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Tuesday, June 6, 2023

The Financial Adviser Value Proposition: The Five Components

What can we do for our clients that they can’t do on their own? What makes us better at managing their money than they are?

These aren’t always easy questions to answer. But modesty aside, we need to be able to explain to potential clients how we can help them and why we’re worth the cost. And once we convince them to make the leap, we have to demonstrate that we really do walk the walk.

It’s a two-part process: Explaining our value and then continually demonstrating that value in the months and years ahead.

So, what is our value proposition? To me, it comes down to five key contributions that we can deliver that most clients can’t get without us.

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1. Managing Emotions and Controlling for Bias

Even if the client is brilliant, a genius, and smarter than any adviser out there, chances are they will get emotional and not be able to stay focused and unbiased when it comes to managing their own wealth the way advisers can. 

They might hold on to a stock as it goes up and up, only to ultimately crash. They might not sell out when it declines by 15% in hopes that it will “come back.” Or they might panic and go to cash when the Dow drops 3% for four days in a row. A good adviser will have the discipline to stick to the investment philosophy. As fiduciaries, we have to. 

I have seen so many clients insist on holding on to a stock simply because they “like it,” even though its earnings and profitability tell another story. And I have seen so many clients try to bail out at the exact worst time.

That’s where we come in. Advisers act in the client’s best interest — no emotions allowed. We provide the process, the philosophy, and the discipline they can rarely get on their own.

2. Resources

As advisers, we have tools and data that clients just don’t have access to. Do they need a mortgage at a great rate, no fees, and a white glove service approach? We come right in. Does the client need to pay their taxes without selling stocks? We can offer an advised line of credit. Do they want access to a private, speculative stock? We can pull in resources from all over our firms as well as our larger networks.

I have had clients who for one reason or another could not secure mortgages for homes they wanted to purchase.  In some cases, my firm could provide the mortgage, in others I used my external network to help them get financing. More often than not, I find help so my clients could get the loans they needed.

I had one client who had worked with every firm on the Street, except mine, but couldn’t find one that could trade a really esoteric stock he was dying to own. Well, my firm could do it, and he became a client, and his assets with us grew over time. We had the access and the resources.

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3. Brainstorming and Listening

As advisers, we take and return our clients’ calls. We listen to their thoughts, whether it’s their worries and complaints or their hopes and dreams. This is significant and it matters. A good brainstorming session can be really helpful and empowering for a client. We can serve as sounding boards, even if we don’t always have the answers.  

Clients may have complex issues that we haven’t seen before. But simply talking through the pros and cons is a great way to build a good client-adviser relationship. I had a client who struggled with whether to retire. She was so concerned about cash flow but no longer enjoyed the expensive city she called home. We brainstormed what it would mean to retire somewhere with a lower cost of living. At first, she merely mentioned it in passing — almost like a dream: It had little to do with hard-core finances. She thought about missing her local friends but being closer to family as she aged. Ultimately, she went through with the plan. She now enjoys a stress-free life in retirement, with no cash flow issues. Our years of back-and-forth discussions went beyond the numbers. I listened and made sure I heard her concerns clearly.

Another client was having his own cash flow issues. We knew if we got him through the next few years, he would be okay. If he could just sell his house, he could lower his expenses. We provided him with a plan and checked in over and over through those years. We made a difference for him that he would have had a hard time getting elsewhere.

Remember: We won’t always have the answer — but we can offer our counsel and our expertise and educate our clients on their financial options. And we can go one step further: We can be both warm and friendly as well as intelligent and intellectual.

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4. Explaining

Don’t downplay how important and helpful it is to simply explain things to clients. We should be spending a tremendous amount of time here. Good advisers will describe to their clients, in clear, direct language, exactly what is going on in their investment portfolio — the portfolio they created — as well as in the market and the broader economic landscape. A good adviser knows how to communicate and breaks things down to a level that anyone can understand. We don’t have to condescend and use big words and impenetrable jargon. We just need to be kind and polite and truly stand behind what we have created so that the client gets it from start to finish.

I think to myself, “If I were a client, what would I like to know?” And then I provide those answers. 

At every quarterly meeting with a client, I make a point of going through what I think is obvious: How much money did the client start with? How much is there now? What is the dollar increase, the percentage increase, and how do these returns compare to the benchmark? What is the appropriate benchmark, anyway? What were the fees paid, down to the penny? What is the income estimate and what was the income earned? How much can be drawn out without touching the principal? 

We want our clients to tell their friends about us. We want them to compliment us: “I meet with my adviser regularly, and they explain my money to me clearly. I understand what is going on. I even understand what is happening in the markets.” I always shudder when I onboard a client who says, “I really have no idea what’s in my portfolio.” Be the adviser that takes the time to explain — it is invaluable.

5. Being Close Confidantes

A good adviser functions as a friend or even a surrogate family member. Sure, there will always be boundaries, and we will always be the one working for them, taking their orders, servicing them, and keeping things professional. But there are times when clients will rely on us in surprising ways. I have attended weddings, funerals, graduations, parties, and galas. I have cried with clients and spent hours with them at their homes when they were lonely or in the hospital while they were undergoing chemo. I drop off chicken soup when they are sick and take them out for chocolate cake on their birthdays. I have been the go-between when the father and son were not speaking — I managed both accounts — and brought the family back together.

To give them comfort, I have walked clients through what will happen when they die, what steps I will take to ensure their financial estate is in perfect shape. Many times I have been asked to serve as trustee. I will do anything for my clients. I am careful not to overstep, but I don’t underestimate how important that role of family/friend and adviser really is.

Trust me: A good adviser is not an easy role for clients to fill. To do it right, to really demonstrate our value, we need to put our hearts and souls into it. Remember: Being a human supersedes being an adviser. Sometimes, showing emotion and compassion is more important than sharing our financial expertise or anything else.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©Getty Images / dblight

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Galit Ben-Joseph

Galit Ben-Joseph, CFP, is an executive director and wealth advisor with J.P. Morgan Wealth Management. She provides investment management
services to a varied client base, including high-net-worth individuals, professional services practitioners, small business owners, and foundations.
Ben-Joseph was born in Israel, and grew up in the New York City metropolitan area. She is passionate about education and holds several degrees, including a doctorate in management and international economics from Pace University. Ben-Joseph also earned an MA in organizational leadership from Columbia University, an MBA in management from Baruch College, and a BA in English literature from Rutgers University. She has taught at several institutions, most recently an introductory business course at Columbia University. Ben-Joseph lives in New York City and Connecticut with her husband, Neil, and their three children, Rachel, Joshua and Jacob. She is an active volunteer at her children’s schools. Having written her dissertation on “The Effect of Family Responsibilities on Working Mothers,” Ben-Joseph has a number of women clients, and serves as a model for striking a good work-life balance. She was honored by Forbes in 2021 as a Best-in-State Wealth Advisor, and in 2022, 2021, 2020 as a Top Women Wealth Advisor. She was also recognized in 2020, 2019, 2018 and 2017 by Working Mother magazine as one of the Top Wealth Advisor Moms. Ben-Joseph has also earned the Certified Financial Planner (CFP) designation.

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