Out of these markets—opportunities for a ‘new’ kind of advisor

In the small city where I live, a major Canadian investment firm has opened a new office. The full-page ad in our local paper focuses on the experience of the two new “wealth advisors” at the firm and their willingness to provide a review of your portfolio.

“If you are not happy with the returns that you have received, we would like to sit down with you,” the ad read.

These advisors aren’t the first to promote that they provide a better investment alternative than others in the marketplace. In fact, one large national firm has used the idea of a “second look” as the foundation of its marketing campaign. The message: You may not have had the best investment advice; we think we can do better.

This is an opportunity for advisors to market their value to scores of disaffected clients, but I am not convinced that those clients are looking for a different version of what they already have. In fact, from a business development perspective, your ability to provide investment advice has diminishing appeal to consumers.

“Now hang on,” you might say. “There has never been a time when so many need a fresh look at their investment portfolios and retirement nest eggs.”

I couldn’t agree more, though I would also suggest that there has also never been a time when so many needed a comprehensive look at their entire financial situation, not just advice about how to reverse or stop their investment losses.

Advisors everywhere have a common problem: through no fault of their own, their ability to provide sound investment advice has suffered. To make matters worse, a jaded public no longer believes in the superiority of one investment advisor over another.

The challenge all advisors face today isn’t how to become a better investment advisor; it is how to be a different kind of financial advisor and market that approach to current clients, prospects and centres of influence.

Redefining the role

We are on the verge of a paradigm shift in the financial advice industry, one that will redefine what professional, trusted financial advisors do, how they market their value and what clients will come to expect in the future.

This shift has been accelerated because of volatile and shaky investment markets, but it is the aging consumer who needs different advice that is the primary catalyst of this shift. For the past decade, we have seen a move on the part of our industry to tie financial advice to life stages and transitions, and away from straight investment management.

I have always called this the life planning approach because it respected the idea that financial planning is the method by which clients facilitate life planning. Clients don’t have financial dreams, financial goals and shoot for financial success — except when they are sitting in their advisor’s office talking about such things.

When the clients leave the advisor’s office, those financial goals become life goals. The life planning approach simply acknowledges that the advisor becomes an expert on the client’s life.

The life planning approach has morphed into “wealth management,” which in my view is not about managing money at all. “Wealth” is your clients’ ability to do what they want, when they want and how they want. A wealth advisor, therefore, is the person who can help them define those goals and help them access the appropriate means to accomplish them.

If that sounds like good old-fashioned financial planning, it is, but with an important difference: the wealth advisor uses his or her experience and education to be the client’s primary financial advisor but also states clearly that he or she is actually taking on that role.

In short, it is important to be a wealth advisor. It is equally important to be seen to be a wealth advisor and not just an investment advisor.

As a result, wealth advisors, by my definition, would not market their investment decision-making abilities as their sole or main value proposition. In true wealth management, access to investment expertise is only one part of the service offering — it is no more or less important than protecting the client’s lifestyle and family. Advisors who take this position present clients and prospects with a unique service offering that is a clearly stated alternative to what other advisors offer. In this marketplace, being a “new” kind of wealth advisor means a redefinition of what advisors are supposed to do for clients.

Rewriting the ad in my local paper

For the two wealth advisors who are trying to start a new practice in my city, I offer this advice. Don’t market that you are investment advisors, market that you are wealth advisors and then spell out what that means.

Tell your marketplace that you have a unique approach to providing wealth management advice, one that focuses on how you work with clients to clarify their life needs, goals, concerns and opportunities. Then tell them that you will work with them in all parts of their life to make sure that they have the right financial strategies in place.

Your role as their wealth advisor is to help them enjoy their lifestyle, help their family, provide for the future, create financial comfort and build a legacy. That is what makes you different.

The ‘new’ wealth advisor

1. The wealth advisor specializes in understanding the client, instead of specializing in insurance, investment management, tax planning, etc.

2. The wealth advisor is the client’s primary financial advisor, supported by a team of experts in the areas that the client requires, and markets himself or herself as such. The advisor’s marketing tools — websites, brochures and seminars — all support this position.

3. The wealth advisor focuses on the client’s life issues, concerns and opportunities first, rather than on specific products.

4. The wealth advisor becomes an educator, mentor, coach and catalyst in helping the clients tie life issues to financial resources and strategies.

5. The wealth advisor has a discovery process in place that will systematically and effectively help everyone understand the issues that will be important to the client.

Barry LaValley, president of LifeFirst Approach [www.lifefirstapproach.com] and leading educator in the life planning approach to financial planning used by the “new” wealth advisor, has more than 30 years of experience working with advisors in Canada and the U.S.

(03/19/09)