Investors and wealth managers agree that objectivity is critical to the quality of the wealth management relationship. But most advisors promote independence in their marketing rather than their objectivity.
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This mistake of focusing on indpendence when investors value objectivity was uncovered in a recent study
released by SEI
“Whereas independence is more closely related to ownership and conflicts of interest, objectivity is associated with advice, which is at the heart of what wealth managers provide to their clients,” said Jim Morris, Senior Vice President for SEI’s Global Wealth Services.
"Understanding the situation and needs" of clients was the top ranked definition of objectivity by investors and wealth managers, according to the study. Significanlty, both groups agreed that understanding the needs of a client is more important than investment processes or the delivery of products and services.
It's fair to assume that many advisors who tout their independence actually mean to tout the fact their that advice is free of conflicts of interest that often arise for advisors work for firms that manufacture financial products.
But words are important, and the independence you market may not be connecting with clients who are most interested in objective advice--advice connected to their personal situation.
Although clients are more concerned about how well connected the advice you provide is to understanding their personal circumstances, few advisors promote objectivity and many advisors probably cannot explain exactly how they practice objectivity.
When asked how they would deliver objectivity in their practices, most wealth managers in the study strayed into a discussion of their services and products. However, your client-onboarding processes, data-gathering interviews, and in-depth risk profiling present opportunities to incorporate objectivity into your practice.
A process focused on clients' needs will help you build stronger relationships. Refining your processes to be more objective will enhance your ability to attract and retain them.