Wealth management on the move
Listening to Deloitte, you’ll learn there’s loads of structural disruption taking place in the wealth management industry ranging from the commoditization of investment management to the aging of wealth advisors and the fast-approaching massive transfer of intergenerational wealth. But at a more tactical level, one of the most pronounced changes taking place is a shift to a greater understanding of fundamental client needs and values.
As Deloitte explains, “To meet investor needs, wealth management firms and their advisors should shift to holistic, goals-based advice and measure performance based on achieving clients’ goals within agreed timeframes rather than beating market benchmarks. This is also a way to broaden the range of advice advisors provide, from investment to wealth management, and escape the commoditization of investment advice.”
Addressing core values
These ideas absolutely resonate with Karen L Asbra, CFP®, principal and chief operating officer at Skokie, IL-based Rappaport Reiches Capital Management, LLC. Indeed, to truly “get” their clients, the best advisors work hard to more clearly assess fundamental needs and values.
“Most advisors focus on trading client portfolios—picking stocks or positioning the portfolio for ‘the next opportunity’ or ‘the next crash,’” says Asbra. “While return on investment is important, something is missing. Our industry is so focused on analytics and strategy that the discussion of core values is often incidental.”
“Core values are the beliefs by which we strive to live,” says Asbra. “They are the priorities that you value most – such as family, meaningful work, or giving back to your community. Perhaps health and fitness, or the flexibility to come and go as you please.”
For this reason, Asbra’s firm asks new and existing clients all manner of questions intended to better understand what really matters in the relationship: What does the client want from their retirement? What truly matters to the client?
“As clients face decisions on family, careers, lifestyles, philanthropy—how they spend their time and money—focusing on their core values can provide guidance to help them navigate their way through life. As advisors, we are in a unique position to bring core values to the forefront of financial planning conversations.”
Addressing needs, not selling products
Along these same lines, Adam Tau, founder and wealth manager for Manhattan-based Dynamic Wealth Strategies, got into the business after having seen his own family struggle financially facing everything from vehicle repossessions to arguments over funeral costs. As such, he has strong views on the importance of focusing on goals and values, solving needs as opposed to pushing products.
“Over the years, I’ve found when someone comes in from a bad experience, they talk negatively about a product or investment. But what we often find is, it’s not the investment that’s the issue, it’s more that person or that family didn’t belong in that investment,” says Tau.
Often, he continues, “the advisor who put the instrument in place wasn’t able to offer anything else, so the menu of strategies was limited. Or the client wasn’t properly informed regarding the drawbacks. Or maybe the tool didn’t align with the client’s interests and needs at the time. The product itself takes the punch for it, but the product isn’t the real problem.”
The solution, says Tau, “is that we need institutions and their reps to be held to a higher standard. They need to stop trying to ‘sell’ a product or investment and instead, look to solve a need.”
A role for diversity
Rebecca Miller, a co-founder of Dynamic Wealth Strategies and chief operating officer for the firm agrees with Tau, but adds yet another aspect of client relationships that if changed, could lead to better understanding better outcomes.
“From my own perspective, I see that the field is still predominantly white and male, which to me, is a motivator. I want to break that mold – I personally want to reflect a different voice, I want the generation under me to see more women having success here. And I want our customers – whether they are female or whether they’ve felt like their voice hasn’t been heard – to feel like solid planning is for them and it can be understood. It can be for you.”
Happily, the executive notes that beginnings of change. “The pandemic brought about reconsideration as to your career path – are you happy doing it? Does it give you the lifestyle you want – not just money and income, but the hours you want to work, the location you want to work in? Is it fulfilling?,” asks Miller. “I believe thanks to the pandemic and to other forces, over time, more and more women are coming into and having success in financial services.”
A dose of reality
As the industry does more to better understand client values and ultimate needs, Dennis Channer, CPA, CFP®, AEP® and principal at Cornerstone Investment Advisors LLC in Boulder, CO says there should also be a shift toward delivering a degree of tough love.
In particular, he chides many baby boomers for having prioritized lifestyle over savings and often carrying forward too much debt. Here, says Channer, frank discussions can often lead to better planning opportunities.
“There is too frequently an assumption that at the traditional age of 65 is retirement time no matter what – the math has often been ignored. But with today’s longer life expectancies, the earnings from a typical 40 year working life may have to fund an additional 25 years of living or more.”
Thankfully, these same longer life expectancies can also extend intervals for earning, saving and investing. Sources such as the Motley Fool go into great detail highlighting the many advantages of delaying retirement and how it can help wealth management procrastinators recover financially in time to still enjoy their senior years.
These are some of the most visible and important changes taking place in wealth management advisory today. But we always have our ear to the rail for new insights. Do you have ideas to share? Email us your thoughts at This email address is being protected from spambots. You need JavaScript enabled to view it..
