The current market environment doesn’t meet the definition of a full blown crisis. Hopefully, that will remain the case, but there’s no denying 2022 will be remembered as a calamitous, turbulent year.
That’s what happens when stocks and bonds decline in unison, but the silver lining is that market volatility presents advisors with numerous opportunities to grow their practices, reconnect with clients and onboard new clients.
In fact, a variety of data points and studies confirm investors and prospective clients across a broad swath of demographic groups want to work with registered investment advisors (RIAs). And it’s reasonable to surmise that the more turbulent markets are, the more investors value advice and guidance from a trusted professional.
Whether it be growing practices, improving existing client relationships or both, advisors need a plan of attack for capitalizing on market volatility.
Steps to Consider
In a recent note, Ryan Krystopowicz, WisdomTree director of client solutions, highlights steps for advisors to capitalize on this environment. Those include focusing on specific client niches and using digital tools to connect with prospective clients in those segments.
“Let’s say you’ve identified your target clientele as millennials working in startups in Austin, Texas. How will these specific individuals arrive at the conclusion that you might be a good fit for their needs before meeting you?,” proposes Krystopowicz. “Your digital presence—specifically what they see on Google, LinkedIn and your website.”
The point is it’s becoming increasingly apparent that advisors’ online footprints matter, but how that presence is established and targeted is equally as important.
Another point for advisors to consider is outsourcing some tasks, which can bolster practice efficiency. More efficiencies create more time to grow the practice and connect with clients.
“We believe advisors should leverage software and third-party expertise to meet the functional needs of their clients. By doing so, they more efficiently address their client’s basic needs, which gives them more time to focus on their client’s higher needs—the needs most cherished during market volatility and uncertainty,” adds Krystopowicz.
More Solid Ideas
Many advisors love taking a hands approach to managing client portfolios and there’s nothing wrong with that, but model portfolios offer advisors the potential for improved efficiencies and clients the potential for better long-term outcomes.
Citing a BlackRock study, Krystopowicz points out model portfolios and SMA performed admirably for clients during the coronavirus market slump.
“92% of model and SMA users said that outsourcing improved their practice during the COVID-19 volatility,” he noted. “85% of wealth outsourcers won new business during volatility versus 69% who do not use models or SMAs.”
Another great idea, particularly for larger practices that have robust portfolios of high-level staff, is to market those employees. Whether it’s investment experts, PhD’s, long-term care experts, estate planners, accountants and the like, advisors shouldn’t be hiding these practice advantages.
“Our research discovered that clients find comfort in knowing that third-party models provide the benefit of the collective expertise of an asset management firm’s analysts, strategists and PhDs. From their perspective, advisors using third-party model portfolios are combining valuable research and data with their intimate knowledge of the client’s needs—a welcome approach that will help their portfolios,” concludes Krystopowicz.