You’re not your grandfather’s financial advisor. The remit of advisors has been forced to adapt to a changing world and new client needs. This seismic shift, from a laser focus on assets directly under an advisor’s management to a holistic approach to monitoring wealth, is one that has benefited everyone, client and advisor alike. For the clients, the appeal is clear. They stand to gain more and feel safer when their wealth as a whole is being monitored and balanced by skilled professionals. And for advisors, the new approach allows them to serve their clients better and to develop deeper and long lasting relationships that go beyond the transactional.
Industry veteran Steven Lockshin summarized this holistic approach succinctly: “Advisors have a unique level of visibility and clarity across assets, aspirations and even familial conflicts and turning points in the lives of their clients. They’re positioned to see opportunities and hazards and plan their clients’ financial future accordingly. This new focus comes with a level of responsibility that advisors must embrace.”
Lockshin’s career success as a financial advisor is evident in the way he has been able to develop relationships with his clients. When it comes to money and investments, it is easy to get caught up in the numbers, and for some of us, the statistics, spreadsheets and reports may be our strong suit. But financial advisors of the 21st century straddle the line between wealth manager and therapist. They must, of course, optimize a portfolio to get the most they can for their clients, but they must also understand how to account for everything from unexpected illnesses to college funding. This involves competency in estate planning and insurance, as well as investing. Financial security is the state of mind advisors bring their clients when the worst case scenario happens and everyone is prepared.
Financial advisors who do what many would now consider the bare minimum – managing a small pool of assets – are unlikely to thrive. Research from sources like Capgemini have been touting the power of personalization in wealth management for years, with Capgemini writing in its 2020 world wealth report that only 40% of high net worth clients were satisfied with the personalized offerings from their firms. Less than half of the clients said they connected very well with their wealth managers, citing a lack of emotional intelligence and insufficient face time as two reasons for their dissatisfaction.
And advisors who develop relationships with their client’s entire family will see their work pay off when the next generation of investors continues with their advisor. This does not always happen, as studies show 70% of widows in the US dump their financial advisors after their partner’s death, and more than 80% of heirs will change advisors after their parents’ deaths.
“As a wealth advisor, your role goes beyond managing investments; it encompasses safeguarding your clients’ family’s financial security,” said Lockshin. He has identified estate planning, life insurance and technology as “essential elements” for an advisor’s practice. With them, he said, “you are securing your clients’ financial legacies and building lasting relationships based on trust, reliability, and peace of mind.”
Capgemini highlighted this year how Scandinavian advisor Formue has used technology to streamline administrative tasks to allow its wealth managers to focus on the clients. The shift, they said, has taken the company from traditional investment to “financial life management.” Advisors can use the technology to better identify needed actions and conversations. It also frees up time to host regular workshops, client reviews and other events.
“Integrating technology into your practice enhances your ability to provide comprehensive financial planning and positions you as a proactive and forward-thinking advisor,” said Lockshin. “A streamlined, technology-driven approach to estate planning and life insurance demonstrates your commitment to your clients’ long-term well-being.”
The ability of a financial advisor to help a family meet its financial obligations is essential. But as financial advisors move forward in the modern world, their responsibilities become financial life management. As Lockshin said, “[a] critical aspect of your role should never be overlooked: ensuring the financial security of your client’s loved ones in the event of an unforeseen tragedy.”