How Savvy Advisors Can Move Upstream and Avoid Losing Clients To Robots

For an industry so laser focused on carving assets away from vulnerable rivals, a lot of wealth managers remain shockingly exposed to the market cycle and shifts in the technological landscape. 

When the market swings, their AUM shudders. And when next-generation providers emerge promising to do the job of managing client portfolios cheaper and at greater scale, profit margins race to the bottom.

This doesn’t have to be you. If you recognize your competitors in this discussion, that’s great. Their strategic weakness is your opportunity.

But the fact remains that for too many of your peers, prospecting assets is a zero sum game. Somebody captures a client dollar and that means someone else loses it. The industry as a whole remains starved for real organic growth. And because wooing those clients is expensive, that starvation is more than a metaphor.

We see this play out in a recent survey of advisor AUM gains TD Ameritrade sponsored. Last year, the typical wealth manager polled grew the book 19%, which sounds phenomenal until you realize that number includes passive market appreciation -- and the S&P 500 climbed 22% over the same period.

A bull year papered over an industry that actually lagged the market. While new clients are coming in, account sizes are shrinking faster than the typical portfolio is growing. Moreover, client demographics are depressing the overall asset base as older clients with larger accounts in distribution (retiring Baby Boomers) aren't replaced.

And new clients are just as resource-intensive to serve, which means firms have needed to staff up to keep them happy. Costs are climbing. Fees are under pressure as you move closer to the “mass affluent” market the robots have staked out and the need to demonstrate added value to your existing clients intensifies.

Situations like this require organic growth, some compelling competitive proposition that changes the stakes and locks the robots out of the really profitable client relationships. 

Where does that come from? I talked to institutions who work with a lot of wealth managers and one way or another they’re convinced that simply running the portfolio is no longer the litmus test that justifies an advisor’s value and fees. 

The portfolio is a commodity. Robots can run it. They can run it for you and they can run it against you. Your edge is that you don’t stop at the portfolio. 

What Can You Do Beyond Managing Money? 

One way to differentiate yourself in this competitive environment is by supporting estate planning and trust services. But again, getting back to the point about trust and care, this must be seen as an extension of your stewardship to the client and his or her well-being: not just a new profit center, but a comprehensive provider of wealth services. 

Time is of the essence, too. Because if you aren't having this discussion with your clients, someone else is. Remember, statistically speaking, you’re not the only advisor. You want to be considered one of the first two people to be contacted when a major life event or change occurs and decisions need to be made.

As the trusted advisor, you will gain a more comprehensive holistic view of their personal wealth. This is an essential milestone on the path to becoming a true wealth management service provider.

Adding high-level trust and estate management services to your suite of client offerings is one of the best ways to accomplish this, for several reasons: 

  1. Nearly 3 out of 4 affluent families use trusts.  And with at least $10 trillion in NEW assets flowing into trusts by 2025, this trend isn’t changing anytime soon. 
  2. The trust role can institutionalize your involvement beyond simple personality dynamics. Now you have a unique functional edge, a reason to always be at the table: a relationship based on investment performance is transformed to one based on financial wellness. 
  3. If you believe you’re the best person to serve your client, then you want to be the one helping them in this critical area. 

Believe it or not, estate planning is never "one and done." There’s always a need for updates, always an opportunity to stay in front of them, to provide value (and show) that you’ve provided value. This means you get the added question of avoiding the dreaded “what have you done for me lately?” question. 

By pushing beyond your current offerings into this area, you’re also able to differentiate yourself and improve your competitive positioning against entrenched traditional providers based within banks and wirehouses. 

And every additional meeting creates additional opportunities for the client to reveal an extra pool of capital held elsewhere. 

These are assets — and potential AUM for you — that your client likely wouldn’t bring to you otherwise. 

It Only Takes One Lost Client

Most advisors begin getting interested in trust services after a client passes away and they lose the account and the opportunity to capture additional assets of beneficiaries. After that, they vow it will never happen again.

But why wait? Of course, all advisors are busy, yet so many nightmares for clients could be avoided by being more proactive about trust management and estate planning. 

Another common nightmare is the bank steals away a client or interferes with the client relationship in some way. Remember, losing a client not only costs you that immediate revenue  but also all potential family and referral relationships from that client. The total cost of a client leaving could be six figures when all is said and done — and that's before we even factor in the next generation.

On top of this, there’s a good chance your client may need things such as lending, trust services or unique assets that you don't provide. And if you’re not prepared, you could have someone else —whether it’s a bank or another advisor — serving your client in ways you aren’t. 

The biggest challenge is that trust management and estate planning require considerable learning to be done at a high level. As people who work with advisors every single day, we at National Advisors Trust totally understand this. You barely have time to serve your existing clients, or prospect for new ones, much less learn an entire new industry. 

Find a Trust Partner Who Can Do All the Work for You

Again, while you want to move upstream, spending years learning and mastering trust services is not an option. If you don’t grab these dollars, someone else will.

The right trust services partner can and will do all the heavy lifting for you. Here are some key criteria to look for: 

  1. Can your trust partner serve all 50 states? With so many clients and families on the move, it’s often more ideal to have a broad footprint. We live in a nomadic society. Sure, it’s helpful to offer service with the most progressive state charters, but this isn’t always practical for all client scenarios.
  2. Does the company view this as a long-term relationship and you as a partner? In an ideal world, your client’s estate plan is dynamic. You want a partner who can work with you on an ongoing basis to keep your client’s plan fully optimized and yourself on top of the screen as conditions change.
  3. Do they allow you to maintain ownership of the client relationship? Because the trust company legally owns the account, you want to make sure that you as the advisor maintains ownership of the client relationship. This is critical to keeping your clients long term and the family across generations.
  4. Does the potential trust partner provide education that you can use with your clients to increase engagement AND confidence in the process? The last thing you want is for the client to have doubts and see this as a commoditized service rather than as a dynamic collaboration together. Communicate value.
  5. Does your prospective trust partner offer any marketing, branding solutions, or private label options? You may not want your clients to know much of the work is being done by an outside provider. After all, it’s your relationship. You’re the star. So in an ideal world, you want your name on the materials. 

While it’s difficult to meet all these key criteria, there is one who does all this and more: National Advisors Trust

Beyond features or key criteria, though, what stands out most about National Advisors Trust is how advisor-centric we are. We are keenly aware of the differentiation challenges advisors face, along with how precious relationships based on trust and the ability to create value beyond the portfolio are in this great period of change. 

We see it all the time. And unlike a lot of our competitors (and yours), our business is actively growing. It’s not a zero sum game for us. We extend to our community of advisors our full service trust offering, supported by both a national and a South Dakota state charter.

We want our partners to grow. That’s the kind of vision we all need.



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