From the March 2010 issue of Investment Advisor • Subscribe!

March 1, 2010

Redefining for Retirement

Sidebar to the Cover Story "Custom Job"

There's a "different mindset" that advisors need to have when focusing on the distribution phase of a client's life, says Scott Slater, and the firms that do focus on retirement are getting better educated when it comes to figuring out "which pools of money should be drawn from first," always considering the tax effects. Slater, managing director of business consulting for Schwab's Advisor Services RIA unit, says the best firms still begin with assessing client needs, but must ask themselves two fundamental questions: how well have they identified who they're serving, and what is their value proposition? Only then can they build their firms, and structure their compensation, to match the clients they're serving. If part of your value proposition, he says, is to be your client's primary advisors, then there are specific services you will need to offer. "If you care deeply about your clients," Slater says, you may get involved in helping pick nursing homes for clients or their parents. Warning against this kind of "scope creep," as he calls it, Slater also says "advisors shouldn't be afraid of charging for a service if they're adding value." Advisors have to be more "creative" when it comes to compensation, since charging an AUM fee on a declining asset base is not a great idea. As for the future, Slater suggests that trust services will become increasingly important to clients and thus to advisors, "not just to keep the assets, but for tax reasons" as well.

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