Being a trusted adviser
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Transcript of Being a trusted adviser
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Being a Trusted Adviser
Frank Mulcahy
Senior Wealth Manager
Certified Financial Planner
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What do clients want fromtheir financial advisers?
Respondents were asked what factors influenced them the most when they selected a financial adviser?
• “Focus on understanding my needs first” as the most important criteria
• A strong personal referral from an existing client
• Helps me understand my situation in a new way I hadn’t previously considered
Source: Huthwaite Asia Pacific
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In contrast the survey found the two biggest negatives for a prospective client are that:
• The financial adviser did most of the talking
• The adviser already had a solution ready when they first met
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What are the personal traits client expect from a trusted adviser?
e • Concern: focus on clients needs and not on your product and
services
• Candour: being honest, not pretending to know, and not exaggerating
• Competence: knowing how your services meet the needs of the client
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How do you set yourself apart?
Clients are increasing shopping around before selecting an adviser. How do set yourself apart from the crowd?
Taking your client through your investment process
• A discovery meeting Fact find the hard and soft facts
• Let the client do the talking
• “Actively Listen” to the clients
• Confirm to the client you have understood
• Develop a strategy that meets those needs
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Managing Expectation – Risk profiling
Why is getting a clients risk profile right so important?
• It is the foundation of the right investment strategy for the client• Builds confidence in your investment process• Compliance • Helps the client to stay invested/maintain the strategy• Clients have short memories and you need to regularly revisit this
conversation
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Risk and return are related
Educate the client on the relationship between risk and return
GoldCore Strategic Portfolios
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Understand the clients appetite for investment risk
GoldCore Risk definitions
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Risk Profiling Other Considerations
• Ensure there is sufficient liquidity to maintain their lifestyle income
• What stage is the client in the lifecycle
• Use the results of the GoldCore risk questionnaire
• You now have a reliable basis to select the right portfolio for the client
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How do you deal with clients during times of extreme market volatility?Performance of the MSCI World Index from 1999 to today
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Get the client to focus on what they can control
• Asset allocation and rebalancing
• Putting in place strategies to meet their goals and objectives
• Patience – it takes time for the strategy to succeed
• Minimise costs and taxes
• Stop reading the financial press
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The Benefit of time in the market------- MSCI World Index 1990 - 2011
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Illustrate the benefit of a globally diversified approach
------ Strategic Balanced Portfolio 1999 – 2011 (50% bonds & 50% Real assets)------- MSCI World Index 1999 - 2011
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Communication
Communication is all important for any adviser but particularly for a fee based adviser
It is an opportunity to communicate the value you add to clients financial lives
• Quarterly newsletters• Semi-annual meetings• Lunch/Phone calls just to say hello – builds the relationship
Separates you from the “product sale person” who only make contact when a sale can be made
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Communication (Cont)
What value have you added to the client?
It is all about delivering on your promises and communicating this to the client
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Promise only what you can deliver
What an adviser can deliver
• Clear investment process• Excellent service• Regular contact• Being available for clients when
they need you• Regular review of the strategy • Risk Management
What an adviser cannot deliver
• Market outperformance due to alpha• Cost free advice• Guaranteed return• Protection from all world and life
events
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Managing Expectations
Headlines from the press
• “Bosses still downbeat on economic prospects”
• “The struggle to deal with the Greek crisis has major implications for Ireland”
• “Tough choices to be made on economy”
• “Bankers escape punishment and then hound customers”
• “We can be the new Argentina”
• “When will our money run out?”
• “Another Anglo mess to be unravelled?”
• “Bankrupted by the bailout”
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Challenging Investment Myths
Current investment myths
“It has been a bad ten years for the equity markets”The GoldCore growth portfolio has returned 8.06%pa in the last 10 years
“It is a bad time to invest with so many risks” MSCI index of global stocks has returned 30.80% in 2009 and 12.30% in 2010
“Cash is a safe investment”What about inflation? Current cash deposit rates have a net yield of +2%. Annual inflation of 3.2% as at April 2011
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The Opportunity for Fee Based Advisers
New Clients
• Existing Commission/distributor structure is broken as it has failed clients
• Major players credibility has been damaged, they did not understand risk and return
• Clients are looking for answers
• Changing regulatory environment
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The Opportunity for Fee
Based Advisers (Cont)Existing Clients
• Rediscover your existing clients
• As your trusted adviser we are constantly looking for better ways to service you. We have developed a new investment/planning process that is adding significant value to our clients
• Call to action and make the appointment
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Positioning
• Independent advisory firm• Holistic approach to advice• Investment process• Academic approach to investing• Educate clients• Lower costs
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There has never been a better or more important time to be a financial adviser
Your clients need you to help them climb out of the bunker and work proactively on developing
new long-term plans