Displaying items by tag: client management

Model portfolios represent an effective strategy for financial advisors to enhance efficiency within their practices by offering a standardized approach to portfolio construction and analytics. Models simplify the portfolio design process, allowing advisors to save significant research time and scale their services more effectively. Moreover, uniformity in portfolio construction promotes consistency, reduces biases, and improves regulatory compliance.

However, advisors must exercise due diligence in evaluating the credentials of model portfolio providers, considering aspects such as investment philosophy, historical performance, and associated fees. It is also essential to maintain flexibility for customization to meet the unique needs and risk profiles of individual clients.

While model portfolios offer considerable efficiency and informed decision-making advantages, their successful integration into a financial advisory practice requires careful consideration and a client-focused strategy. When utilized judiciously, model portfolios can significantly contribute to a financial advisory practice's operational efficiency and client satisfaction levels, albeit not as a universal solution but as a valuable component of a broader strategic framework.

Finsum: Explore how model portfolios boost advisory efficiency with standardized construction, analytics, and compliance, while ensuring due diligence and customization.

Investing in the right technology has the power to create a more efficient, scalable, and successful practice. The latest disruptive technology is artificial intelligence (AI) which will affect many different parts of a practice and is already impacting specific areas. 

Advisors who are able to effectively leverage AI will see a material and quantifiable impact in terms of generating leads, conversion rates, retention, and reducing time spent on operations and management. Client engagement is an area where advisors are already applying AI to generate positive outcomes and deliver more personalized outreach and services.

Ideally, an advisor would be able to spend hours learning and preparing for a client meeting. In reality, this is not possible given constraints and other responsibilities. However, with AI, an advisor can effectively organize and review all of a clients’ data, including notes from previous conversations, and find insights to deliver a more unique and valuable experience. 

AI can also help sort through all of the data generated by an advisor or practice and find hidden opportunities or potential risks. They can also provide guidance in terms of strategic decisions and long-term planning. It’s recommended to use a specialist AI model for these purposes given that it’s trained in relevant data and adheres to regulatory standards. 

Finsum: AI is the latest disruptive technology that will certainly impact multiple aspects of an advisors’ practice. Here is how it’s already affecting client engagement. 

The Center for Retirement Research at Boston College recently completed a study which investigated why annuities are under owned despite the benefits it provides for retirees. The findings are particularly interesting for financial advisors given this wide gap and persistent challenge. 

The study queried investors with more than $100,000 in financial assets who are in or near retirement. About half of the respondents indicated some willingness to buy an annuity at current rates, while only 12% actually are invested in one. 

Interestingly, the study also found that a lack of liquidity or the inability to pass on an annuity as an asset to heirs were not cited as reasons to not purchase an annuity. Instead, the major factor was a lack of knowledge of the product and how to buy one. Some who were more familiar with the product had a negative perception of hidden costs and performance issues.

According to the authors of the study, the reluctance to buy one stems mostly from psychological reasons. Advisors should endeavor to provide more detailed knowledge about these products including the mechanics of how they work in order to increase comfort levels. Then, they should share an action plan of how to actually buy an annuity. 

Finsum: Most retirees acknowledge the benefits of owning an annuity and self-report a desire to invest in one. Yet only 12% of retirees own an annuity despite the benefits. Some research on this gap came up with some interesting findings. 

Natixis Investment Managers issued its outlook for 2024. It notes that cash levels are higher than normal due to volatility and uncertainty. However, it does believe that some of this cash will be put to work in model portfolios. 

Overall, it sees uncertainty continuing given a tense geopolitical situation in multiple parts of the world, an upcoming presidential election, and the risk that the economy stumbles into a recession. But these conditions are positive for fixed income given attractive yields, falling inflation, a more accommodative Federal Reserve, and equity valuations which are once again getting expensive. 

According to Marina Gross, the head of Natixis Investment Managers Solutions, model portfolios are one of the biggest trends in wealth management. She notes that “Firms are looking to provide a more consistent investment experience for clients in an increasingly complex market, advisors are looking to grow their practices and know clients want more than an allocation plan, and clients are looking for broader more comprehensive relationships with their advisors. Models offer a solution that fits the bill for each in 2024 and beyond.” 

Model portfolios are particularly suited for the current environment as they help manage risk and increase the chance that clients will stick to their financial plan through market turbulence. For advisors, it leads to more confident clients while freeing up time for revenue-generating and business-building efforts.  

Finsum: Natixis is forecasting that model portfolios will continue to gain traction in 2024. Given high levels of uncertainty, model portfolios are particularly useful for advisors and clients. . 

Marketing is essential to an advisors’ long-term success as it is how you connect with prospects. Ultimately, it requires experimentation to figure out the best approach for your practice. But, it’s useful to learn from other advisors and identify what works for them as a starting point when constructing your own marketing plan.

While there are many methods, some commonalities between effective marketing strategies is that it effectively captures the attention of your target audience. It also communicates what makes you unique and what value you provide to clients. It should establish your credibility in your prospects’ mind. Finally, the end goal of marketing is to capture leads that can eventually be converted into clients. 

Email marketing allows you to share information and promote your business to people who have signed up for your email list. You can offer an incentive for people to join such as an e-book or a free workshop. This can be quite effective as it allows you to build a relationship and establish credibility by speaking about topics that address potential pain points.

By going straight to a persons’ inbox, there is an opportunity for a deeper connection than other mediums. Over time, some portion of readers may elect for an in-person consultation or phone call once your value proposition becomes clear. 

Finsum: Email marketing can be a quite effective marketing strategy. It allows advisors to establish credibility and start a relationship with clients in a low-pressure manner. Over time, some portion of readers can be converted into clients.