Turmoil at the Top of the Market
August 4, 2009
New York Times
And on Friday of last week, the New York Times focused on a Pricewaterhouse Coopers survey of 238 private banks and wealth managers serving clients with assets of $500,000 to $20 million. The study highlighted a huge gap in the training, skills and tools that client relationship managers are equipped with â€“ driven in large measure by the priority these firms give to attracting new clients as opposed to serving existing ones.
One consultant quoted in the story summarized it this way: â€śIn the past, people were incredibly loyal to their advisors even through periods of dissatisfaction. Today thatâ€™s changing.â€ť
Given the level of paranoia that dominates the psyche of many American investors in todayâ€™s post-Madoff world, more important than advisorsâ€™ brand, performance or pedigree is the level of transparency in how they do business and how they manage clientsâ€™ money. â€śEven if you think youâ€™ve found an advisor you can trust, check and check againâ€ť the article concludes.
A five point response
The fallout from articles such as those in Business Week, the New York Times and Wall Street Journal will include an increase in the number of clients exploring their options - some investors who have been on the fence about switching will conclude that if others are looking at moving, perhaps they should as well.
In some cases, disillusioned investors are going the discount broker route; the self-directed channel has picked up significant share over the last while. More often, theyâ€™ll be going to another advisor, asking tougher questions than ever before.
In light of the increasing media coverage on investor movement, you have two choices: You can fume about know-nothing journalists, ungrateful clients and â€śmedia whoreâ€ť advisors seeking out the limelight. Or you can accept these articles as reality and focus on the things under your control.
The workshops Iâ€™ve been running since January have received the best response of anything Iâ€™ve done in twenty years working with advisors. Hereâ€™s a five point strategy you might consider, drawing on ideas from those workshops and bringing together some of the things Iâ€™ve been writing about over the past year.
Step One: Revisit your value proposition
In todayâ€™s value driven world, Americans are taking a hard look at the value they get from everyone with whom they do business. Like it or not, more and more investors will be pushing hard to understand how much theyâ€™re paying in fees and what theyâ€™re getting in return
Historically, some advisors have promoted their investment and asset allocation discipline as their key point of differentiation â€“ although for many, last yearâ€™s events have called into question the ability to define value in this fashion.
Another approach to value lies in the total wealth approach that more and more high end advisors are taking. Still another example is the peace of mind and sense of control that can come from a planning financial planning approach.
Or perhaps you have gone the route of specialization and built expert knowledge in a narrow product area or bring deep understanding and strong credentials in the needs of a defined niche market.
Whatever approach to value you offer, being able to clearly articulate your value proposition and what clients get from working with you will become the necessary cost of doing business going forward. Nowâ€™s the time to take a hard look at how you describe the value you bring.
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