will perform. And, this would certainly be the case if we go back to a low interest rate world which prevailed for much of the past 2 decades. 

For investors and advisors who believe that inflation is here to stay, buying an annuity doesn’t make sense. Instead, they should find better opportunities in other asset classes which tend to outperform in an inflationary environment. 

Finsum: Annuities are seeing major demand due to high interest rates, falling inflation, and increasing concerns that a recession is looming.

Many advisors have embraced model portfolios as it frees them from a portion of their portfolio management responsibilities. Instead, they are able to focus more time and energy on areas like client relationships, prospecting, and planning which are shown to be more important to building a successful practice, client retention, and helping clients reach their goals.

However as covered by Jeff Benjamin for InvestmentNews, some advisors are rejecting this approach. Instead, they believe that they can add value to their clients by remaining involved in portfolio management. Many of these advisors apply their expertise when it comes to selecting individual stocks for their clients’ portfolios. 

For instance, Ryan Johnson of Buckingham Advisors will manage the large-cap equity portion of clients’ portfolios, but when it comes to small-caps, international, or fixed income he relies on mutual funds and ETFs.  

Many of these advisors cite reasons such as tax management, higher concentration, and greater client involvement in their portfolios. That being said, these advisors acknowledge that it’s more work and comes with greater risk. Yet, they are willing to accept the tradeoff. 

Finsum: Model portfolios are taking a greater share of the industry as it frees advisors up from portfolio management responsibilities. Yet, some are not so eager to embrace the trend. 

For WealthProfessional, Leo Almazora discusses best practices when it comes to succession planning. For one, advisors need to delineate between working in the business and on the business. Many are so wrapped up in helping their clients plan for the future and reach their financial goals that they don’t apply similar principles to the futures of their practice.

However, it’s increasingly accepted that succession planning is an integral part of serving your clients especially if you plan to retire before your clients. Therefore, advisors need to secure a worthy successor for their clients and it’s ‘the last best thing an advisor can do for their clients’.

According to Almazora, advisors should start planning for succession about 5 years before their retirement date. Although there are multiple ways to structure a takeover, some sort of soft transition is ideal, where the new advisor and old advisor both work together for a couple of years to ease the transition. These types of transitions typically result in less client attrition and more client satisfaction. 

In terms of finding the right successor, some considerations are shared values in terms of planning and investing and a similar temperament when it comes to clients. Another important factor is that the successor should be able to identify with the niche that is an advisor’s specialty. 

Finsum: Over the next decade, there is going to be a wave of retirement of financial advisors. WIth this in mind, advisors need to get serious about succession planning.