Displaying items by tag: practice management

According to Marcy Keckler, senior vice president of financial advice strategy at Ameriprise Financial, couples consulting a financial advisor tend to be more transparent about their finances, emphasizing the importance of selecting an advisor jointly. Keckler highlights the optimistic trend in couples' financial communication, as revealed by the Ameriprise Couples, Money & Retirement study, which surveyed over 1,500 American couples with substantial investable assets. 

The study indicates that the majority of couples trust each other on financial matters and share similar retirement goals. Keckler stresses the necessity for advisors to engage with both partners from the outset, ensuring a balanced relationship and effective financial planning.

Furthermore, the survey underscores the crucial role of advisors in addressing couples' concerns, such as providing support to family members and navigating retirement uncertainties. While most couples plan to retire simultaneously, the reality often diverges, requiring flexibility in retirement planning. The study's recommendations include open communication about financial objectives, resolving disagreements constructively, and collaborative selection of a financial advisor. Despite positive findings, challenges such as estate planning and financial transparency persist, highlighting the ongoing need for advisor assistance in fostering financial harmony among couples.

Finsum: The couple adds a different dynamic to the advisor client relationship and understanding their needs is fundamental, as more are seeking advisors in pairs. 

Opting to switch broker dealers is typically a last-resort decision, stirring discomfort among advisors. The mere contemplation of change signifies a threshold of considerable discomfort. There are various catalysts for this discomfort, with the top three reasons for advisors to consider such a move descending as follows:

1. Advisors increasingly require practice management and marketing aid from broker/dealers as they expand their practices and seek to optimize efficiency.
2. Advisors prioritize broker/dealers offering innovative technology solutions such as electronic signatures and paperless office systems.
3. Advisors explore broker/dealers offering higher payouts, lower expenses, and more favorable administrative fees to maximize profitability.

Despite the challenges, the landscape of over 500 Independent Broker/Dealers presents ample opportunities for advisors seeking change, with the potential for greener pastures elsewhere.

Finsum: Tech advancements are offering new advisors a plethora of reasons to consider a transition because they can improve both efficiency and client relationships. 

Financial advisors are flocking to independence.  Some who switched to the RIA model, say it was a game-changer for their career, and they have gained an "entrepreneurial mindset" while creating lower-cost programs for clients.

This trend is widespread. Cerulli reports the RIA channel is experiencing the fastest growth in advisor headcount. The number of independent RIAs and advisors working there have grown steadily over the past decade. Advisors are seeking independence for several reasons. Clients demand lower fees, and RIAs allow advisors to deliver quality service at a competitive price. Wirehouses, on the other hand, are raising advisor costs.

One highlights of the RIA fee-based model is it has made RIAs a target for private equity firms. Cerulli predicts RIAs will control nearly a third of the market by 2027. Advisors like Harry Figgie see this as inevitable due to the open architecture, financial benefits, and equity-building opportunities offered by the RIA model.

Finsum: The RIA model has been made easier by the technological advancements in advisor space, and this trend might continue to ramp up.

While portfolio construction is crucial for achieving client investment goals, it's merely one facet of a successful financial advisor-client relationship. A deeper understanding of the client's life circumstances and how their investment objectives fit into their overall financial picture is equally important for fostering trust and long-term engagement.

Time constraints often lead advisors to outsource portfolio construction, allowing them to dedicate more time to relationship building. Delegating this task can prove to be a win-win for both parties. The client gets professional investment management from an entity whose sole job it is to maintain their portfolio. And the advisor has more time to be there for their clients when they truly need them.

However, even with outsourcing, advisors must understand the client's portfolio construction and ongoing management comprehensively. Overreliance on outsourced services can lead to losing track of the intricate details of the investment process.

Ultimately, the client relies on the advisor to bridge the knowledge gap between their financial goals and the details of portfolio implementation. By remaining knowledgeable and engaged, advisors can effectively represent their client's best interests and build a robust and enduring partnership.

Finsum: Advisors outsourcing portfolio construction benefit from more time to build client relationships, but they still need to keep up with the details of the investment management of client accounts. 

It’s a simple truth: the more you do something, the better you’ll become at that task. For financial advisors, communicating with clients consistently and confidently is one of those skills that is essential to a healthy practice.

Let’s apply this concept to explaining to a client their investment portfolio: how it was constructed, how it’s maintained, and why it has the components it does. Imagine two scenarios: one where you’ve built customized portfolios for each of your clients and another where you’ve implemented a set of model portfolios across your book of business. In which scenario would you feel more confident explaining each approach to each client?

The point is this: model portfolios offer more than just operational efficiency. They provide advisors with the benefit of consistent communication. By implementing a defined set of investment strategies across your client base, you can polish your investment story into a clear and consistent narrative.

This consistency translates to proficiency and, ultimately, confidence. You become adept at articulating its nuances and rationale by repeatedly explaining a unified investment approach. And the more practiced you become at telling your story, the more confidence you convey to your clients.

Finsum: Find out how model portfolios can help you tell your clients a consistent and compelling investment story, building trust and confidence.