Clients Want Performance But Advisors Want To Give Them Something Else
These numbers, from a new study by Charles Schwab Advisor Services, suggest the reason behind a rather large disconnect between some advisors and their clients. Other studies have shown that clients are looking for investment return performance, while advisors concentrate more on relationship factors – communication, trust, customer service.
It makes sense that advisors would want to manage toward things they can control, such as the quality of the client relationship. And client surveys back that up to some degree: The Schwab study shows that clients value their advisors’ knowledge (71%) most of all, followed by their advice (59%). But guess what is in third place, with 49%? Yep, investment performance. Following performance are factors such as trust, service, objectivity, perspective, fiduciary responsibility, and independent thinking.
Clients expect positive performance, and controlling investment performance is a bigger challenge than controlling relationship factors. It entails contemporary manager due diligence - or clairvoyance. You need to either pick good managers or market time.
Which skill do you profess to have? Crystal ball or roll-up-your-sleeves manager research? Hint: outsourcing due diligence is not a good choice in most cases.
To improve your performance levels you need to get serious about performing quality due diligence. For a guide to doing so, see my white paper, “A New Era for Financial Advisors as Fiduciaries. How Do You Measure Up?”