Customization key for advisor success

Customization key for advisor success

Customization key for advisor success Providing real value-added advice including true customized portfolios are crucial to becoming a successful advisor, according to a new report.

Rob Carrick of the Globe and Mail published an interesting article Friday that highlighted a new study from four finance professors on both sides of the border that shows investment advice alone isn’t enough to justify the fees. Using investor and advisor data between 1999 and 2012, the study finds that most advisors do a haphazard job when it comes to constructing client portfolios.

It’s not enough to put them into any old ETF or mutual fund and expect that your client is going to view your compensation as reasonable and fair. To earn your keep, you’ve got to provide real value-added advice including true customized portfolios that meet the needs of your clients.

Retirement readiness has been a big topic of conversation these days with no less than three reports out in recent weeks from the Conference Board of Canada, Bank of Montreal and Manulife Bank suggesting Canadians aren’t doing nearly enough to get themselves financially fit.

The positive from the report, according to co-author Stephen Foerster, finance professor at the University of Western Ontario’s Ivey Business School, is that “… advisers are putting people in riskier assets that, long term, should have a higher expected return.” The downside of this is that advisor fees eat up any advantage they deliver in increased returns.

How to overcome this?

Foerster suggests that advisors forget about off-the-rack portfolios and truly provide clients with extraordinary advisory services that pass the sniff test when it comes to customization. Clients aren’t blameless in this situation. They need to demand that their advisor truly understands their situation and creates a portfolio that reflects this reality. With robe-advisors stealing advisor business, it’s become essential that advisors do everything they can to stand out from the crowd.

So, the next time you meet with clients, ask yourself whether you’re providing them with enough customization in their portfolio. It could be the difference between keeping or losing them.