The current environment of low returns, market volatility and nervous investors isn’t conducive for financial advisors trying to grow their businesses.
But markets are likely to remain unfavourable for some time to come, and advisors need to adapt to the new reality of the marketplace.
Read: Benefit from volatility
To be able to grow through volatility, advisors need to identify and retain high-value clients, and provide personalized financial plans to help clients achieve their goals, says Scott McLean, senior vice president and head of distribution at Invesco Canada.
At an advisor event yesterday, organized by Invesco Canada, he shared some steps to help advisors through trying times.
The right business model
Create a business model around controllable situations. No one can tell how the TSX will behave on a given day, but “you can control the level of service and expectation clients have of you,” says McLean.
McLean encourages advisors to fire their worst clients, so they can focus instead on fostering stronger relationships with their target base. “Focus on strong relationships; on people who want to grow and develop with you and focus on the plan laid out for them,” he says. “If clients aren’t following their plan, then maybe it’s best to focus on the one who will.”
Talk isn’t cheap
Advisors must refrain from making portfolio performance the focus of every conversation. “Resist the temptation to dwell on investment performance,” says McLean. “Conversation should revolve around the process [and] the plan that you’ve put in place.”
Stay in touch with them and don’t be wary of having an opinion. “Your clients need guidance and direction, and they’re counting on your to deliver,” says McLean. “Educate clients on how volatility can actually be their friend.”
Want versus need
Clients may want more predictable income, but what they actually need is an inflation-sensitive cash flow, for instance.
Tax deferral is, in fact, the need for tax minimization. Advisors should steer clients’ focus from “superior financial performance” to “attaining the financial goals” they’ve discussed.
Top advisors are successfully positioning themselves in an ever-changing world to meet today’s challenges, he adds. Those who are prepared will overcome adversity and continue to grow their business.