A Time Of Challenge & Opportunity

The advisor/client relationship has been irrevocably altered.

Reviewed by: Heather Bell
Edited by: Heather Bell

[This article appears in our September 2020 issue of ETF Report.]

This has been a challenging year for advisors and their clients, and a redefining year for the advisory industry.

The economy and stock market have been running amok, leaving investors confused and anxious, while the persistence of the COVID-19 pandemic has made face-to-face meetings ill-advised, if not downright dangerous, at a time when communication is paramount.

The advisor/client relationship has been permanently changed—but not solely because of the coronavirus. The pandemic simply accelerated the changing face of the advisory business. It pushed everyone, in virtually every field, into the new world order of doing business.

Let’s not forget the dramatic growth of the fintech space and the popularity of robo advisors during the last few years. Things were already changing before the disaster that is 2020 hit, with technology playing a larger and larger role in that reshaping. That shift has made coping with the twists and turns of this year a little easier than it would have been, say, a decade ago.

Same Service, Different Delivery
Certainly, the current inadvisability of face-to-face advice has been anything but an insurmountable obstacle.

At 89, my father has fairly advanced dementia, and when I took over his care, I hired a financial advisor to handle his portfolio (which included several questionable positions that needed unwinding).

The advisor’s approach is very hands- on. His communications include quarterly reports with personal notes as to how the portfolio has performed, as well as regular emails and periodic meetings that I can request at whatever interval I need. I can also access my father’s portfolio through a portal if I wish to monitor it in my own time, and the advisor reaches out whenever he wants to make a change to my dad’s holdings.

The notes, calls and emails have continued as normal, and for this year’s annual portfolio meeting, we simply did a video call with screen-shared documents. It was no less effective than our face-to-face meetings over the last few years, with no threats whatsoever to anyone’s physical health.

Although the coronavirus has been a disaster for millions, it’s also been an opportunity for advisors. At a time when automated portfolio services and robo advisors are becoming more and more common, human advisors are able to prove their value by offering guidance and a steadying hand in a time of tumultuous markets—even if remotely.

What makes that possible today in a way that it wasn’t in the past is the massive innovations in technology. Navigating these new waters of the workplace hasn’t just been made feasible, but easy, thanks to new and improved fintech tools and software. For those with even the most basic of computers, a video conference is just a click away.

Coaching Your Clients
The pandemic didn’t hurt one of the most important value-adds of advisors: coaching clients. It actually enhanced its value. Market turmoil, increased downside risk and massive volatility highlighted that advising isn’t just about putting your clients in the best ETFs, it’s about helping them develop smart allocations and a plan—and then helping them stick with that plan for as long as it makes sense.

After all, an investor bailing on an S&P 500 fund in the midst of the March meltdown would have missed out on the rapid recovery of the large cap market, led by mega cap stocks. And to jump in now after an incredible rally since March lows because of the feeling of missing out could be just as hazardous. An advisor can help investors avoid those behavioral traps.

The advisor’s job is not just to buy and sell securities, but to help investors achieve their long-term goals. It’s times like this when a strong advisor/client relationship matters most.

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.