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Buzzwords to Advise By

By Grace Williams March 28, 2017

The industry has championed plenty of buzzwords over time, and advisors hoping to satisfy clients by putting a few words into action are best served by studying how they define transparency, adaptability and mindfulness.

These pointers come courtesy of a newly-released survey from the CFA Institute and Scorpio Partnership, a U.K.-based consultancy. In collecting responses from 1,370 advisors and 4,000 high net worth private clients from July to December last year, they found that 25% of respondents don’t use professional financial advice. Among the 75% who do, one in four held their primary advisory relationship with their retail bank.

According to the survey, the respondents who didn’t use a professional did so because they question the value of hiring one and possess concerns that an advisor might not have their best interest in mind.

“There’s a lot of Washington debate and very public discourse around” the term ‘best interest,’ John Bowman of the CFA Institute tells FA-IQ. The industry has a lot to prove, considering the title “financial advisor” functions as a blanket moniker. “No wonder a quarter don’t think we’re worth it,” Bowman says.

As information and education have become more widely available, knowledge and preferences have evolved, so some client pushback is to be expected, he says. But in the new landscape, an advisor who can act as tech whisperer, therapist and life coach could anticipate having a slight advantage over competitors who’d rather emphasize performance. This apparently bears out according to the survey: 64% of respondents said they consider a ‘financial advisor’ to be an all-inclusive financial sherpa who wears multiple hats rather than someone who simply crafts their financial plan.

Satisfying preference from day one requires a conversation in which the advisor gets to know the client, according to Scott Hanson, senior partner and founding principal of Hanson McClain Advisors. “Money is just a tool, not necessarily good or bad,” he says. The holistic approach includes working together to craft a clear picture of what clients want out of life and what their money can do for them.

John Bowman

Being mindful that client attitudes and behaviors can’t be set in stone forever also comes in handy. “As time goes on, we have experiences and life happens,” says Hanson, whose Sacramento, Calif.-based firm manages $2 billion. “Goals change as we change.”

Clients understand that they are not an advisor’s sole customer but advisors can still show them they value the relationship. One surefire way an advisor can prove their worth is by reassuring clients that their individual needs and concerns are being acknowledged and addressed.

At ARS Wealth Advisors, according to president and CEO Tony Anderson, the primary objective is to provide client-focused services by learning about client preferences, including how they like to have things presented to them. When it’s time for quarterly or annual results, Anderson says, his clients can’t be bothered with an 80-page statement that lacks transparency and a basic breakdown.

Clients want to know, “What did I own? How did I do over the last year's period? Did I make money?” says Anderson, whose St. Petersburg, Fla. firm manages $450 million. “Show them what they paid and what they made.”

Although technology certainly plays its part in the business, emphasis should be tailored to client comfort and ease of use around the products. “Keep it simple with great software and reporting capability,” but answer the simple questions, says Anderson.

While you can’t predict the market, an ability to nurture basic client needs can help the relationship withstand any ups and downs. It can also help an advisor prove their true worth from the get-go. “The ideal relationship is one in which we can do a discovery process,” says Hanson. “We don’t have total clarity about what we want in life; we’re all on a journey.”