Clients As Partners

There's a compelling article in the Wealth section of today's NY Times entitled, The Hands-On Investor: Increasingly, Advisors Want Clients to Share the Responsibility of Managing Their Assets.

I have a quibble with the headline...which I'll get to in a minute.

But, I completely agree with the headline's implication. Our research corroborates as much. Top-performing financial advisors report to us that there is an ongoing shift in how some clients (not all) would like to work with them. This new dynamic emphasizes the partnership that is created, where the advisor and client build a collaborative space of working together to achieve the client's goals (which have been arrived at through an honest, thoughtful, and comprehensive dialogue between advisor and client). The key words here are "partnership" and "collaboration".

Interestingly, I don't find the words "partnership" or "collaboration" at all in the Times article...which seems unusual.

My quibble with the headline is the wording..."Advisors want clients to share the responsibility..." What the headline misses is that, in many cases, it's the clients who are driving this. They want to share the responsibility and accountability.

Of course, this makes complete sense when you consider how Baby Boomers make decisions. As the private individual wealth in this country has passed to the hands of the Boomer, financial advisors are seeing that Baby Boomers have different expectations of their advisor relationship than their parents did, the Silent Generation. With the old dynamic, the financial advisor could get away with portraying themselves as the all-knowing, all-seeing expert who dispensed advice from the mountain-top.

That approach doesn't work today. Many clients expect a much flatter relationship with their financial advisor, where their opinions, concerns and desires are valued and respected.

Ultimately, I think this new accountability is a good development for both advisor and client.

I'd be curious about your views on this...either as a financial advisor, or as a client.

All the best!

by Chris Holman