Being a trusted adviser


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  • NotesTop: Recent research on the Australian Advisory market by Huthwaite Asia Pacific provides real insight into what clients expect from their financial advisers.Is there anything on that list that is missing that you would expect to be there?Notice there is no mention of products or investment solutions or the highest returns.This illustrates that clients do not find investments, investment returns as important as adviser believe. So focus on things the client interested and that is himself Survey of 430 directors and senior managers across industries
  • So as advisers why do we spend so much talking about our products? Is it because that is what we have been trained to do and comfortable talking about?It is often part of our DNA but once in a discovery meeting actively listen to yourself are you talk too much
  • Concern – again stop talking and listen to the clientCandour – not making predictions about the markets or economyCompetence today is a great example where you as advisers are taking time out to obtain a detailed understanding of the investment solution you recommend to your clients. Compare this to New Ireland or Irish Life that email you a commission structure and key features document and off you go
  • This gives the client an understanding that you are really interested in his situation and the person to make a difference in their financial lives.Actively listen means being wholly present for the client not trying to think how you are going to respond, how much your going to earn or you need to email someone on your return to the officeIt is clear that advisers need to develop a thorough understanding of the client’s goals and objective, specific issues, history and circumstances. Advisers are often too busy looking in their "tool box" for sales strategies to really listen to clients and take time to understand what they really want to achieve.
  • As part of this first meeting you need to determine the clients risk profile. It very important to get it right.
  • A key concept that you must ensure the client understands and accepts. If you do not creating real trouble for you at a later stage
  • I find the GoldCore risk definitions very useful in this regard.Engage client in the conversation. Well Mr Client this is the historical returns and the best and worst return years. How much capital are comfortable losing in anyone year.
  • An example of this a retire with ARF ensure that you have 2/3 years cash, maintain 7/8 years in bonds and the balance in the growth assets.This will allow the client maintain the strategy in periods of high volatility.
  •  So how many of your clients called you up to sell their portfolios in 2002/2003 or in 2007 to 2009?It at times like this is where advisers can really add value , because people will make mistakes by selling low and buying high - and you're there as a professional to keep them from making those mistakes. Return 1.90% SD 15.75Get them to focus what they can control
  • NotesWe can provide this tools to you so you can generate your only analysis. Return 7% SD 16%
  • GoldCore Portfolio balanced portfolio returned 6.7% SD 6.96MSCI index performed 1.90%pa SD 15.75%
  • So when are the communication opportunities?Quarterly newsletters :GoldCore prepare a quarterly letter and you can white label and send it to your clientsSA : GoldCore prepare semi annual reports use this an opportunity to sit down with your clients
  • What is your value add?
  • Guaranteed return being misnomer or inaccurate name used in the fund management business. As we know from the recent crisis there is always risk with a counterpart that provides a guarantee even if it is a government Comprised of a derivative and a cash depositAviva launched a protected product with a AIB as the counterparty providing the guarantee
  • So how do we deal client that have been traumatised by the wall of fear, anger and regret that is perpetuated by media on a daily basis?Get the client to focus on what they control and dealing with the investment myths that have built up in recent years.
  • 1.2. There is a global recovery in place and your client need to know about it. A point that many clients find hard to understand from the burnt out bunker if the irish market.Positioning: The starting point for their investment strategy is the global equity markets p63 of the matrix book3. Client is setting himself guaranteed loss of 1%pa. How about 5/10 years? Do a monte carlo projection illustrate how long their capital will last if they keep it in cash.
  • Irish clients have had a terrible investment experience sold products they did not understand and now counting the costThe changing regulatory environment is a real challenge for the industry but also an opportunity to help clients minimise the damage it can cause to their wealth
  • Find out what is important to them. What they trying to achieve? Show them that you are concerned interest and ready to helpWould you be interested in setting up an appointment to find out more?As your trusted adviser we are constantly looking for better ways to service you. We are now in a position to provide you access
  • Being a trusted adviser

    1. 1. Being a Trusted Adviser Frank Mulcahy Senior Wealth ManagerCertified Financial Planner
    2. 2. What do clients want from their 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
    3. 3. In contrast the survey found the two biggest negativesfor a prospective client are that:• The financial adviser did most of the talking• The adviser already had a solution ready when they first met
    4. 4. 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
    5. 5. 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
    6. 6. Managing Expectation – Risk profilingWhy 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
    7. 7. Risk and return are relatedEducate the client on the relationship between risk and return GoldCore Strategic Portfolios
    8. 8. Understand the clients appetite for investment risk GoldCore Risk definitions
    9. 9. 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
    10. 10. How do you deal with clients during times of extreme market volatility? Performance of the MSCI World Index from 1999 to today
    11. 11. 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
    12. 12. The Benefit of time in the market------- MSCI World Index 1990 - 2011
    13. 13. Illustrate the benefit of a globally diversified approach ------ Strategic Balanced Portfolio 1999 – 2011 (50% bonds & 50% Real assets) ------- MSCI World Index 1999 - 2011
    14. 14. CommunicationCommunication is all important for any adviser but particularlyfor a fee based adviserIt is an opportunity to communicate the value you add to clientsfinancial lives• Quarterly newsletters• Semi-annual meetings• Lunch/Phone calls just to say hello – builds the relationshipSeparates you from the “product sale person” who only makecontact when a sale can be made
    15. 15. Communication (Cont)What value have you added to the client?It is all about delivering on your promises andcommunicating this to the client
    16. 16. Promise only what you can deliverWhat an adviser can deliver What an adviser cannot deliver• Clear investment process • Market outperformance due to alpha• Excellent service • Cost free advice• Regular contact • Guaranteed return• Being available for clients when • Protection from all world and life they need you events• Regular review of the strategy• Risk Management
    17. 17. 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”
    18. 18. Challenging Investment MythsCurrent investment myths“It has been a bad ten years for the equity markets”The GoldCore growth portfolio has returned 8.06%pa in the last10 years“It is a bad time to invest with so many risks”MSCI index of global stocks has returned 30.80% in 2009and 12.30% in 2010“Cash is a safe investment”What about inflation? Current cash deposit rates have a net yieldof +2%. Annual inflation of 3.2% as at April 2011
    19. 19. The Opportunity for Fee Based AdvisersNew 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
    20. 20. 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
    21. 21. Positioning• Independent advisory firm• Holistic approach to advice• Investment process• Academic approach to investing• Educate clients• Lower costs
    22. 22. There has never been a better or more important time to be a financial adviserYour clients need you to help them climb out ofthe bunker and work proactively on developing new long-term plans