With the amount of turmoil in the financial markets these days, insightful financial advice is needed now more than ever. Clients are looking for ways to have constructive and insightful conversations with their advisors about the best way to plan for their financial future, despite the current market conditions. And most clients – especially high net worth clients – have a variety of needs that can become quite complicated in the current macroeconomic environment, which makes clarity and timely advice paramount.
So what conversations are the most productive? What conversations help both the client and the advisor to establish a better financial plan? How do advisors provide a higher level of service to their clients?
In short, financial planning is a process not a quarter by quarter endeavor to beat a chosen benchmark. Neither advisors nor their clients should be attempting to “look into the crystal ball,” asking “what if questions” or narrowly focusing on short-term performance. Creating a solid financial plan is best managed by playing the long game. To do this, financial advisors need to be able to provide their clients with an understanding and sense of security that their entire balance sheet is taken care of properly. Clients understand that their financial well-being depends on more than a brokerage account. Moving past performance as a sole focus of conversation can allow advisors to build relationships with clients that go beyond picking the right stocks, bonds and mutual funds and can allow clients a more comprehensive view of the financial standing.
Many advisors ask themselves, “Why do conversations with my clients so often turn to a comparison of their portfolio with the S&P last quarter?” We believe that if the main point of interaction between you and your client is centered around portfolio management, portfolio management will become the sole focus of your conversation. But all clients, and especially high net worth clients, are increasingly interested in more than simply understanding how their mutual fund performed against similarly positioned funds.
Driving this transition in expectations is the rapidly growing number of Americans with access to personal financial management software. According to Visible Banking, nearly 50 million Americans use not one, but two, three or even four different personal financial management software solutions. Software focused on the client but provided by the advisor can be a solution for RIAs, Family Offices, and Private Wealth Management Groups who want to provide a superior level of service. This software allows clients the ability to have a peace of mind about their entire net worth and can position the advisor’s relationship as more than simply a portfolio manager. It can allow the financial advisor to talk about the things that matter, like planning for college, establishing trusts for the grandchildren, or ensuring that portfolio allocation remains on a well-planned path.
Advisors understand that the financial services industry is changing rapidly and technology is putting new pressure on their business model. And clients are looking to advisors for more than portfolio management. They expect advice on any number of issues. Personal financial management software can act as a way to bridge the gap between the quarter by quarter rat race and a world where advisors are helping their clients plan for and execute on a strategy designed to grow and protect wealth – the conversations that advisors and clients should be having.