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June 01, 2008 at 04:00 AM
Pick up any newspaper or magazine and the headlines are daunting — Credit Crisis…U.S. Recession…Economic Slowdown. These are challenging times. And while the view on the Street is that the long-term drivers of global growth remain strong, the near-term disruptions are taking a toll on the average investor. Fortunately, at Merrill Lynch, our wealth management business has been relatively resilient in the face of the current environment. One reason is the dramatic change in how our financial advisors interact with their clients.
Thirty years ago, when the first issue of Research magazine hit newsstands, FAs were stock pickers. They were independent practitioners who tended to spend their days cold-calling clients and recommending stocks. This was a transaction-based business. In boom times, this strategy worked. But when times were bad, and stocks went down, clients would simply retreat from the markets and, in some cases, miss out on even greater opportunities down the road.
Flash forward 30 years and we have evolved to what is now a relationship-based business. The global marketplace is far more sophisticated and complex than ever before. Consequently, so too are the needs of our clients. People are living longer, fuller and more active lives. As a result, the way advisors engage with their clients has evolved as well. Today, wealth management is all about partnership. Clients need someone who understands the totality of their needs and can develop an innovative, long-term approach to help them achieve their goals.
At Merrill Lynch, we refer to our FAs as essential partners. As I like to say, they have a seat at their clients’ kitchen tables, and are involved in all of the important investment decisions in their clients’ lives. I have always believed that if you sell someone a financial product, as soon as a better salesman comes along or the market shifts, they will leave you. But if you become a partner in fulfilling someone’s dreams, you begin a relationship that will last a lifetime.
Shifting GroundIf the past is any indication of the future, there’s no question that the pace of change for our industry and clients will continue to accelerate. Advancements and investments in technology worldwide will, more than ever, have profound implications for the wealth management business. This will impact the way in which we interact with our clients and the way we evaluate and tailor our products and services through cutting-edge data-gathering and analysis programs.
Clients’ needs and behaviors are changing as well. According to the Merrill Lynch and Capgemini 2007 World Wealth Report (WWR), client demand for specialized products and services has increased significantly over the last several years. Take, for example, environmentally and socially responsible investments (SRI). Thirty years ago, who would’ve guessed that, by 2005, $1 out of every $10 invested in public equities in the United States would be in SRI?
