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Getting More from a Client Relationship with Client-Centric Investing

Client Relationship

It has been nearly a decade since the global financial crisis and, while investors are beginning to regain their confidence in the markets, many are still having difficulty overcoming the trust deficit created by financial advisors who treated them as assets to be managed rather than people with life ambitions. While advisors focused on benchmarks and evaporating assets, clients were watching their financial future evaporate before their eyes.

Even today in a typical advisory relationship, advisors tend to focus on Monte Carlo analysis, efficient frontiers and risk-adjusted returns, while their clients struggle with anxiety over achieving their most important financial goals. Advisors then become confounded when their clients suddenly decide to break from strategy to follow the panicked herd over the cliff.

Clients Looking for More from an Advisory Relationship

Advancements in digital technology have leveled the playing field for investors who now have access to information once only available to the financial pros. They are also much more aware of the difference between meaningful financial advice based on their needs and priorities, and sales presentations designed to steer them into an investment product. Financial advisors, who fail to understand this and continue to communicate with their clients in abstract terms, will find it difficult to gain their trust. However, advisors, who succeed at making their clients along with their best interests the foundation of an investment strategy, are not only trusted, they are viewed by their clients as partners in their financial journeys.


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Creating a Client-Centric Investment Strategy

An increasing number of financial advisors are adopting a goals-based approach to developing an investment strategy, taking a completely agnostic view of portfolio solutions until they draw up a complete investment profile on their clients. In this client-centric approach, clients are encouraged to share their ambitions for a good life and what’s important to them before advisors do a deep dive into their specific goals, priorities, time horizons, risk tolerance and their general attitudes about money. For clients, this lengthy discussion brings more clarity to their vision for the future and, for advisors, it creates a framework of developing a tailored, goals-based portfolio.

This approach is best accomplished when advisors have an open architecture product platform to work with, so they are not limited in the types of investments they can use. That way, the focus of their clients’ investment strategy is defined by their goals and objectives rather than by traditional asset class applications. When a portfolio is aligned with the client’s investment profile, investment performance focuses more on achieving specific client objectives and less on meeting meaningless benchmarks. This provides clients with the confidence to stay focused on their long-term strategy while ignoring the short-term fluctuations of the market, which have very little impact on their long-term performance.


A “Client-Centric Approach” Brings Clarity and Confidence to investors – Learn how to create one for your advising business in this post Click To Tweet

A Client Centric Approach Brings Clarity and Confidence

A client-centric investment strategy, built from the bottom up, more closely aligns clients’ portfolios with their interests so that all investment decisions are made with more clarity and conviction. Clients can discern the difference between advisors who are working with their best interests in mind and advisors who have some other agenda. Rather than simply hoping their investment strategy will work for them, clients with a goals-based portfolio have more confidence in their strategy, which means they will more likely stick with it during turbulent times – and that is the key to positive long-term performance.