Secret Tool For Today’s Financial Advisors

October 08, 2014

Adapt Or Die

So what’s a financial advisor to do? Either adapt, or be very good at the other core competency of successful advisory firms: actual advice.

Look at the model being promoted by folks like Ritholtz Wealth. They’ve built a financial advisory business not based on providing better mousetraps of flipping coins and getting heads 10 times in a row, but by actually working with their clients.

The value that they’re bringing to the bulk of their client base isn’t investment acumen, it’s the handshake. It’s actually understanding what the client needs, and helping them get there.

What they are doing by launching into the robo space is simply meeting clients where they are. Because of their strong presence in social media, I imagine they get a lot of inbound inquiries where, frankly, the high-touch approach just isn’t appropriate, and the financial need is pretty basic—simple portfolio management.

They looked at their business and adapted their model.

We’ve seen other successful advisors adapt in different ways. Mebane Faber of Cambria Investment Management took the ETF route, and went from advising wealth clients to running a passel of ETFs based on the firm’s philosophies.

Austin, Texas-based Sage Advisory is one of dozens of firms that expanded their horizons by taking their tactical ETF strategies out to other advisors through model portfolios, augmenting a substantial wealth management business in ways they couldn’t have done on their own.

Three threats. Three adaptations.

The Fourth Way: The Handshake

For the vast majority of advisors, however, I’m guessing that the real value-add isn’t launching a robo advisory firm, launching your ETF or becoming a third-part strategist.

The real value-add is focusing on the one thing you provide that no technology and no portfolio can provide: actual advice. True financial advisors do a lot more than just manage money: They actually shake hands with and get to know their clients.

True financial advisors match up the realities of modern liabilities—health care, college tuition, retirement, charitable aspirations—with the ever-shifting nature of modern assets: uncertain real estate values, a fluid tax environment, the lack of traditional pensions, the plug-in/plug-out career path.

That’s the real value of a financial advisor. And the best ones will recognize that this is where they add value, and not look to the ETFs, strategists and robo firms as competitors, but as liberating tools that can free them up to do what they’re really good at: the handshake.



You can reach Dave Nadig at [email protected], or on Twitter @DaveNadig.


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