being a trusted adviser
TRANSCRIPT
Being a Trusted Adviser
Frank Mulcahy
Senior Wealth Manager
Certified Financial Planner
What do clients want fromtheir financial advisers?
Respondents were asked what factors influenced them the most when they selected a financial adviser?
• “Focus on understanding my needs first” as the most important criteria
• A strong personal referral from an existing client
• Helps me understand my situation in a new way I hadn’t previously considered
Source: Huthwaite Asia Pacific
In contrast the survey found the two biggest negatives for a prospective client are that:
• The financial adviser did most of the talking
• The adviser already had a solution ready when they first met
What are the personal traits client expect from a trusted adviser?
e • Concern: focus on clients needs and not on your product and
services
• Candour: being honest, not pretending to know, and not exaggerating
• Competence: knowing how your services meet the needs of the client
How do you set yourself apart?
Clients are increasing shopping around before selecting an adviser. How do set yourself apart from the crowd?
Taking your client through your investment process
• A discovery meeting Fact find the hard and soft facts
• Let the client do the talking
• “Actively Listen” to the clients
• Confirm to the client you have understood
• Develop a strategy that meets those needs
Managing Expectation – Risk profiling
Why is getting a clients risk profile right so important?
• It is the foundation of the right investment strategy for the client• Builds confidence in your investment process• Compliance • Helps the client to stay invested/maintain the strategy• Clients have short memories and you need to regularly revisit this
conversation
Risk and return are related
Educate the client on the relationship between risk and return
GoldCore Strategic Portfolios
Understand the clients appetite for investment risk
GoldCore Risk definitions
Risk Profiling Other Considerations
• Ensure there is sufficient liquidity to maintain their lifestyle income
• What stage is the client in the lifecycle
• Use the results of the GoldCore risk questionnaire
• You now have a reliable basis to select the right portfolio for the client
How do you deal with clients during times of extreme market volatility?Performance of the MSCI World Index from 1999 to today
Get the client to focus on what they can control
• Asset allocation and rebalancing
• Putting in place strategies to meet their goals and objectives
• Patience – it takes time for the strategy to succeed
• Minimise costs and taxes
• Stop reading the financial press
The Benefit of time in the market------- MSCI World Index 1990 - 2011
Illustrate the benefit of a globally diversified approach
------ Strategic Balanced Portfolio 1999 – 2011 (50% bonds & 50% Real assets)------- MSCI World Index 1999 - 2011
Communication
Communication is all important for any adviser but particularly for a fee based adviser
It is an opportunity to communicate the value you add to clients financial lives
• Quarterly newsletters• Semi-annual meetings• Lunch/Phone calls just to say hello – builds the relationship
Separates you from the “product sale person” who only make contact when a sale can be made
Communication (Cont)
What value have you added to the client?
It is all about delivering on your promises and communicating this to the client
Promise only what you can deliver
What an adviser can deliver
• Clear investment process• Excellent service• Regular contact• Being available for clients when
they need you• Regular review of the strategy • Risk Management
What an adviser cannot deliver
• Market outperformance due to alpha• Cost free advice• Guaranteed return• Protection from all world and life
events
Managing Expectations
Headlines from the press
• “Bosses still downbeat on economic prospects”
• “The struggle to deal with the Greek crisis has major implications for Ireland”
• “Tough choices to be made on economy”
• “Bankers escape punishment and then hound customers”
• “We can be the new Argentina”
• “When will our money run out?”
• “Another Anglo mess to be unravelled?”
• “Bankrupted by the bailout”
Challenging Investment Myths
Current investment myths
“It has been a bad ten years for the equity markets”The GoldCore growth portfolio has returned 8.06%pa in the last 10 years
“It is a bad time to invest with so many risks” MSCI index of global stocks has returned 30.80% in 2009 and 12.30% in 2010
“Cash is a safe investment”What about inflation? Current cash deposit rates have a net yield of +2%. Annual inflation of 3.2% as at April 2011
The Opportunity for Fee Based Advisers
New Clients
• Existing Commission/distributor structure is broken as it has failed clients
• Major players credibility has been damaged, they did not understand risk and return
• Clients are looking for answers
• Changing regulatory environment
The Opportunity for Fee
Based Advisers (Cont)Existing Clients
• Rediscover your existing clients
• As your trusted adviser we are constantly looking for better ways to service you. We have developed a new investment/planning process that is adding significant value to our clients
• Call to action and make the appointment
Positioning
• Independent advisory firm• Holistic approach to advice• Investment process• Academic approach to investing• Educate clients• Lower costs
There has never been a better or more important time to be a financial adviser
Your clients need you to help them climb out of the bunker and work proactively on developing
new long-term plans