Category Archives: Wealth Management

Five Key Areas for Wealth Management Firms to Focus on for High Performance in Current Environment

In the financial advice business, a key success factor in the business development process is the degree to which advisors make an accurate assessment of themselves, others and situations. So it was a surprise to find advisors and prospects see things differently in some meaningful ways on certain elements in the business development process. At least, this is the result of joint research by our organization, Atherton Consulting Group, and Upside Consulting Group based in Toronto.

The groups collaborated on a recent study comparing how advisors market services with what prospects seek in a financial advisor. They developed a survey examining advisor and prospect perspectives on the sales process as two sides of the same coin. Specifically, advisors were asked “what are the most important elements of your sales process?” and prospects were asked “what are the most important attributes that you look for in an advisor?”

In the post-financial crisis climate, wealth management clients are more circumspect about advisor capabilities and motivations. Trust has to be earned, rather than advisors assuming it is there to be lost. Clients are also paying closer attention to the value received for fees they incur. New business models, a movement toward passive investing and improved online investment and financial planning information all threaten the way traditional wealth management businesses operate. With this as the backdrop, our collaborative research pointed to five key areas firms should prioritize for high performance in the current environment:

1. Listen. It’s not about the advisor, it’s about the prospect. Capabilities are irrelevant unless they relate directly to a need that has been clearly articulated by the client. Develop and master questioning strategies and listening skills aimed at understanding and creating an emotional connection. Write questions in advance and practice paraphrasing, validating, appreciative inquiry and other active listening skills with prospects.

2. Substance is more important than form. Focus on the concrete value of the service. Personal relationships are earned over time by delivering results that are important to the client. Go into detail on what tax-sensitive investment management means (e.g., .25%/year improved after tax returns). Keep an on-going log of results to show clients as the relationship develops (e.g., investment returns compared to benchmarks, tax savings, total fees, referral to mortgage broker).

3. Tackle the fee structure openly and early with prospects. Be transparent and specific about how you’re paid and how this aligns with the value received by the client. Firms must ensure incentives are aligned with client results. Probably more than any other business, the private client relationship is centered on trust. Transparency around all sources of fees (asset management, underlying manager, redemption, incentive fees) will help solidify that trust.

4. Do not shy away from showing investment performance. It seems to have been lost by many in the wealth management industry that investment performance matters to prospects. Prospects are clearly saying it matters. While no industry standard for communicating private client investment performance has emerged, advisors have the opportunity to differentiate themselves through appropriate historical performance analysis communicated in a way that matters to prospects.

5. Continually ask clients and prospects what products and services they are interested in and figure out a way to offer them, directly or through collaboration and partnership. Being in the dark about what clients and prospects seek is an invitation for other advisors to convert them. Periodic on-line survey tools and questionnaires at quarterly or annual reviews can help with this process. Assign and make accountable a highly skilled team member to collect data, develop client recommendations and create new solutions-focused services specific to client needs.