Over a year ago, Fidelity’s Clearing and Custody Solutions division introduced a “New Advice Value Stack,” a striated pyramid of services that advisors should provide clients to align with clients’ needs and desires and support their own value proposition.
The services include, from the bottom up, managing money, achieving goals, attaining peace of mind and finally fulfillment.
At the company’s Inside Track conference in New York City this year, Fidelity included a panel of advisory firm leaders who focus much more on the upper rungs of that value pyramid, staking their futures on services apart from traditional investment management.
Jeffrey Gitterman, co-founder of Gitterman Wealth Management, said his firm outsourced traditional investment management activities years ago and now focuses in-house on environmental, social and governance investing, including fossil-free investment strategies, that the firm also offers outside advisory firms for a fee of 10 basis points.
ESG, which he calls the GPS of investing, is now part of the due diligence process, used by investment banks and a growing number of funds, and it attracts “stickier clients” for advisors, said Gitterman. Those clients value advisors who invest “in line with their values.”
An ESG approach to investing is also a magnet that attracts next-gen advisors, said Gitterman, adding that his firm, which hosted its third Sustainable Investing Conference — most recently at the UN — has been “inundated with resumes,” many from millennials. Sustainability is “sellable and scalable,” said Gitterman.
Frank Corrado, who heads Blue Blaze Financial Advisors, explained that his firm focuses on the client’s “life purpose,” first helping them to uncover what that is, then developing a comprehensive life plan that the client and advisor both commit to in partnership.
Corrado is a registered life planner, as designated by the Kinder Institute of Life Planning, and his firm’s advisors use the institute’s EVOKE process to develop a client’s financial plan: Exploration (what’s important to a client), Vision (what living your dream looks like – if you had all the money in the world, or five to 10 years or just 24 hours to live), Obstacles (to achieving that dream life and the point where details about a client’s assets, income and net worth are revealed) , Knowledge (when the financial advisor takes the lead in this five-step process, putting to work his or her expertise), and finally, Execution (of the financial plan).
As a result of this approach, the firm’s average client age has declined to 44 from 55 previously, said Corrado.
Blue Blaze, named for the blue streaks on hiking trails which signify an alternate route, outsources investment management, compliance and client administration, which allows its advisors to spend about 70% of their time interacting with clients, said Corrado.
Ron Carson, head of the Carson Group, which serves advisory firms through multiple businesses including Carson Group Coaching, Carson Wealth and Carson Group Partners, said that most of the advisors he talks to still see themselves as portfolio managers even though the investment management side of the business has become commoditized.
Advisors need to offer clients more, including a great digital presence, which is just “table stakes” these days, as well as a tax overlay, advising when assets should be held or withdrawn on a dynamic, not static basis, said Carson. “That’s true value add.”
— Check out Ron Carson: 9 Challenges Advisors Must Tackle on ThinkAdvisor.