Advisors have a lot on their plates and as is the case with any profession, jam-packed agendas, to-do lists and the like can get in the way of pursuing more growth-oriented fare. It’s a classic “time is money” scenario.
Fortunately, there steps can advisors can take to pave the way for improved growth trajectories. Whether its integration of more technology or other avenues for added efficiencies, smart advisors are always searching for ways to become more effective advisors. After all, entering the latter territory is often accompanied by increased practice revenue and profitability.
There’s more good news. Many of the ideas and strategies advisors can deploy today to improve efficiencies and nurture rosier growth prospects are low-cost if not free. Everyone likes “free” particularly if that free leads to more revenue and profits. We’ll explore some of those options here.
Embrace Free Tools, Ditch Stock Picking
There’s a fair chance an advisory practice, particularly one with large client bases and staff counts, have a slew of subscriptions, some costly, to investment research and data tools. Thing is, an array of asset managers and fund issuers offer some this stuff gratis.
So it’s on advisors to take the time to review the necessity of all those outgoing monthly expenditures because there’s a decent chance they can find some savings in the process. Take the case of WidsomTree’s Digital Portfolio Developer. It’s chock full of useful tools for advisors and it’s free.
“We built this tool to empower advisors to analyze their portfolio holdings of ETFs, mutual funds and stocks on demand. Additional features of this tool include stress tests, factor exposures, Monte Carlo simulations and white-labeled proposal generators for prospects,” notes WisdomTree’s Ryan Krystopowicz.
Formerly an analyst at a mid-sized RIA, Krystopowicz also advocates in favor outsourcing management, i.e. embracing model portfolios and ditching stock picking.
“As we’ve previously written in Four Habits of Highly Successful Advisors, as opposed to building out an internal research team, RIAs that manage less than $1 billion–$2 billion in assets are better off driving scale, efficiency and profitability by outsourcing all or some of their portfolio management function,” he adds.
There’s another area with plenty of green space in which advisors can usher in new growth: Helping currently unadvised clients on topics beyond investment management. Those include life insurance, Medicare and Social Security, among others.
A recent study “notes that those without an advisor listed retirement income planning, advice on Social Security and Medicare and developing a financial plan as the most appealing topics to get advice on,” observes Krystopowicz.
Don’t Fear Model Portfolios
As has been widely noted, if there’s one are of potential efficiency that advisors are reluctant to embrace it’s deploying model portfolios. The reasons for this vary, but are easy to understand. Some advisors admit they’re concerned about chasing clients off. Others prefer to manage investments directly because that’s why they got into the business in the first place.
The latter point requires internal reflection and perhaps conversations with respected peers to “get over.” On the other hand, fears pertaining to investment outsourcing may be largely unfounded.
“WisdomTree’s property research study found that 73% of advisors agreed that models could support regulatory requirements through the key pillars of having a strict process, investment guidelines and due diligence,” concludes Krystopowicz. “Another State Street Global Advisors’ study found that two-thirds of outsourcers agree that model portfolios mitigate risk in a heightened fiduciary landscape. The study points out how outsourcing can potentially support a structured portfolio management framework as well as lead to more consistency in applying suitability standards to client recommendations.”
Related: Advisors, Pay Attention to These Retirement Disruptors