There is always room for improvement.
It’s an old cliché, but still apropos in the financial services industry as advisors strive to identify the best practices to create the best possible outcomes for clients.
Advisors Magazine asked four financial advisors: “What changes or improvements in client services do you want to see happen within your industry?” Each differed in their response, but the unifying theme centered on how advisors can hone in on the individual needs of their clients as we face a time of economic uncertainty and challenges in the U.S.
Addressing Risk – Ensuring Cash Flow
“How advisors look to address risk for clients needs an overhaul,” states Chris Osmond, chief investment officer with Centura Wealth Advisory located in San Diego, California. “Risk needs to be managed and framed in a manner that addresses the most pressing concerns of clients.”
In his opinion, one of those “most pressing concerns” is cash flow.
Clients want reassurance that they will have more than adequate – perhaps better described as abundant – cash flow.
“Excess cash flow allows for peace of mind and leads to clients’ ability to live the lifestyle they ultimately want,” said Osmond. “Excess cash flow allows clients to take vacations, care for their family, plan for wealth transfer, and implement an effective gifting strategic, both philanthropic and legacy.”
Offer Your Time Unsparingly and Gain Client Trust
“The role of the financial professional today needs to be that of the ‘trusted advisor’ who is willing to invest the time necessary to truly understand the needs of the client as well as their behavioral biases, concerns, values, fears, and passions,” said David Pickler, founder of the Pickler Companies based in Collierville, Tennessee. “Today’s financial professional must become a compassionate advisor and guide to help individuals navigate the often-tumultuous markets of today.”
Accomplishing that is important to Pickler because the financial media – with all its cable channels and digital platforms –puts too much focus on short-term tactics as opposed to long-term, well-defined strategies to plan for the future, he said.
“We must return to a focus on planning and discipline to help clients pursue their long-term goals,” said Pickler.
He also adds the ability to be nimble in responding to market changes as part of being a trusted advisor.
“We need to have the flexibility to adapt and adjust,” asserts Pickler. “We need to return to a focus on planning, ongoing monitoring and review, and intelligent adaptation in planning as life and the markets adjust.”
Stop Quarreling Amongst Ourselves
If there is one thing that Erica Gargol would like to change about the financial services industry, it is the amount of sparring regarding which type of financial advisor and financial product is doing the best job for clients.
As a partner and divorce financial specialist with G&G Wealth in Scottsdale, Arizona, Gargol believes “all channels” within the financial industry have a place.
“All channels serve an appropriate niche, or they would not have business,” she stated.
The rise of independent advisors has in her opinion led to an increase in feuding within the industry.
“This has led to ongoing ‘bickering’ among the different channels regarding who better serves a client,” Gargol said. “Additionally, the constant disagreement about who can hold themselves out as a fiduciary misses the point: Different products make sense in different situations and being fee-based does not make one more ethical based on that point alone.”
Perform More Downside Risk Assessments
During inflationary times and with the threat of a recession looming, advisors ought to put more effort into analyzing just how much risk their clients have within their investing and retirement accounts.
So asserts David C. Gratke, managing member and chief compliance officer at Gratke Wealth, LLC, located in Portland, Oregon.
“Financial advisors are not talking to clients about de-risking portfolios for a large, protracted downward spiral in asset prices,” said Gratke. “We think this is misguided at best.”
Instead, Gratke advocates regular stress-testing of a client’s investments to gauge their ability to endure various levels of decline. With current economic conditions, Gratke strongly believes the potential for investing loss is less a possibility and more a reality.
“Unfortunately, many are likely unprepared,” he said. “Retirees may have to re-enter the workforce due to compromised investment account balances.”
In an effort to prevent this from happening to his clients, Gratke uses a scale from 1 to 100 to rank the amount of risk of each client account. He then discusses risk with each client to assess their personal risk score. Finally, he compares the two often discovering that a client has more risk in their portfolio than they were aware of.
Closing Bell
Taking the “uncertainty” bull by the horns is advice these four advisors all agree on.
As history has shown, financial times continue to change, and volatility has always been a force in investing. Advisors who can plot a course that accounts for the unpredictable are can help clients not only reach their financial and retirement goals, but also retain those clients.
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