The world today is ruled by clients. Clients, customers, consumers; call them what you may. Never before have clients had so much access to information, or been so highly empowered to make informed purchase decisions. This requirement is the new norm for adviser-client retention and business growth.
It is also true that today, customers have never been so confused or unsure of who to trust. All of the information, some of it clouded by misinformation, is hard to wade through. Moreover, corporate and industry misbehaviour has undermined customer confidence in institutions and the traditional sales approach.
Technology is fuelling disruption, changing the way we solve problems, find things we need, buy, travel and communicate. Clients expect to be understood and for every interaction with a business to be relevant to them and them alone.
In the field of financial advice and investment management, this is as true or truer than in any other industry.
Be completely client-centric
The answer is to become client-centric. So, what is it to be client-centric? The old view was to offer high levels of customer service. Today that is necessary but not sufficient.
To be client-centric is to understand your client’s needs and expectations. To help them with information that allows them to understand the category and your services. To provide services that are designed to match their unique needs. They need to be able to understand the benefits of the services they receive. Also, service delivery must be painless and straightforward.
Focus on the client's goals
Goals Based Planning is, by its very definition, client-centric. That is, everything is focused on helping the client meet their needs and expectations. This is what planners have always advocated, and it is simply common sense. Focusing on goals not only aligns your advice with what matters to the client, it changes the role from that of investment manager to strategic adviser. It's a more valuable proposition.
Align investing with goals
Where the advice industry has been let down is through the legacy issues of institutional products not matching up with clients needs and expectations. Moreover, as the Hayne Royal Commission demonstrated, the distribution method has been far from focused on clients and their needs. However, it doesn’t need to be that way.
While it’s true that many advisers have incorporated elements of Goals Based Planning into their client interactions, they are missing the vital ingredient – the alignment of portfolio objectives with goals. Goals Based Investing uses Dynamic Asset Allocation (DAA) to actively steer the investment and portfolio towards achieving the client’s financial goals at a defined time. The aim is to undertake portfolio management in such a way as to minimise portfolio volatility along the path to the goal while improving the likelihood of superior risk-adjusted returns.
Goals Based Investing with an absolute returns objective, using Dynamic Asset Allocation, fits hand-in-glove with Goals Based Advice. It is, at its very core, a customer-centric solution. After the adviser has helped the client define their financial goals and specific timeframes, portfolio management applies a suitable mix of portfolios to target specific risk/return objectives. This approach is tremendously reassuring to people because everyone loves to be understood and understand what is going on. It also gives the planner the appropriate tool kit to advise investment solutions designed to precisely match the investment goals precisely.
Gain from a Managed Account solution
Goals Based Investing requires an active and sophisticated approach to portfolio management. Typically, a more extensive set of asset classes are utilised dynamically to balance risk and returns. This approach requires the constant focus and skill of a specialised investment manager to execute effectively.
Goals Based Investment portfolio services, such as those provided by Dynamic Asset make Goals Based Investing accessible and practical for financial advisers. The adviser works with the client to set the goals, then allocates investments to specific Goals Based Portfolios that provide the correct targets for income, growth, risk and timing.
Making it work in practice
- The adviser works with the client to set rational financial goals
- The adviser allocates the investments into a portfolio mix that aligns with the client’s financial goals
- Dynamic Asset actively manages the portfolios towards the targets
- The adviser reports to the client on the progress of their investments against their individual goals
- Changes are made as their life circumstances changes or in response to market conditions.
- Rinse-and-repeat.
How advisers can be more compelling
- Setting financial goals that are aligned with a client’s actual needs is a more logical starting point to the arbitrary allocation of risk profile settings.
- The client’s investments are managed actively by a specialised portfolio manager with the time and skills required to operate the more complicated process. Again, this is entirely logical and easily understood by every client
- Review meetings with clients are focused on their needs, circumstances and goals. The conversation focuses on the progress of the portfolio towards their goals, rather than an explanation of complex market dynamics and investments. Once again, this is logical and readily understood
The key ingredients of an entirely client-centric business are all there for advisers who choose to evolve with the times and deliver a better advice experience and outcome.
- The client feels better understood
- The investment solution is specific to their needs and goals
- The client achieves a greater understanding of the investment approach, which improves investor confidence
- The client service process is more focused and simple
Being focused on clients is more important today than ever before. It is the key to greater client satisfaction, referral and new business acquisition. For financial advisers and financial planners, Goals Based Investing offers a compelling change in these times of heightened client expectations.
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- What to expect from Goals Based Investing
- Managed Investment Services for the New Breed of Financial Adviser
