The best advisors are ‘leaning into’ behavioral finance strategies and technology that connect them on a higher level with clients, according to Noreen Beaman, CEO and founding partner at Brinker Capital.
“We are at an inflection point in the industry when advisors need to engage with clients and support them as they are taking a hard look at themselves and their goals” because of the coronavirus and the racial unrest, Beaman said.
Advisors need to look at clients’ entire lives and, in the current circumstances, adopt technology to connect with them, she added.
Brinker Capital, a privately held investment management company based in Berwyn, Pa., with $25.3 billion in assets under management, produces a guide, “Behavioral Insights,” for advisors to help them navigate the new trends in the financial industry that take advisors beyond just the financial numbers.
For instance, the guide said advisors need to help clients realize that “investor speculation can lead to uninformed investment decisions based on the desire to chase performance and prevent losses,” and they can make poor decisions if left to emotion during traumatic times.
In addition, according to the guide, “As we live in a world with a 24-hour news cycle, it is important to filter out the noise from the information [for your clients]. Making investing decisions based on noise can impact the clients’ long-term returns. Many factors [such as dramatic shifts in the market] can lead to a bubble-like environment. History shows us that a bubble can pop just as fast as it was created. Recognizing these factors can allow you to avoid investing into a bubble.”
Practices being established now, such as the use of technology to connect to clients, will accelerate even faster in the months and years to come, Beaman said.
“Think what the new technological tools advisors use will look like a year from now,” she said. Those tools will be far more advanced than what is available now, but “at the same time, face-to-face meetings will be even more impactful than they were in the past.”
Another trend established by the current chaotic environment is that advisors realize they need to talk to clients about their financial independence.
“Advisors are taking more time to go over clients’ financial plans to make sure they are staying focused on their goals and not just being reactive to the market changes,” she added. “If clients made decisions for the short term in March, they may have made some very bad decisions. This time is when advice is critical. The best advisors are looking holistically at wealth management for their clients.”
The value an advisor brings to a client is highlighted by things like the pandemic, she said.
“A financial plan is a living thing” that needs to be reviewed at critical times. Advisors know this now, “unlike 2008 when advisors just told clients to stay the course and wait it out,” Beaman said.