It is no longer sufficient for financial advisors to simply offer quality advice; this is now the new benchmark, with consumers demanding more personalised services and advice that is transparent and easy to understand. Not to mention the ever-higher compliance and ethical standards imposed by regulators. Advice firms need something more to differentiate their services and stay competitive.
Those that are succeeding in this demanding environment are focused on developing trust, being transparent and, of course, operating professionally – three common features that clients say they value when choosing a financial advisor. This, combined with an approach that addresses the individual needs of each client, allows advice firms to develop a superior client value proposition that distinguishes their offer in a meaningful way.
A method that unites these elements in one streamlined approach is goals based investing, which entails uncovering each client’s short and long-term financial goals and using these to formulate their investment strategy. The process itself develops trust, as the advisor truly understands the client’s needs. It also allows them to showcase the value of their advice by demonstrating how the resultant investment plan will help realise the client’s goals within the required time frame.
Commonly, a goals based investment approach is implemented via a managed discretionary account structure, which makes it possible to apply dynamic asset allocation. This is vital if clients are to meet their investment goals and aims to reduce portfolio volatility while moving in and out of assets in response to market conditions – something that is extremely difficult to achieve via a fixed strategic asset allocation.
At the same time, managed discretionary accounts offer full transparency. Clients remain the beneficial owners of the assets, which means they are able to see where their money is invested and the progress that is being made towards their goals at any time.
Advisors often find that partnering with an expert investment manager to help with the investment function of their business complements goals based investing, which necessitates true diversification beyond the traditional stocks, property and bonds asset allocation to ensure client’s investment goals can be met; a unique proposition that will differentiate your practice. For instance, returns may be sought from alternative assets and various strategies, that are uncorrelated to traditional markets, which many consider face a challenging outlook.
Partnering on this critical aspect of the financial advice process facilitates superior portfolio management, increases professionalism and helps to set the advice business apart from the competition. Moving away from product-based advice also eliminates the need to overload clients with complex details and confusing jargon.
Branding your business as one that engages goalsb ased investing makes it easy to articulate how the services you provide align with your client’s needs and add value.
Contact Dynamic Asset today to find out how improved client outcomes will help your advice business thrive.
