Client viewing his financial statement on a cell phone

Staying Relevant To Clients As Their Expectations Change – Lessons From Over 20 Years Of Serving Investors

Times change… And if you don’t change with the times, you tend to get left behind.

I remember when Advanced Asset Management Advisors (AAMA) began in 1999. Things moved a little slower then. There were, of course, always client challenges and demands. But all-in-all, there seemed to be more time to address them.

Today, things move at the speed of Twitter, Reddit, and Facebook (or is it Meta now?). Think of the last time you had to wait more than three seconds for a webpage to load on your phone…. Weren’t you irritated?

We live in a 24/7, instant-access world. And that reality means we’ve seen a fundamental shift in the advisor-client relationship—a shift that can either be an opportunity to differentiate and win more business, or get left behind.

Managing assets (with both direct investors and through advisor-clients) for more than 20 years, I thought I’d share how AAMA has managed positive client experiences throughout the evolution of client expectations, knowledge, and autonomy.

Fundamental Changes in the Advisor-Client Relationship

First, let’s look at how the dynamics between advisors and clients have changed over the years. The technology-led 24/7 and instant access culture we live in today has altered the advisor-client relationship in a number of ways:

  1. From no-fee trading to in-depth research and planning tools, investors have access to the resources needed to manage their portfolios with autonomy.
  2. With a 24/7 news cycle and countless online education resrouces and investor forums, clients have access to a near-endless sea of information. Advisors aren’t the gatekeepers anymore. 
  3. Consumers have grown accustomed to more comprehensive, convenient, and tech-forward services (i.e. Amazon) along with more flexible work habits. For advisors, that means clients will continually expect more than asset management. And when they have a question, they want answers right then and there—not next week.

Adapting to Keep Existing Clients Happy, and Prospective Clients Interested

A growing advisory firm is a healthy advisory firm. So how do you maintain strong growth when client expectations become harder to meet? After all, how can I meet expectations that are being shaped by cutting edge technologies and the Amazons of the world?

The good news is you don’t have to have the most cutting-edge technology. And you don’t have to become Amazon. You just need recognize where clients are coming from, and tilt your focus to align with those expectations. Here’s how:

Prioritize Accessibility To Align With Clients' Evolving Service Expectations

If you’re at all familiar with AAMA, you know that we place a high premium on being accessible to everyone we work with (advisors, investors, and partners). That’s not because we have nothing better to do. It’s because we realize how important accessibility is to the investment experience.

A great example comes from earlier this month when we executed a rebalance in our portfolios, which included the a few fund swaps. One of our investors missed the advance notification about the fund swaps and emailed us for clarification (this was around 8:00 PM). Being after hours, we didn’t immediately respond to the email, so the investor called my personal line. I was happy to answer and field his questions. Again, not because I had nothing better to do, but because I realized that with just a few minutes of my time I could give that investor peace of mind.

This goes back to the 24/7 culture. We are inundated with information, all the time. We’ve grown to expect answers to our questions immediately. So whether you do that by expanding your staff, outsourcing less impactful functions of your business, or being more strategic about your growth, we feel accessibility to key players within your business is critical to sustainable growth.

Want a quick win in the accessibility department? Get ahead of the questions with content. Being proactive is a great way to deliver the accessible feel if you’re shorter on time, as it solves many of the same issues, but en masse.

Find Efficiencies That Make Room for Deeper Client Relationships

In the same vein as accessibility, we’ve found that internal efficiency is essential to managing consistently positive investor experiences. Why? Because when you’re operating a tight ship, you can prioritize the things that really matter.

At AAMA, that’s meant focusing on a core investment strategy – fundamental market pricing and sector valuation. Our process may be time consuming, but it’s our only focus (in terms of investing). That focus allows us to execute our strategies with consistency and efficiency, which allows us to better prepare to handle client conversations.

This mentality also means we are the first to recommend another firm that fills a core competency that we don’t. You can see this on the advisor-client side of our business more than anything. When you’re building a portfolio that we aren’t well suited to serve entirely, we jump at the opportunity to not just point out where we aren’t a fit, but work with the advisor to find a solution that is a fit (aka blending portfolios). Clients actually appreciate the candor, which builds trust.

For most advisors, we aren’t shy in saying we think the best path for most is to outsource some or all of the investment management function. Clients increasingly expect for their advisors to provide comprehensive financial services – tax planning, trust and estate planning, financial planning… a lot of planning. How can you do that at scale if most of your time is spent in the weeds of investment and market data?

By outsourcing some of the services that have become table stakes (this goes back to our mantra that investments are commonplace, but a partner in the investment journey isn’t), you can find the time and energy to focus on things that will wow a client.

Make Sure Your Clients Know Negative Market Events Will Happen, But That Their Portfolio Is Designed To Handle It (And How)

Speaking of investment data and constant news headlines, today’s investors are more inundated with information than previous generations (from the news, social media, and even small talk at parties) – and that equates to more intense hype, fear, and anxiety. Add to that a generally more volatile market, and the effects compound.

We’ve found that the uptick in volatility paired with a 24/7 news cycle means we have to spend more time educating clients on the potential drawdown of portfolios.  After all, a risk-adjusted portfolio may be well aligned for a client’s long-term goals, but that doesn’t mean they’re going to blindly ignore short-term hiccups in the market—which are becoming more frequent and severe.

At AAMA, we’ve leaned on two key strategies to keep clients focused through volatility and noise. The first is in reinforcing the client’s exposure to the market. If their long-term goals necessitate a high level of market exposure, we ensure they understand what a 5% market swing will feel like (in dollars) and why it’s ok.

The second strategy is actually our investment strategy—that’s to say, our fundamental process. Beyond working to ensure clients understand how their portfolio will react across markets, we also try to ensure clients understand the core drivers of the market, over the long term. When they understand that earnings and valuation statistics tend to play out over the long run, investors get a lot better at tuning out the daily noise that’s best left to the day traders.

Expectations and Tactics May Change, but the Fundamentals Hold True

Everything moves in waves. We see it all the time in the investment industry. Just look at the ebb and flow of indexing vs. active management.

But one constant in a constantly changing industry is the fundamentals that drive long-term market movement. Price, earnings, affordability. These are the pillars that hold up our market, and we feel they are the best waypoints to guide the advisor-client relationship. They’ve worked for us over the last 20 years, and we expect they’ll work for another 20.

Want to learn more about fundamental market pricing and sector valuation strategies? Give us a call. We’d always be more than happy to speak with you.

From our AAMA family to yours. Happy and healthy holidays!  

Robert Baker, President

The information and opinions in this report have been prepared by the investment staff of Advanced Asset Management Advisors (AAMA). This report is based upon information available to the public. The information herein is believed to be reliable and has been obtained from sources believed to be reliable, but AAMA makes no representation as to the accuracy or completeness of such information. Opinions, estimates and projections in this report constitute AAMA’s judgment and are subject to change without notice. This report is provided for informational purposes only. It is not to be construed as a recommendation to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction in which such an offer or solicitation would violate applicable laws or regulations.

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