A greater focus on the client makes for better business.
In today's increasingly complex world, consumers need quality financial advice more than ever. Yet many advice firms are struggling; overburdened by regulatory and compliance obligations that are making it difficult to scale their business and keep fees affordable, resulting in more work for not necessarily any more profit. Too often, these are the advisors that are failing to capture the opportunity to modernise their business in response to changing industry requirements and customer needs.
Successful advisors are overcoming these challenges by revisiting their firm's client value proposition and implementing more efficient systems and processes. Current market dynamics and changing regulations are prompting firms to turn towards overtly customer-centric business models, such as Goals Based Advice and Investing. This approach focuses on achieving customer outcomes by genuinely understanding each client's individual needs, rather than matching clients with a favoured product or risk profile.
Significantly, Goals Based Advice shifts the focus away from risk-based strategic asset allocation; an approach that seeks to maximise returns for an apparent level of risk tolerance. Instead, Goals Based Advice delves into a client's actual financial goals. It uses these to determine the appropriate asset allocation, with the capital actively invested to achieve each goal's target return within a specific time frame. This collaborative approach leaves clients with a meaningful financial plan based on their genuine needs and a clear road-map of how their goals will be achieved.
While it was not easy to scale a customer-centric business in the past, technology has made it possible to meet increased client expectations of efficient, transparent and personalised services with only subtle changes to the advice business’s philosophy. A common approach to best map client goals to portfolios is to outsource investment research, governance and execution via a managed account service, such as that provided by Dynamic Asset. Such changes can seem confronting to established advice firms, but ever-changing regulatory requirements mean the old way of doing business is no longer a feasible option, as it bogs advisors down in administration and compliance.
Meanwhile, outsourcing is often a far more efficient structure that solves many of the advisors' problems. It allows them to do away with a significant portion of compliance tasks and slash operational costs. Advisors are also freed from the need to research, implement and keep track of client portfolios. The result is more time and resources to properly service clients and develop deeper relationships, boosting retention and referral rates, as well as the ability to take on more clients to achieve scale, increase profit and add resale value to their business.
Other benefits include a stronger value proposition when associating with the 'right' managed account provider. Quality providers benefit clients by allowing them to tap into institutional-grade investment services that have previously been restricted to high-net-worth individuals. Furthermore, the right solution enables improved governance, as aligned portfolio solutions that directly meet clients’ needs allows advisors to demonstrate that they are clearly and effectively fulfilling their best-interests duty.
If you're ready to look to a better future and help your business succeed, contact Dynamic Asset today.
