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Anticipating Investor Needs

“Just when I start figuring out the answer, they start asking different questions!” This old punchline almost sounds like it was made for investors. The truth is: advisors are often forced to become full-time mind readers to meet the needs of their clients. Baby boomers and their Gen X and millennial children have different goals that change all the time, and in a regulatory landscape that changes almost as often, how can advisors keep up without going insane? Isn’t helping clients reach their financial goals hard enough?

Commonwealth presented five tips for anticipating and accommodating shifting investor needs on their blog. We think with these suggestions and a new perspective on risk can help you meet the needs of every client, and ensure you’re answering the right questions.

Connect with Trusted Contacts

FINRA Rule 2165 and amendments to FINRA Rule 4512 went into effect in February 2018. The amendments to Rule 4512 require that member firms make a reasonable effort to gather the contact information of a trusted adult who may be approached about a client’s account. Members may contact this individual to address potential financial exploitation or elder abuse, as well as to confirm the specifics of the client’s current information and health status or the identity of any legal guardian, executor, trustee, or holder of a power of attorney.

You may want to consider establishing connections with your clients’ trusted contacts before those contacts are needed. According to the Wealth and Asset Management 2021 report, 65% of millennials and 42% of Gen Xers expressed a willingness to change financial providers. Building relationships with these trusted contacts now can help you highlight your value proposition and win future business while protecting your baby boomer clients.

Wealth has a multi-generational impact. Failing to develop a relationship with your client’s family and dependents can have far-reaching impacts on a firm. It’s estimated that nearly 70% of women will leave their advisor within a year of being widowed. And with the greatest transfer of wealth in history happening right now, the 2021 report confirms that nearly half of advisors could miss that boat.

Boost Your Online Presence

In today’s increasingly digital world, presenting your brand effectively online is crucial for building your business and keeping up with shifting investor needs. In a panel at FINRA’s 2017 annual conference, it was reported that millennial clients are 1.5 to 2 times more likely to check the background of financial professionals than Generation X clients, so it’s important to make sure your website and social media pages meet the criteria prospective clients are looking for. Social media comes with a number of compliance considerations, however, so maintaining a professional social media presence, while staying abreast of evolving regulations for these platforms, is critical.

These days a great website isn’t an option for advisors—it’s a must. Not to worry, you don’t have to be a web design guru to have an amazing website. Companies like Advisor Websites build beautiful sites with an eye for compliance and an advisor’s unique needs in mind. For further inspiration, take a look at these 15 Great Advisor Websites.

Showcase Your Differentiators

The ability to create unique portfolios and offer personalized expertise and a full menu of services is something that cannot be replicated by a robo-advisor. According to the Wealth and Asset Management 2021 report, a majority of investors expect advisors to offer the following services:

  • 68% expect advisors to “offer innovative and customized financial solutions and products”

  • 68% expect advisors to “provide more holistic goal-planning advice to help [them] respond to life events”

  • 68% expect advisors to “provide a range of financial services/support in addition to wealth management”

  • 62% expect advisors to “use the latest technology to provide sophisticated analytics and 24/7 digital access”

Advisors compete against expectations set by players outside of financial advice. Called liquid expectations, it’s the assumption that a wealth management experience should be just as predictive and effortless as every other digital platform clients use (Amazon, Apple, Netflix, etc). Advisors aren’t being compared to self-directed investing platforms or even the advisor down the street. Expectations now come from everywhere.

Demonstrating value is going to be an important part of keeping clients happy and invested for the long term.

Provide On-Demand Access to Information

The way in which clients communicate with advisors and access information is undergoing a transformation. Clients increasingly expect seamless 24/7 access to their financial information. In fact, according to the Wealth and Asset Management 2021 study, 49 percent of Gen Xers and 41 percent of millennials “expect to use anywhere, anytime, any device access over the next five years.”

Making sure your clients can access their account information—whether via desktop or mobile app—can reduce or even eliminate the workload associated with responding to client requests. And by adopting web collaboration tools, webinars, and video conferences for client service, you can provide performance and asset allocation information to clients on demand.

A 2018 Tech Survey from showed that modern clients expect an easy, digital experience in every aspect of their lives. What this survey highlighted was an inherent discrepancy in what clients expect and what advisors implement in their practice. Advisors that are unable to meet client expectations, demonstrate value, and keep up with industry trends are at risk of falling through the technical gap.

Maintain Detailed Documentation

Legg Mason’s 2017 Global Investment Survey found that 85% of millennials considered themselves “conservative” in terms of their risk tolerance, with a majority subset considering themselves “very conservative.” While personal debt is an issue, the survey showed that 57% of millennials and 39% of Gen Xers say they are “strongly influenced” by the 2008 crisis.

When it comes to risk tolerance, the industry has been getting it dead wrong for decades. One of the reasons investing feels broken to the average investor is that everyone has a unique tolerance regarding risk and reward that is independent of age. And yet semantics like “aggressive” and “moderately conservative” are still guiding investment recommendations.

Stereotypes don’t work.

This is why we created the Risk Number®: an objective, quantitative measurement of an investor’s true risk tolerance and the risk in a portfolio. Our patented technology calculates risk utilizing a scientific framework that won the Nobel Prize for economics, and is a more efficient way to discuss risk with a client than the old subjective semantics.

Let’s start treating investors as the individuals they are. Let’s empower fearless investing by getting a clearer image of risk and measuring it quantitatively.

This article originally appeared on Commonwealth’s blog in May 2018.

To see the Risk Number® in action, book a demo with us! We’d love to show you around the world’s #1 Firm Growth Platform.