Displaying items by tag: clients

A major trend in wealth management is personalization. Due to new technology, financial advisors are now able to offer customized products and solutions without sacrificing scalability. It can help clients reach their financial goals while also creating a stronger relationship between advisors and clients.  

A survey conducted of high net worth investors by PwC showed that 66% are interested in more personalization, while 46% are looking to change or add new advisors within the next couple of years. For advisors, offering personalized solutions will be increasingly important in terms of recruiting and retaining clients.   

Personalization is also impacting model portfolios. Until recently, most model portfolios were built around the traditional portfolio, combining stocks and bonds, which limited customization. Now, there are more options to customize model portfolios, including factors, themes, and values. 

According to research from MSCI, wealth managers can allocate to these strategies without worrying that they would have an adverse impact on a portfolio in terms of returns or diversification. Further, these model portfolios are customized but still retain their core benefits. For advisors, this means spending less time on investment management and more time on client service, financial planning, and growing the business. 

Finsum: Personalization is a major trend in wealth management. Now, model portfolios can be customized, which brings a variety of benefits for advisors and clients without having an adverse impact on returns or diversification.

In late 2022, the SEC amended its marketing rules for financial advisors. One change was that client testimonials were permitted under certain conditions. Many practices are seeing success by showcasing testimonials from satisfied clients. 

Michelle Tigani, the director of marketing and communications at Cassaday & Co., added a client testimonial page to the firm’s website, which simply shares positive feedback that the practice has received over the years. She plans to use these testimonials in ads, emails, and targeted campaigns. She notes that the client testimonial page is the most visited on the firm’s website, underscoring their efficacy.

Susan Wilkinson, the founder of Wilkinson Wealth Management, recommends reaching out to long-term clients to ask if they would be willing to share a testimonial. The firm displays these on their website and integrates quotes from clients into various marketing mediums such as social media, emails, and print. She believes it’s more effective and authentic for prospects to hear from satisfied clients rather than traditional forms of marketing which many instinctively tuneout.

Finally, Terra McBride, the chief marketing officer at Prime Capital Investment Advisors, asserts that financial advisors are in the relationship business. Client testimonials are the most effective way to communicate your ability to form positive and successful relationships. She recommends using testimonials in multiple formats, including websites, videos, and marketing campaigns. Ultimately, it adds more credibility and layers to help prospects get a feel for the client experience.  

Finsum: Late in 2022, the SEC amended its rules for client testimonials. Here’s why they are effective and how some practices are integrating testimonials into their marketing strategy.

JPMorgan had six advisor groups, managing a cumulative of nearly $15 billion in assets, leave the company on April 19. In total, 50 employees left the company to join competitors including Merril Lynch, Morgan Stanley, Citizens, and Wells Fargo.

Notably, all of the teams were originally from First Republic Bank, which collapsed last year during the regional bank crisis and was taken over by JPMorgan. About a third of its advisors departed First Republic during its turmoil, prior to the acquisition. Following these exits, First Republic’s private banking segment still had over 200 financial advisors, managing $200 billion in assets. 

First Republic was a leading provider of private banking and wealth management solutions for high-net-worth clients. It was also an aggressive recruiter of advisors and brokers from Wall Street banks, luring them with generous packages. In fact, one departing team was recruited from JPMorgan by First Republic in 2020.

Currently, JPMorgan has $3.3 trillion in client assets, managed by advisors at bank branches and its wealth management group, which services high  and ultra high-net-worth investors. It’s an indication that growing wealth management through acquisitions is not a straightforward process and is dependent on retaining advisors. 

Finsum: JPMorgan had six advisor teams depart the company last week. These advisors came to the company through the acquisition of First Republic and managed nearly $15 billion in assets.

There is a subtle distinction between fee-based and fee-only advisors. Fee-only advisors exclusively offer financial advice but don’t sell any products with commissions. Fee-based advisors also mainly offer financial advice, but they may also sell other non-investment products with commissions, like insurance. This means that they cannot market themselves as being ‘fee-only’. 

Many advisors are moving to these models due to their simplicity, while there has been an increase in regulations around the fiduciary standard. In fact, the industry as a whole is seeing fewer broker-dealer accounts and growth in investment-advisory accounts. As a result, many products can now be bought in investment-advisory accounts without a commission, such as annuities and alternative investments. 

An important consideration for an advisor going independent is responsibility for compliance. This requires registering with the state regulator or the SEC if there are more than $100 million in assets. It also means responding to regulatory inquiries, developing a compliance program, and having a system to ensure compliance. 

This additional burden highlights the challenge of running an independent shop. Another is that there is less time for clients, especially during the initial stages. Even afterwards, the additional responsibilities will lead to less time and energy for client service, prospecting, marketing, etc. By choosing a fee-only or fee-based model, advisors can have less of a regulatory burden.

Finsum: Many advisors are moving towards a fee-only or fee-based model. The biggest reason is that it simplifies and reduces the compliance demands for advisors.

Raymond James conducted its annual survey of retired financial advisors to figure out how happy they are and the factors behind their responses. A consistent lesson is that succession planning is essential to feeling content in retirement. 

Many advisors recommend getting immediately started with succession planning, even if it is many years down the road. An important step is to identify a successor who you believe can continue effectively serving your clients. 

Some steps in this process include surveying your network to identify potential candidates, conducting interviews, and spending time with them to gauge if they are the right fit. It can also be helpful to get input from your firm’s management team.

Once you’ve identified a successor, the next step is to inform your clients. In the survey, 74% of advisors mentioned that communicating with clients was important in preparing for retirement. While these conversations can be initially awkward and uncomfortable, they will ultimately deepen the client-advisor relationship and increase the odds of a successful transition for your clients.

The final step is getting mentally and psychologically prepared for retirement. This can mean planning the final stage of their career, whether it means an immediate exit, a transition period, or a consulting role. Retiring advisors have considerable experience and wisdom that they can still share with their successors, especially during stressful situations.

Finsum: Raymond James conducts an annual survey of retired advisors to find out how many are happy and why. One of the major takeaways is the importance of proactive and effective succession planning.