The “new” wealth advisor — from transaction to transition

An advisor friend of mine decided not long ago that he was no longer going to sit back and feel paralyzed by the markets. His firm put out a “buy” list of companies that were trading at exceptional values, and he felt that he could generate some activity by phoning all of his clients to share the research. This campaign was done over the course of a week. After more than 100 phone calls to everyone he could think of, he gave up in disgust and went back to staring at his computer screen.

Being “client-focused” means the advisor puts him- or herself in the client’s shoes and tries to understand what that client is thinking. Today’s volatile and challenging times are having a great impact on the client’s life. Investment markets are not the only worry for Canadians; job security, the ability to maintain lifestyle and reaching future goals such as retirement security are all concerns as well.

My advisor friend might have been more successful in generating conversations with clients if he spent his time conducting a life checkup with them. Rather than pitching another investment idea, he could have said to clients, “This is a perfect time for us to sit down and talk about where you are today and how your plans have been affected. I am doing this with all of my clients because we need to ensure that your plans reflect today’s reality.”

The resulting conversation could have concentrated on all of the client’s life issues, concerns and opportunities and how he or she is affected by the economic uncertainty. Out of this would likely come some portfolio adjustments, new strategies to handle plan changes and other opportunities to be of service to the client.

I call this “client rediscovery.” Uncertain economic times are a catalyst and opportunity to conduct a complete financial checkup, update clients on their portfolios and show them you are interested in how they are being affected by the current climate, not just in how their money is faring.

Today’s economic restructuring has, on its own, affected many of the life transition issues that clients face: family choices, job or workplace changes, health issues and retirement are just some of the life transitions that have felt the impact.

This presents a unique and valuable opportunity for financial advisors to reposition their value proposition with clients and hold themselves out as “new” wealth advisors.

Positioning yourself as a transition advisor

The new wealth advisor is really a life-transition advisor. Your role is to help your client plan financially for the expected and unexpected life transitions that may occur in the future.

A life transition incites clients to rethink where they are, where they want to be and where they are going. Most financial planning issues address those life transitions.

This is actually a very different position than the one most advisors take, even if they consider themselves to be comprehensive financial planners.

Don’t panic. No one expects you to be a psychologist or sociologist or to move beyond your natural role as a financial advisor and planner. You are acknowledging that life transitions are important to the client. Your role is to recognize planning issues and help clients understand the related financial implications.

After all, isn’t this what financial planning is all about? Rather than being an exercise in helping the client set and reach financial goals, wealth advice starts with life issues and then wraps a financial strategy around them.

Your marketing position isn’t that you are a financial planner; you are an advisor who uses financial planning to facilitate life strategies and life changes.

In some cases, the strategies will be more focused on managing the client’s nest egg through effective investment management. The purpose of managing a nest egg is to ensure that it continues to meet the client’s present and future life goals. In others, a main strategy might be to find ways of protecting the client’s lifestyle and family or to look after loved ones when the client may no longer be able to do so.

The transition advisor would never say, “I am an investment advisor, but I can do other things too” or “I am an experienced insurance advisor, but we also sell savings products.” Instead, advisors might say they focus on understanding the client’s life situation and use their experience, expertise and sometimes the expertise of additional professionals, to find the right solutions.

Helping my friend develop business in trying times

My advisor friend has a well-developed book and has always been thought of as an investment advisor. In fact, everything he has done to market his practice reinforced the fact that he is the expert on portfolio management and investment. His current, unsuccessful campaign to generate more investment activity simply underscores what clients already think he does.

That said, he has every reason to call his clients to find out how they have been affected by this recession. Most clients would understand why this is so important — they likely think a lot about their life issues every time they watch the news.

Because this is so important, a face-to-face meeting is the best format for this discussion. A meeting gives the advisor an opportunity to redefine his or her role in the client’s life. From a marketing standpoint, it also ensures that the client receives the message.

If my friend uses a meeting to explore how the various areas of a client’s life have been affected and explains to the client that this understanding is necessary for him to provide value by ensuring that he is using all of the resources at his disposal, he moves the discussion away from investment markets toward life issues and planning.

Gaining an understanding of where the client stands today and tomorrow is a very good foundation for redefining the advisor’s value proposition and opening up new areas of discussion that don’t focus simply on investment management.

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. Watch for his upcoming advisor workshop series on how you can become the “new” wealth advisor, presented by the Canadian Securities Institute.

(04/16/09)