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The pandemic is financially stressful, but it also demonstrates the value of technology that lets me communicate quickly to my client base.
To understand why, consider the range of questions advisors must be able to answer for our clients.
If you think that political disagreements are the most awkward thing that can happen at a family dinner, think again.
I was recently enjoying a lovely meal with all the people I love when my aunt leaned forward and asked my opinion of a particular special-purpose acquisition company (SPAC). What did I think of this SPAC? How does it compare with that SPAC? Should she jump into one? Both? I love my aunt, and she’s a smart woman. But listening to her riff on SPACs was as unexpected as hearing her discuss quantum physics or dissect University of Georgia’s football recruits down to their bench press numbers and 40-yard times.
I found this situation surreal.
Then I realized it’s the new real.
Our job as financial advisors has always been to help clients realize their dreams by creating and tending a long-term financial plan. Until recently, we were the keepers of the money knowledge. We had somewhat exclusive access to in-depth financial information, which we used to make data-based decisions for our clients.
The internet and financial cable TV smashed the gates of our temple and set the information free. Clients drink from a gushing firehose of real-time information about every aspect of investing from retail sales trends to the most obscure investment-vehicle details. This reality presents financial advisors with a considerable challenge – helping the client stay on course even when the client’s brain is swimming in data, opinions and sales pitches about financial strategies and products that aren’t in their portfolio.
Clients sometimes equate all that information with understanding. Over the past 15 years, I have found myself spending more and more time defending even the biggest no-brainer portfolio moves to clients who want to know why we’re not in the latest thing (Damn you, SPACs!) or why we’re not following the crisis strategy laid out by some screaming talking head.
Based on such personal experience, I wasn’t surprised by a Cerulli Associates study that found that in 2017 just 33% of respondents believed their financial advisor had “the highest level of investment expertise.” That figure was down from 47% in 2013.
Perhaps counterintuitively, the answer to this information and technology-spawned challenge is more information. And more technology.
In this noisy environment, financial advisors need to over-communicate with clients. We have to provide a steady flow of information that explains our portfolio decisions, provides context for the latest market developments, and delivers reassurance that the long-term plan is working regardless of what’s happening in the moment. That last part can be tricky in times of crisis or when the latest “sure-fire” strategy or investment vehicle is sucking all the air out of the room. It can be challenging to convince info-distracted clients that a boring, well-allocated portfolio is the key to sustainable, long-term success.
Does this need to hyper-share with clients mean we have to spend endless hours making phone calls or sending emails? Nope.
A couple of years ago, my firm began building technology to improve client service and communication while boosting our operating efficiencies. Thank the finance Gods that system was fully online in time for the pandemic. It allowed the firm to provide proactive client communication and preempt many questions during the craziness of February and March.
Our technology alerted me of new monies in client portfolios, highly concentrated positions and drastic portfolio moves. I was able to monitor our client portfolios at scale. Any client whose portfolio dropped 5% or more in 14 days received an email offering our view of the market volatility and our plan to ride it out.
I followed up with a one-hour Zoom webinar that allowed me to go in-depth with this group of my clients, who were all in similar situations and sought the same detailed information and answers about their portfolios. That one-hour investment paid huge dividends for both my clients and the firm. The clients received enough context and answers to inoculate them against the swirling fear and misinformation. My firm looked proactive and saved hours of staff time that would otherwise have been spent trading emails and phone calls with nervous individual investors.
During the worst three months of the pandemic, I held two Zoom meetings and sent 12 group emails to subsets of my client list who have similar portfolio profiles, as identified by my tech. As a result of that aggressive communication, I received just three fretful client emails.
The best financial advisors have always been more than money guys. In addition to managing a client’s money, we manage her expectations, fears and reactions. The digital information revolution has made the human management part of our job harder, for sure. We’ve got to up our game. Technology can help.
Matt Reiner is a CFA, CFP® , and partner at Capital Investment Advisors, a $2.8+ Billion RIA in Atlanta. Reiner is also CEO of Wela Strategies, a sister company to Capital Investment Advisors, and is the founder and CEO of Benjamin™ . Benjamin is an AI technology created by Reiner after seeing the gaps in technology used in his own firm. Reiner’s true passion is using his vast experience to coach other advisors across the country, helping them evaluate their firms’ practices and find the best strategies for future success. To reach Matt Reiner, visit www.MattReiner.com.
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