Tools to Build Trust and Protect Clients

Trust: I would argue that this one word represents the critical foundation for every client-advisor relationship. Trust isn’t achieved at a single point; it is validated and strengthened as time goes on. In operating an advisory practice, your technology and your business processes play a big role in creating and strengthening trust.

Trust is particularly important as it relates to monitoring client accounts. Let’s face it—anyone who has assets can become a target for thieves, con artists and frauds, but there are steps you can take to prevent your clients from becoming victims. You can also provide valuable advice in other areas where your clients may not even realize they have risks, such as their personal email being compromised. Let’s discuss several actions that will further strengthen the trust in your relationships with clients, and most important, actions that can help prevent events that may diminish the level of trust.

Today, advisors have more access to account monitoring tools than they’ve had before, such as their custodian’s platform or portfolio management system. Nothing out of the ordinary should happen in your client accounts without someone at your firm noticing it relatively quickly. Noticing irregularities doesn’t just happen by itself, though; you need to have a documented process that details what you are looking for and who is doing the looking. You should monitor daily all cash movements, trading activity and even address and phone number changes.

As we have discussed in past articles, your clients’ personal information can be compromised, often through their own lack of awareness of threats and attacks. A simple address or phone number change might be the fraudster’s initial step. By monitoring those changes daily, your firm could potentially catch it before your client even receives the change confirmation letter in the mail from their service providers.

Taking advantage of the alert features in many technology solutions is another mechanism for watching over accounts. The alert functionality by itself has been around for a long time. These might include alerts for ACH transactions, transfer requests or margin issues. Nowadays, with the increasing adoption of rebalancing systems, advisors can receive alerts to unexpected changes in a client’s asset allocation mix. For example, say a client deposited a check without notifying you directly. If you have built model portfolios, then your rebalancer could highlight that their cash position is out of balance with the target allocation. In addition, many rebalancing systems provide a view that lists any asset allocation mix discrepancies on a single screen. You no longer need to run report after report to catch these changes.