We Know Clients Love "Holistic" Advisors, But What Does That Mean?

By Scott Martin, Senior Editor, thetrustadvisor.com on Tuesday, March 13th, 2012

It’s one thing to divide the industry into advisors who give their clients a 360-degree view and those who don’t. Positioning yourself as one of the must-have relationships takes a little more work.

At this point, everyone in the wealth management business is aware that investors would rather work with an advisor who exceeds the minimum expected level of service.

As ByAllAccounts and the advisor benchmarking gurus at Paladin Registry discovered a few weeks ago in a national survey of investors, clients are increasingly inclined to move their assets if they find an advisor who goes an extra inch, much less an extra mile.

Client loyalty isn’t necessarily a dead concept, but you wouldn’t know if you were one of the many wealth managers who’s gotten used to simply allocating the assets they’re given and maybe updating the financial plan once in awhile.

ByAllAccounts and Paladin found out that 60% of clients are getting a “holistic” view of their total holdings from their current advisor.

Getting beneath the buzzword

“Holistic” can be an empty buzzword like “value-added” or “full-service,” but here it has a very specific meaning: “holistic” advisors monitor and report on all of their clients assets, even if they don’t actively manage that money.

That means 401(k) plans and other retirement accounts, trust accounts, college saving vehicles and even wealth managed by banks and rival advisors.

With 60% of all advisory clients currently getting this level of service, it really isn’t exotic or bizarre, says ByAllAccounts CEO James Carney.

“Before we came onto the scene there were firms doing this manually,” he explains. “But it was a time-intensive, error-prone and expensive process.”

Now, however, modern account aggregation technology has turned that process from a perk to a virtual necessity.

Put yourself in the shoes of the 40% of clients who have to compile their own statements every quarter in order to get a sense of their overall financial picture.

Even if the 360-degree view didn’t offer them a better shot at achieving their goals -- which it does -- it definitely makes life a lot more convenient.

And when they see how happy their friends in the holistic 60% are, they’ll be eager to switch to the first advisor who treats them as more than a commoditized slice of AUM.

Positioning yourself as the holistic advisor

The first litmus test, Carney says, is extremely simple. Advisors who want to stay relevant to today’s industry mainstream need to at least offer to monitor their clients’ holdings, whether they personally manage those accounts or not.

Most investors faced with that offer will accept.

If they don’t, Carney points out, you probably have deeper problems with that client anyway and should consider writing him or her off.

“If you have a client who doesn’t want you to see the retirement account and the bank accounts, ask yourself whether this is truly a good fit who is going to stick around for the long term,” he explains.

“You don’t want to be just a piece of the action any more than the client does. Someone invested in doing it himself or herself is not really invested in building a relationship with you.”

From there, it’s relatively easy to bring in the data feeds that let you monitor outside accounts and adjust your allocations to match what the client has going on out there.

The crucial thing is reporting back to your client with what you’re learning about the big picture.

After all, you can tweak portfolios around the clock and squeeze out an extra percentage point or two of overall performance, but the real goal is demonstrating how indispensable you are.

The more accounts are in play, the more chances you have to get in touch with advice, Carney says.

“They’re paying somebody to actively watch these accounts, so let them know what you’re seeing,” he explains.

These updates can easily become the springboard for other types of conversation.

Maybe you’ve noticed that a 401(k) is rolling over, which is a great time to suggest taking on active management of the IRA assets.

Maybe you’re seeing a lot of big checks moving through the bank accounts. Is there anything you can do to smooth your client’s cash flow needs?

And if assets are accumulating ahead of schedule, now’s the time to set up a meeting and establish yourself as the advisor who made your client’s dream come true.

That’s the biggest win of all, because with a winning outcome like that, you can bet that client is going to brag about you to everyone he or she knows. 

You Might Also Be Interested In:

comments powered by Disqus