The February issue of Research magazine takes an in-depth look at what value financial advisors provide to their clients. Drawing widely on academic analyses and real-world insights, Michael Finke, Texas Tech University professor and Research contributing editor, finds that advisor value is not measured adequately by investment returns. Instead, it has a great deal to do with planning and relationships.
Elsewhere in the issue, Ellen Uzelac’s feature article “Here’s Your Lead Generation Machine” probes how technology is providing new ways to find and engage prospective clients. Bill Good, in his Sales Seminar column, draws on a new book about communication to advise advisors on how to improve their listening skills.
“A Broker Who Broke Bad” offers the story, as told to Jane Wollman Rusoff, of Justin Paperny, who went from the brokerage industry to prison and now offers insights on business, ethics and life. Global Economy columnist Alexei Bayer considers the trend of middle-class investors shying away from the stock market. And amid the current polarized political scene, Senior Editor Kenneth Silber observes shifting alignments over monetary and financial policy issues.
Click through the following slides to preview the February issue of Research.
In the February cover story, Michael Finke delves into the question of how advisors benefit clients. Excerpt:
A recent survey conducted by Fidelity Investments found that only 57% of clients felt their advisor provided value during “recent market conditions.” Clients who felt their advisor provided value, unsurprisingly, expressed much greater trust and loyalty. What did advisors do to create a perception of value and loyalty? They focused on long-term goals and provided comprehensive financial advice.
According to Michael Laine, a financial planner in California, “what most clients are looking for is financial peace of mind. Money is often a very stressful issue for people as it is still very much a taboo subject that is not well discussed. As such, having a trusted advisor who makes sure their financial house is in good order is invaluable.”
Unfortunately, peace of mind isn’t easy to quantify.
Technology is opening new ways to get referrals and engage prospects, reports Ellen Uzelac. Excerpt:
Here’s a storyboard you’ll love: Investor checks out financial advisor online and likes what he sees. Investor contacts financial advisor. Investor hires financial advisor.
It’s the ultimate referral engine, marking a reversal in the way investors and financial advisors historically connect. Instead of the advisor reaching out to the prospective client, it’s the other way around. As Nicholas Stuller, president and CEO of AdviceIQ, puts it: “People find their roofer online, their spouse, their favorite Chinese restaurant. But their financial advisor?”
Sales Seminar columnist Bill Good provides a review and guide to a new book on communications. Excerpt:
Here’s the bold promise that opens a book I want to call to your attention: “Your mastery of the critical elements of communication bestows upon you great power to exert on behalf of your clients. You use that power wisely and always in your clients’ best interest—with care, skill and caution—to help them succeed financially.”
The book is The Financial Professional’s Guide to Communication: How to Strengthen Client Relationships and Build New Ones, by Robert L. Finder Jr. The author, a managing director for a national financial services firm, has the credentials to make the claim.
As told to Jane Wollman Rusoff, Justin Paperny relates his story of going from the brokerage industry to prison and then on to a new phase of life. Excerpt:
There will always be people who dismiss me as a felon, a cheat, a thief and a liar. You never get over that, and any guy out of jail who says he has is lying.
My descent was gradual. I couldn’t resist temptation. It was just too easy.
I decided to become a stockbroker while cold-calling at Prudential one summer when I was at USC. I liked the excitement—the thrill of soliciting business.
I was an arrogant, entitled stockbroker in my 20s, one of the youngest brokers Bear Stearns hired. I had Bear, and I thought it was a big deal.
Alexei Bayer examines the causes and consequences of middle-class reluctance to own stocks. Excerpt:
In the 1990s, it was a point of pride for economists to talk about the U.S. as a shareholding society, where stock ownership had become a national pastime. Investing into shares of U.S. companies, either directly or through various pension schemes and mutual funds, represented direct ownership of the U.S. economy and a vote of confidence in America’s future.
Plus, equity investing was an important complement to individual retirement savings; over the long run, stocks consistently outperformed all other financial instruments in terms of their returns, providing an additional layer of safety for retirees.
But the situation began to change after 2002, when stock ownership reached a peak of 67% of U.S. households.
Kenneth Silber discerns some political realignments on issues of monetary policy and financial regulation. Excerpt:
The recent fiscal cliff negotiations underscored the elusiveness of agreements between Democrats and Republicans, and the resulting deal set the stage for further showdowns over fiscal matters in the early months of this year.
The chasm between the parties tends to obscure some more subtle features of the political environment, such as underlying tensions within both parties and points of similarity among factions that might lead to some collaboration across party lines.