Displaying items by tag: clients

Direct indexing was one of the hottest topics in the financial services industry last year. The strategy has typically only been utilized by wealthy clients with complex portfolios, but that’s a mistake, according to Randy Bullard, global head of wealth at Charles River Development. Bullard, who was presenting along with Ben Hammer, a sales executive at Vanguard, at the ETF Exchange conference, pushed back on the notion that direct indexing is a niche product for select clients. He stated, “A direct indexing solution is uniquely designed to catch money in transition, and it’s suitable for all types of investors. That’s the transition the industry is starting to go through. Once you conquer the operational complexities of direct indexing, it becomes a broad market solution.” In fact, Hammer believes that it gives “advisors an additional edge with clients.” Hammer added that the volatility of 2022 provided the perfect environment to showcase the strengths of direct indexing. He stated, “Right now, most of the reason people are using direct indexing is for taxes, but we’re telling people not to fall in love with that after-tax return from last year. Volatility created an opportunity last year, but the opportunity hasn’t passed by. Every year there are some stocks that fall in an index.” Hammer is also seeing increasing adoption among accounting firms that work with advisors.

Finsum:While direct indexing has primarily been a tool for the wealthy, two panelists at the ETF Exchange conference believe that all investors can benefit from it, which gives advisors an edge with clients.

According to a recent announcement, Raymond James Financial has nabbed a Merrill Lynch advisor managing $250 million in Miami. Daniel Laiter, who has been in the industry for 25 years, joined Raymond James’ Alex. Brown unit on January 20th. He started his career at Lehman Brothers in 1997, joined Credit Suisse by way of its Donaldson Lufkin & Jenrette Securities predecessor in 2001, and returned to Lehman for two years between 2006 and 2008 before joining Merrill. Laiter, who focuses on clients in Mexico, will report to Eric Termini, regional executive for South Florida. As part of the announcement, Termini said “Danny represents one of the top advisors in the industry.” Laiter was convinced to move in part by a “client-centric” culture and the “experienced management team” at Raymond James. In June, Raymond James folded Alex. Brown into its core employee channel, Raymond James & Associates, led by Tash Elwyn. The unit had around 150 advisors at that time, a small fraction of the roughly 3,450 advisors in the RIA division. Raymond James announced four additional hires into the unit last year, including three who joined in Miami.

Finsum:Raymond Jamesadds to its Alex. Brown unit with the recruitment of a Merrill Lynch advisor managing $250 million.

According to a new report, advisors may be missing out if they are reluctant to target next-gen investors. Research from Fidelity Institutional Insights found that investors under the age of 40 are inheriting more than $540 billion in the United States every year, 30% of the total wealth transferred. In addition, data from Cerulli Associates shows that the demographic will control three-quarters of $84 trillion in inherited wealth by 2045. The Fidelity report is a wake-up call for advisors that shy away from young clients due to higher debt, fewer assets, and generational differences. Fidelity Investment’s vice president of practice management and consulting, Anand Sekhar, said the revenue-weighted age of the average Fidelity advisor’s client is 65. According to Sekhar that creates a huge problem for advisors in the future. With older client rosters, advisors could see widespread drawdowns and not enough clients to take their place. Making matters worse is that only 13% of advisors are engaging with clients’ children and grandchildren, which puts billions currently managed at risk. Fidelity’s data suggests that if firms can reduce the revenue-weighted age of clients by just seven years, from 69 to 62, it can increase a firm’s growth tenfold. The research also suggests that establishing those relationships now could produce greater returns as investors under 40 are investing earlier than their parents and are willing to pay for advice.

Finsum:With the average revenue age of clients nearing 70, many firms could see soon see massive withdrawals with no clients waiting in the wings, which is why advisors need to start engaging with clients’ children and grandchildren now. 

Based on the results of a Broadridge survey fielded between September 29th to October 10th, advisors with a marketing strategy brought on an average of 41 new clients, compared to 17 new clients for advisors without a strategy. The survey queried 401 advisors overseeing at least $10 million in client assets. The survey also revealed an increase in marketing, as advisors spent an average of $743 in marketing for each new client and added 23 new clients on average over the past 12 months. Those figures are both up from last year when the average advisor spent $719 per client and gained 21 new customers. Kevin Darlington, general manager, and head of Broadridge Advisor Solutions had this to say about the results, “Having a defined marketing strategy, that is the single biggest differentiator [for] how the advisors that are reaching their growth goals [are] doing it. They're much more confident in reaching their goals, they're acquiring clients, and they're just getting much better ROI on their marketing.” The survey underscores the benefits of a well-executed marketing strategy. Gordon Abel, chief marketing officer of Dynasty Financial Partners, told Financial Advisor IQ, that “Advisors also need to remember that a marketing plan requires careful thought and patience.” He added, “Building awareness means familiarizing potential clients with the advisor's brand and name. They need to understand who you are and what you do.”

Finsum:A recent study revealed that advisors who have a well-executed marketing strategy get 2.4 times more new clients than advisors who don’t.

With studies indicating that the advisory industry’s organic growth rates are near zero, Gary Foodim, chief marketing officer for Mercer Advisors, believes it’s time to bring a renewed focus to marketing. Firms are facing a more challenging environment now. Advisors are dealing with rising inflation, higher interest rates, and market volatility that have slowed down the decision-making time of consumers. In addition, the competitive environment has also increased with an influx of low-cost financial advisors. Due to these challenges, traditional referral activities may no longer be enough. So, Foodim is recommending advisors embrace digital marketing for more leads. He noted that “A strong digital client lead generation engine requires three important things rooted in a ‘test and learn’ approach. First, firms need to refine their message and target audience – are you targeting the right people, and are you doing it with a differentiated message?” He also believes that firms should be open to testing various digital lead sources including paid search, social ads, connected TV ads, and nurturing email campaigns. Firms should also conduct audience testing through lookalike audiences, where you create groups of people who look like your current clients. This can be done through outside marketing firms or on social media platforms such as Facebook. Finally, firms should develop an internal sales team to follow up and convert these leads into clients.

Finsum:With increased competition and a challenging market environment, referrals may no longer be enough, which is why advisors should embrace digital marketing as a way to generate new leads.