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Financial Planning > Behavioral Finance

6 Ways to Make Yourself More Valuable to Clients

By Dinah Wisenberg Brin

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Volatile markets can leave investors worried and confused — and reaching for the phone or email to touch base with their financial advisors for guidance and reassurance.

How can advisors maximize and demonstrate their value to clients amid the market turmoil?

Betterment, an online financial advisor platform that also offers products and services for financial advisors, hosted a webcast Tuesday with Devon Klumb, strategic sales manager for Betterment for Advisors, and Eric Bronnenkant, Betterment’s tax head, to discuss moves advisors can make to strengthen their value to clients.

Here are six tips from their talk.

1. Recognize the evolved advisor value proposition.

Klumb noted the “advisor value proposition” has evolved over the past 50 years, with advisors transitioning from essentially stockbrokers to professionals offering investment advice. 

With the advent of passive index investing, advisors had to pivot and expand into retirement, risk management, estate and tax considerations and investment management, which have become “equally relevant pillars” in advisory practices, he said.

This evolution is a net positive for many reasons, but the modern advisor is now giving more advice on a much broader range of topics than ever and being asked to do so for diminishing compensation compared with their counterparts in past generations, according to Klumb.

“Basically, you’re doing more for less and that’s a trend that is likely going to continue,” he said. So advisors need to identify the value of their work, he added. Klumb said it’s important to ask what your clients would say is your primary value.

2. Focus on relationships.

Klumb cited a quote from financial planning consultant Michael Kitces, who has said advisors can differentiate themselves by offering services beyond portfolio management and a relationship that consumers can’t get from a robo-advisor or do-it-yourself platform.

“The modern advisor is paid to make complicated things less complicated. The value proposition is really simplification, it’s helping clients to connect the dots and build a comprehensive, customized plan that’s specific to their unique situation and their needs,” Klumb said.

“In other words, clients want to experience a relationship with someone, someone that knows them deeply, someone who can offer counsel on every aspect of their financial situation.”

3. Identify high-value and low-value work.

Advisors need to identify the most effective ways to deliver their service and should ask what work they’re doing is commoditized and what, on the other hand, amplifies their value proposition “and makes our relationships sticky,” Klumb said.

He suggested identifying high-value and low-value work, with the high-value activities requiring a human touch and low-value tasks including administrative work that can be automated. Advisors should spend less time and energy on the tasks that don’t add value to the clients and more on the relationship side, he suggested. 

Klumb identified low-value work as activity that falls outside the core service offering, can be standardized among all clients and can be outsourced or automated, such as billing, bookkeeping, scheduling, sending email reminders and collecting client information.

High-value work requires more advisor expertise, more tailoring to individual client needs and a comprehensive and personal relationship, according to Klumb.

“We’ve got to get this right if we’re going to scale and serve our clients in the right way,” he said.

This can be as simple as sitting down and listing everything the advisor does for clients and grouping these tasks into two categories.

5. Set the tone early on.

“Clients recognize the value of you knowing them well, being in tune with their goals, reminding them of things that they said previously are important to them, the relationship side of things,” Klumb said, urging advisors to make space for the “the human side of what we do” by automating the non-human.

People want to know if they’re going to be OK, and advisors’ ability to reassure is the simplest version of their value, he added. That question may manifest as calling when the market is down or questioning whether the financial plan is going to work, Klumb said.

“You can always work to evolve an existing client perception of your value over time but the reality here is that the conversation begins Day One with a prospective client and getting it right on the front end,” Klumb said.

Clients find important the things an advisor prioritizes, so if the advisor centers on portfolio performance, “your client will only know to see your value through portfolio returns,” he said.

If advisors focus on the dynamics of a well-designed financial plan — including estate plans, tax effects on performance, working on the client’s vision of their ideal future  — “your clients are going to see your value as a quarterback and as a coordinator that makes everything work for them. And I think that’s an advisor in the truest sense of the word,” Klumb said.

“If clients see you as their holistic financial planner, it’s kind of hard to be replaced,” he said. “You’re always there, you’re guiding them through life’s peaks and valleys and that is a relationship that over time becomes unquestioned and unbreakable.”

5. Educate clients.

Educate clients early on volatility’s historical role in public markets and make it clear what your firm’s stance is on staying the course, Klumb said.

 “This is an ongoing task; year after year, you have to remind clients of this and what this volatility means” and that you accounted for the unpredictability in their plan. “It’s not because they don’t listen to you, it’s because emotion just simply trumps reason in times of uncertainty.”

It’s easiest to educate clients on volatility when the market is not experiencing uncertainty, Klumb added.

And when the market is experiencing turmoil?

“Saying, ‘Not only is your fear normal, it’s expected,’ saying things like, ‘You’re not alone,’ at least in my experience, there’s something that sort of settles a client when they don’t feel like they’re the only one thinking this,” Klumb said.

The ability to reframe a situation is a skill advisors need to learn and deploy, he added. “Often the decision that seems to be rational in an uncertain time would be viewed by that same person as outrageous in good times,” he said.

Just because an investment’s value is down doesn’t mean the client has lost money, for instance. “You only lose money if you’re forced to sell something and a good plan never puts you in a place to sell something for less than you paid,” Klumb said.

He suggested framing emotional conversations with “rational guardrails” with resources to educate clients on how trends and events play out in the long term.

6. Focus on what you can control.

In handling clients’ investments, “focus on the controllables, both on what you can control and what the client can control. Helping clients to recognize there is not a lot that we can do in these times other than sticking to what we’ve always planned to do and understanding that we’ve accounted again for some of this uncertainty in the plans that we’ve made,” Klumb said.

He added, “be their advisor, not the financial sales rep. Be someone that’s there to advise them, be honest with them but in a tactful way. You know your clients, you know the way that they need to hear things. And so it’s our job to give them advice they way they need to hear it, especially in times like this.”

(Image: Adobe Stock)

Dinah Wisenberg Brin

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