A failsafe way for financial advisors to attract, gain, and maintain clients is by providing great returns for their clients’ portfolios. After all, that is why clients are willing to pay for financial services — to earn greater returns than they could on their own.
However, maximizing portfolio returns is only part of the reason why investors choose to stay or break up with their advisors. For many, the quality of the services rendered and their relationship with their advisor are just as, if not more, important than the returns earned.
A recent client survey found investors had fired a previous advisor because:
- 32% were unhappy with the quality of financial advice and services.
- 21% were unhappy with the quality of their relationship with their advisor.
- 11% were unhappy with their returns.
How can advisors maximize client returns and, at the same time, improve the quality of services and relationships? Let’s dive into three strategies financial advisors can implement.
1. Understand Their Investing Style and Risk Tolerance
The first way to maximize your client-advisor relationship (and their portfolio) is to sit down and listen to your client’s financial goals. You’ll want to assess things like your client’s risk tolerance levels, current cash position, and where their investment portfolio currently stands. Here are some questions to get you started:
- What are your financial objectives? Do you have any short- or long-term financial needs, such as saving for retirement, education, or big purchases like buying a home?
- What is your investment time horizon? How quickly do you expect returns? What would success look like to you?
- What is your risk tolerance level? How aggressive have your investments been in the past? What is your preferred investment style and mix?
Diving into these questions when you bring on a new client and regularly with existing clients can help set you up for success when it comes to structuring (or restructuring) your client’s investment portfolio. As times change, your client’s investment strategies and preferences may change. By building trust through listening, you can set a solid foundation to work on over the years, even when portfolio returns or market conditions may not be ideal.
2. Diversify Effectively
Next, maximizing your client’s portfolio and returns comes down to effective and intentional diversification. Now that you know your client’s goals and investment preferences, you can create a diversified mix that is right for the objectives you both want their portfolio to achieve. The goal behind diversifying is to ensure no single asset class has an undue influence on overall performance (positive or negative).
You can start by looking deeper into diversifying client portfolios across:
- Asset class (treasuries, equities, bonds, commodities, and alternatives)
- Industries
- Geographic regions
- Investment style
After their portfolio is diversified, it’s key to continuously monitor and rebalance your client’s investment mix to manage risk exposure, adjust to changing market conditions, and maintain integrity with their investment goals. Doing this builds client confidence in your ability to manage and maintain their portfolio performance.
3. Stay on Top of Trends and Communicate Regularly
Perhaps the most crucial aspect of maximizing client portfolios (and their trust) is to make sure you take on the role of a trusted advisor in their eyes. What does that mean? Proving through frequent communication that you are well-researched on strategy, informed on current events, and are proactively monitoring their portfolio to ensure maximum returns. In other words, becoming a thought leader for your clients.
How to become a financial advisor thought leader:
- Stay informed: Make sure you’re staying on top of market trends, economic indicators, and regulatory changes that may impact your client’s returns.
- Be flexible: As market conditions change, adjust your strategy accordingly (here’s where your diversified portfolio comes in).
- Be transparent: Most important of all, educate and communicate with your clients often. You could regularly share updates on portfolio performance, market developments, and recommendations on investment strategy.
Becoming a thought leader for your clients builds trust in your ability to successfully execute for their portfolio. And proactive communication will help them feel more secure in your capabilities, even during a downturn.
To summarize, maximizing your clients’ portfolios is just one half of the puzzle — you need to build their trust along the way. But that’s hard to do when you spend too much time on back-office activities like paperwork. Docupace’s paperless, compliant, and adaptive technology can help you reclaim productivity and focus more on what matters — gaining returns for clients. Schedule a discovery call here.
