Financial advisory firms occasionally sponsor a client appreciation event to express their gratitude for their clients’ trust and to reinforce the value of each relationship. Such events are also a good way to generate referrals as the invite usually encourages the client to “bring a friend.” Furthermore, the current trend towards a more digital client experience with less human interaction might actually increase the uniqueness and value of such an event.
Competition for the coveted high-net-worth (HNW) client is at an all-time high due to increased transparency and a growing level of sophistication among younger, affluent professionals. In an effort to challenge yourself as to how valuable you are verses the competition, ask yourself what would prompt your clients to throw a little appreciation party on your behalf?
What can the professional investment advisor do that would exceed client expectations and compel their appreciation?
The Basics. In the category of simple basics, there’s that staple of relationship management—personal contact. It may be “hand holding” for loyal clients or crisis management to salvage those relationships that might otherwise leave. In either case, advisors should seek to prevent investors from making the most common investment mistakes: selling out at the bottom of a market cycle or holding concentrated positions in beaten down sectors or industries hoping for a comeback.
All well and good, but as a consumer of financial services, the savvier client today has a higher standard. In addition to reassurances and helping avoid common pitfalls, the sophisticated HNW client more acutely appreciates the value of investment advice delivered with factual, content-rich explanations even if delivered via e-mail or in a FaceTime format. As part of that comprehensive advice, they want solutions that focus directly on their particular situations.
Coordinate For Value Add. Collaborate with your client’s other financial professionals, such as an attorney or CPA, in proposing a more comprehensive approach to solving the client’s wealth management issues. Take on the role of leading the team towards the goal of designing and implementing a personalized solution—the mainstay of the new wealth management paradigm. The team of professionals will appreciate the plan’s inclusion of estate planning, long-term care for parents, philanthropy, ESG considerations and, of course, tax implications.
Having grown up in an age where Madison Avenue has spent millions of dollars convincing baby boomers and millennials that they are the center of the commercial universe, the client will appreciate your proactive, customized approach. Because, after all, “It really is all about me.”
Incorporate Separately Managed Account Solutions. If your value proposition is mainly based on providing an asset allocation model comprised of ETFs, you will eventually feel price compression. The more successful Vanguard, Schwab and other “robo advisors” are at marketing their service, the more pressure there will be on your fee. Providing an actively tax managed, diversified, custom equity portfolio is easier than you might think. Today, you can implement a separately managed account solution that features customization, low fees and allows a measure of control over tax liability. Simply slotting a client into an asset allocation model comprised of ETFs will hardly justify an Advisor Appreciation Day, especially if the client is forced to liquidate existing, low cost basis positions to do so.
Control The Controllable. To exceed client expectations in today’s volatile market, advisors should seek to control those elements which can be controlled. This may seem like an intangible concept to the investor, but it can bring about tangible benefits to his or her wealth plan. Two elements in particular stand out: individual customization and comprehensive, proactive tax management.
For example, a client holding large unrealized gains will particularly appreciate a plan to avoid a hefty tax bill by retaining those existing positions and customizing the core equity exposure around them. Formulate a strategy to harvest losses from market declines to offset unrealized gains that would be incurred by reducing a concentrated position from legacy or company stock. Use the proceeds to diversify core equities over a defined period. Taxable losses can also be used to offset gains outside the portfolio.