Gathering vs. Managing Assets: Can You Really Do Both Well?
Investment and insurance professionals typically fall into one of two camps. Either they enjoy selling, which gives them the edge in attracting clients, thereby gathering new assets. Or their strength lies in actually managing the investment of those assets.
No matter where you fall in this equation, it is becoming clear to many that clients are interested in the solutions created during the selling process, as well as a higher level of management for their investments.
If you are like the majority of registered representatives with whom I have had the privilege of working, your talent probably lies in gathering assets, thanks to your expertise in developing solutions for your clients financial needs and your excitement for selling. Those solutions can involve a wide range of strategies and a variety of products, many of which have underlying investments, such as subaccounts within variable life and annuity products. Over time, these products will ultimately represent a large portion of your clients net worth and will warrant close monitoring.
But as an “asset gatherer,” you dont want to get into the awkward position of discussing investment details and changes that occur in your clients accounts, which can include style drift, capitalization movements and investment returns relative to benchmarks, to name a few.
Instead, your job is to balance the “gathering” needs of your practice and monitor investment performance–not to manage client assets by making proactive investment recommendations.
So what do you do? This is where the second half of the equation–managing assets–comes in. Registered representatives who are attracted to the asset-management side of the business often affiliate themselves with third-party investment advisor firms (TPIAs). The strength of these firms lies in managing, not gathering, client assets.
Using the services of a TPIA can give you the freedom to remain focused on growing and gathering new assets, while simultaneously providing your clients with a high level of proactive management. Often included in that proactive approach are dynamic, sophisticated management models that can be customized to individual client characteristics.
These dynamic investment strategies may better meet the needs of your clients who have used traditional strategic buy-and-hold approaches with some disappointment.
This disappointment stemmed from the fact that in the past, buy-and-hold asset allocation models, provided by product manufacturers or investment firms, met most clients investment objectives, thanks to packaged product features like dollar cost averaging and asset rebalancing. Therefore, an allocation strategy was not usually altered until a major change, such as a shift in risk tolerance or time horizon, occurred.