Relationships trump investment returns
In the current climate, clients place less value on investment management than on their personal relationship with their adviser, industry figures told the ifa Business Strategy Day.
Speaking at a panel session, Treysta Wealth Management head of wealth management Mark Nagle said his firm outsources all investment management to focus exclusively on client relationships.
“If you all ask yourselves where you've had the biggest victories, it's rarely been around an investment piece,” he said.
“It's been around structure, strategy or sometimes simply life-coaching.”
He suggested outsourcing portfolio management has freed up Treysta advisers to work exclusively on these core areas.
“It meant that all of our advisers could spend their time doing things that we think genuinely influence the outcomes for their clients,” he said.
He suggested handing off portfolio management to a third party has contributed to the success of some larger licensees.
“It's the fact that they have outsourced the investment piece that's created those efficiencies within their businesses for better commercial outcomes,” he said.
Meanwhile, during a workshop on value propositions, Implemented Portfolios managing director Santi Burridge said outsourcing investment could be part of the “next wave of financial planning.”
“Outsource everything except your client relationship and value proposition and focus on where you add value, which is that human connection and which is what people are actually happy to pay for,” he said.
In particular, he highlighted the need for advisers to differentiate their service from that offered by robo-advisers specialising in investments.
“By technology, [robo-advisers] are going to be able to engage our clients better than we can,” he said.
“We need to have a bunch of people in our business that are good at relationships because that's where the computer can't target.
“Clients trust you. They value the relationship.”
He suggested advisers should decide whether they want to be asset managers, actively pursuing market outcomes, or asset gatherers, a client-centric approach that outsources investment processes.
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