Matt Oechsli
01/01/2005
Roughly seven in 10 affluent investors are dissatisfied with the financial advice they receive, and they are not certain where to turn for help, so says market research by firms such as TNS and Intuit. My institute’s 2004 Affluent Purchasing Decision research explains why. Eight essential evaluation criteria emerged from our study, and respondents admit that their financial advisors are not meeting their expectations in any of these areas.
Financial professionals have traditionally operated in a one-dimensional capacity. Accountants handle taxes, insurance agents address protection issues, financial planners create strategy, bankers deal with lending, stockbrokers focus on investments. Affluent investors typically have had three or more financial advisors, and they frequently receive conflicting advice.
But the past four years of market swings and corporate malfeasance have changed this. Dissatisfaction and distrust are the new normal. One-dimensional financial professionals have caught the brunt of angry clients whose investments tanked, whose tax bite became too painful, whose planning proved incomplete. Affluent investors are convinced they need a new approach to managing their multidimensional finances.
Now it seems that every financial professional is offering this “integrated” solution. Accountants are giving investment advice, insurance agents have become financial planners, stockbrokers are marketing wealth management services and banks aggressively promote their own financial advisory services. Confusion reigns. In reality, as our studies show, what they offer is seldom what they deliver. Moving from a one-dimensional professional to an integrated financial coordinator is a difficult journey. It requires a shift both in how the financial professional thinks and what he or she does on a daily basis.
I advise these professionals, and some are doing better than others at managing this transition. Larry and Bill, two advisors I have coached, paint a clear picture of this contrast. Both were successful in the one-dimensional model. Now they are diverging.
Larry wanted his image to match all those investment firm commercials we see today. He invested $15,000 in a fancy brochure extolling the virtues of a trustworthy “wealth manager.” He presented it to an affluent business owner, a client he wanted to impress with his expanded services. His client looked at the new brochure and asked, “How are you planning to provide all these services?” After listening to Larry stumble through his response, the client informed Larry that he would find another advisor.
Bill, however, first listed the service areas he needed to provide, determined where he could specialize and identified competent financial professionals he could call in to help with the others. Bill’s first effort to attract a new client was with a franchise owner. Bill’s preparation paid off. Combining his own expertise with advice from his tax specialist, Bill explained how his client could enjoy tax savings by restructuring his defined benefits program—and by hiring Bill to coordinate all of his business and family’s financial affairs. Not only does Bill have a new client, he also has been referred to all the franchise owners in a three-state area.
According to our research, high-net-worth investors are looking for a primary financial coordinator who:
If this list resonates with you, add any other items that are important to you and use it to determine whether any one of the financial professionals you currently use demonstrates the ability to meet these criteria. If so, that individual should become your primary financial coordinator, and the reason why is clear. Without an integrated and coordinated effort, wise portfolio and tax management is not going to just happen. If no one meets your criteria, it is time to find someone who can.
Matt Oechsli is the author of Mastering High Net Worth Selling and president of the Oechsli Institute, a consulting firm.