The industry is in desperate need of a wake-up call. Gimmicks and half-truths seem to be the most popular response to questions of value. Instead of learning from other service industries, advisors and their firms are burying their heads in the sand. Notwithstanding, the current health and economic crisis, we are at a crossroads on how professional, expert advice will be understood and sold in the future.
The democratization of investing has placed the value of a traditional financial advisor into question. The industry has responded by arguing price, access or performance are the most important differentiators for an investor to consider. I would submit that honesty is the single most important quality to look for when selecting an advisor.
Consider the foundation of the advisor/advisee relationship. The consumer of the advice is placing trust in the information provided by the individual giving the advice. It is a transaction whose only value is based on the accuracy of the advice given. This entire arrangement lends itself well to a fiduciary obligation and is a main point I traditionally raise when discussing the competing standards of care.
Beyond the obvious of doing right by clients, truth can be the most powerful sales tool an advisor has at their disposal. The ease of access to information has led to highly educated consumers. These are clients that know more and can ask better questions than ever before. This means expect to be fact checked on everything you say. Honesty and candor are rewarded as this same educated consumer can easily reconcile what you said and what they have read.
Kingsview Partners and all the Wealth Managers within our firm are dedicated to remaking the wealth management client experience. Direct, honest advice regardless of how uncomfortable the conversation – is the standard. Combining this client service ethic with the tools that offered by an independent firm, are what turn the solutions recommended into reality.
Kingsview Partners, through its subsidiaries provides comprehensive services to address a diverse set of client needs. Many advisors believe that joining an RIA will come at a sacrifice of most of their non advisory business lines. While of course there is a fair amount of nuance individually, for most, this simply is not the case. Independence is a cornerstone of best interest. Without competitive options to provide the tools necessary, captive advisors are serving the wrong master.
We cannot always be the smartest person in the room, offer the best performing portfolio, or make fantasy into reality. A sustainable service business is built on a transparent value proposition. The ability to meet and exceed expectations starts with the truth. Honesty is your best quality, use it liberally.
Sean McGillivray, CEO
Asset classes have dislocated from reality. Fundamentals and technicals are out the window and clients are looking for guidance from their advisor. These are the times that the value of a professional Wealth Manager will ultimately be most appreciated and have the largest positive impact on a client’s future. You must be present for your clients during this time.
Resist the urge to hypothesize on a game plan. The situation is fluid and long-term investors should ignore short term moves (regardless of the size and scale). The pricing mechanisms in the market are clearly broken short term which will provide future opportunity, but we should allow the crisis to unfold to get a better sense of the total economic impact.
Helping investors understand and quantify “crisis risk” is also important. We are in the 2nd and 3rd deviation of statistical data sets. This is the 5% of the non-quantifiable risk that all investors accept when allocating capital. This risk doesn’t destroy diversification, nor the prudent measures put in place when creating portfolios, but it does make investors act irrational when these events occur. Long-term investors should be reminded of this and the reason why we allocated to risk assets.
Beyond the portfolio, our advice should be a measured voice in a sea of noise. Be a steward of verified and reliable data effecting your clients. Do not engage in rumor or hysteria. We have a duty as fiduciaries to act in an impartial and prudent matter. This means helping clients make wise decisions both financially and personally.
Check in with your clients in the risk demographics (60 years and older) or anyone with a preexisting health condition. Make sure they have adequate resources (food, water and medicine) or have support to get these crucial items. We must help each other through this crisis, and I can think of no better person than their trusted advisor.
Other follow up ideas/strategies:
- Providing clients an update on your office hours/sanitization procedures/staffing levels.
- Make clients aware of online tools (custodian website access, Orion portal and Money Guide Pro planning).
- Ensure clients who have recurring money movement instructions have sufficient cash to cover their individual needs.
- Guide clients with margin or secured lines on potential calls or overdraft.
- Give clients the opportunity to use the firm’s virtual meeting software as a way to replace in-person meetings and travel.
We are Wealth Managers, we provide so much more than investment advice. We are friends, coaches, clear minds and advocates for our clients. Let’s us continue to be that influence in our client’s lives.
Sean McGillivray, CEO