A Divided Mind – Should The Markets Drive Your Value as an Advisor? Jonathan Bentley, Managing Director, Head of Content Coming off a volatile year in the markets, we are revisiting one of the most basic questions in the advice business: How do you define your value? While advisors commonly claim to have high service standards of anchoring their value in how well they know and communicate with their clients, we’ve come across several internal client surveys that contradict these statements. The claims seemed to be more aspirational than actually true. The research reveals findings of wealth managers believing that the industry’s service quality trails far behind other high net worth (HNW) service providers. Comparing the usual way that wealth management is delivered against the common practices among other types of service providers serving this same demographic, this research suggests that wealth managers are actually somewhat inconsistent. We believe that advisors have a different fundamental value proposition in different circumstances. When securities markets are strong, leading to consistently positive absolute returns, advisors tend to focus more on the investment returns themselves (alpha) as their primary value. However, when market prices are weak, they tend to re-focus their value proposition to the personalization of portfolio composition and their personal knowledge of the nuances a client risk tolerance. Reacting differently toward different situations may be a good approach, but in our opinion, we think it is a mistake. Advisors need to learn from successful luxury brands and related non-financial high net worth (HNW) service providers know what your true value is and develop it to best practice standards of excellence. In this case, the best practice would be the decision to not shift with the winds of market conditions. Once an advisor has settled on how they want to position their firm with clients, it is critical that all the firm’s communication delivers and supports that message. The most important place that this is reflected is through the firm’s client reporting. The type and structure of client reporting can be considered as one of the most concrete representation of what an advisor’s value proposition really is. For wealth management, reports offering more general asset context and forward projections while for a more Alpha derived positioning, reports that show more granular performance analysis and benchmarking. In the past, advisors could only create customized client reporting with their paper reports. Web-reporting was constrained with the concept of “one-size-fitsall” due to the cost and complexity of programming a screen design. With the flexibility that InvestCloud’s apps bring, customized client reporting is now easily
attainable. Firm’s data-reporting web screens can be as customized as any paper report now. Despite being easy to use, it is also cost-effective. Advisors can now tailor their reports for not only different strategies and products, but also for different client groups. This revolution in report customization is going to open the doors for progressive advisors to differentiate themselves in way never before possible. It will allow even smaller advisors a cost effective way to offer their clients a highly custom reporting experience. For larger advisors it will allow tailored reporting for different products types and strategies. For any independent firm, it will give them more competitive leverage against the global banks and wirehouses with which they compete. For more information about the InvestCloud Apps and our amazing ability to customized client reporting, visit us atwww.investcloud.com or click here to request a demo. Jonathan Bentley leads InvestCloud’s content development and management division. From helping advisors better craft and deliver their stories to curating customized advisor RSS site feeds, Jonathan’s team is critical to InvestCloud’s bespoke design and site management services. Jonathan was previously founder and CEO of LightPort Inc, which merged with InvestCloud in 2013. Previously a practicing RIA, while at LightPort, Jonathan was involved in developing web portals for more than 500 advisors and money managers. Asset management cloud, investment management cloud. John Wise, InvestCloud, Data warehouse 3.0, Advent Geneva, cGeneva, “Programs writing programs”, “PWP”