But, like AdvicePeriod, you can adapt to the new realities of the advisory market by giving your clients something that apps and robos can’t: Advice. Period!
Here are seven strategies AdvicePeriod used to rapidly grow its business.
1. Advise clients on all their assets, not just the ones you directly manage. “Oftentimes, we're able to advise clients on assets that are managed elsewhere, assets that are in the form of a business or real estate,” said Larry. “We found over the years that clients were really seeking an advisor who could offer them advice on their entire balance sheet, and all of their liabilities, regardless of where they were custodied. We believe the best advisors are able to do just that.”
Larry has found that what really matters to clients are aspects of their wealth that, traditionally, financial advisors wouldn’t touch upon: business, family, education, philanthropic goals, lifestyle plans that stretch into retirement. You can rebuild your relationship with your clients around these life-centered planning pillars, and create revenue streams that supplement, or even replace, your traditional 1 percent AUM fee.
2. Advise clients on non-financial assets, too. That starts with becoming more comfortable with discussing “touchy-feely” issues that didn’t used to fall under the client-advisor relationship. That might take some getting used to if you’re happiest moving numbers around a spreadsheet, but these new conversations about financial planning and retirement are going to be the cornerstone of financial advice: the service that retains your clients, attracts new ones, and ultimately helps you grow your business.
3. Be extremely transparent in how you price and discuss your fee. “What we've done is we've itemized each piece of the value chain and said that it's worth a certain number of basis points, and we're very transparent with our clients,” said Larry. “We tell them what each of those categories are, asset allocation, manager selection, client complexity, estate planning and what we think it's worth paying for.” The AdvicePeriod model hasn’t entirely done away with asset allocation and the relevant fees, but Larry’s team believes that client portfolios are now just one part of a bigger, and potentially, more profitable picture. “These days, you can Google and find really good asset allocation, or you can go to Vanguard, Fidelity, Betterment, and get one for a few basis points,” he notes. “We help our clients with asset allocation, but we just don't think it's worth very much. And so that bucket has a very low fee ascribed to it.” Ultimately, advisors need to start focusing on making sure clients agree that it’s worth paying for professional advice in these areas.