Goodbye to the squeeze

Pulling as much as possible from clients up front is no longer acceptable. The wealth management industry needs the tools to adapt.

How much can an advisor reasonably expect a particular prospect to pay into a scheme? Be it a one-off payment or a monthly investment scheme the traditional wealth manager’s aim has been to extract as much cash from an individual as possible.

This method is understandable. The advisor themselves are chasing their commission and their monthly targets. The firm is pushing them to ratchet up the income for the sake of the pay packet. It is even possible to argue that it is good for the client – most are cagey and unwilling to lay down the money. Pushing from the advisor may lead them to make a bold decision that is better for them in the long run.

I was never very good at that. “Paul,” a client would say on the phone, “I’ve just had a bonus! What should I do with it?”

“Take ten percent and spend it on something nice – a holiday, a watch, a new set of golf clubs – then come back to me. Cheerio!” I would reply to the consternation (or hair-tearing rage) of my boss sitting opposite.

Wealth management was always a long-term game for me. Money, after all, exists to be spent. If clients squirrel all of their cash away in investments, then they are not able to see the fruits of their hard work. A bit of spending leads to better motivation to make more, leading to more money for the wealth manager to work with in the long term. It seems obvious to me. My masters differed.

The face and heart of wealth management is changing. Accountability has been boosted considerably by the sharing of information and by regulation. Gone are the days when an advisor could squeeze a client for as much cash as possible, lock them in for eighteen months and then never be seen again. The quick consequence-free payday has become a thing of the past.

Client management, and client nourishment, are now key – less money now for more money later. Prospects must be educated, reassured and convinced not blinded, bullied or cajoled.

A changed industry requires modernised tools. A rudimentary CRM system and a whole load of spreadsheets don’t cut the mustard in 2018. Advisors must keep on top of every account and check every investment, and the time that they have to do this is being squeezed in the hunt for yet more clients.

For a prospect to be persuaded to come on board they must be presented with a well thought-through, slickly presented recommendation that can demonstrate the flexibility (or lack thereof) of the proposed course of action. They must be able to budget for a change of life situation and see how their investments will work in a good year and a bad year. A book of graphs is yesterday’s news.

Technology allows a wealth manager to carry their planning tools, proposal editor and illustrative materials with them on a tablet device, to be brought out and shown to the prospect or client at a moment’s notice. Technology can also streamline the process of getting referrals, making it perfect for efficient wealth management firm with an eye on the long term. No more wallet raiding: this is the way to make clients for life.

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