Advisors' New Role: Matchmaker

As “Am I going to outlive my assets?” becomes the overriding concern of your clients, rather than “How can I grow my assets?” your role will shift from finding the best performing mutual fund to matching client assets to liabilities, according to a number of speakers at the General Membership Meeting of the Investment Company Institute last month in Washington, DC. In a period of low personal savings and low equity returns, the somber consensus is that advisors are going to have to take a new look at active management and guaranteed products in order to increase returns. Inside that job is a responsibility to keep costs low, to avoid losing money for your clients, and to enhance the long-term relationship with those clients. Wholesalers, it was suggested, will become a more valuable source of help in gathering research, education, and marketing.

Future business growth will not come from asset growth, speakers warned: With the newfound focus on IRA rollovers, the issues of distribution and income in a low-return environment will trigger more investors to look for advice, which will require advisors to employ more proactive marketing if they wish to continue to grow.

This change in role from performance to guidance will involve making costs and conflicts of interest more transparent; simplifying paperwork; increasing regulatory costs; and placing a bigger emphasis on relationship-building skills.