Putting Investors First: What Do Clients Want from Their Wealth Managers?

Deena Katz

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In a session at the 67th CFA Institute Annual Conference in Seattle, a panel of seasoned wealth management professionals fleshed out the most pressing question in a business where differentiation has become a more urgent calling: How can private wealth managers better serve their investors?

What follow are a series of tweets and excerpts from the panel: Patricia L. Edwards, CFA, of the Private Client Reserve at U.S. Bank; Deena Katz (pictured above), associate professor at Texas Tech University and a founding principal of Evensky & Katz; and Scott D. Welch, executive vice president and chief investment officer of Fortigent.

What do clients want from their wealth managers?

“In the ’90s, they were worried about lost opportunity, and since 2000, they worry about loss of principal, so what they really want is a lot more discussion around holistic advice and how their investments fit in the context of their life, and not just performance. We are seeing a lot more people asking for deep conversations around retirement strategies and how [they] will affect their families, about estate planning and how [they] will affect their families. So it’s a lot more deep discussion and a lot less around performance.” — Deena Katz



The job of the wealth manager:

“Let’s face it, what we really do for a living is manage expectations. That’s all we do, which means we need to know enough about what the clients’ expectations are to know if we can actually help them and continue to help them. So when there are difficult conversations, we have already had the discussion about ‘what does that look like to you?’”  — Deena Katz




“Some of the best advisers I have worked with spend three minutes on performance in an hour-long conversation, and the rest of it is: What’s changed in your life? What’s going on with your family? What’s going on with your health? How are your charities doing? Have your life circumstances changed?” — Scott Welch

“Focus on the correct side of the decimal point in terms of what you are trying to accomplish and the hierarchy of value you bring as an adviser. Number one is financial planning and estate planning — that is where you will add the most value to clients’ financial lives. Then you start to talk about asset allocation. Then you start to talk about beta management. Then you start to talk about costs and taxes and the fact that you can actually control them in the portfolio. And then at the bottom of that hierarchy is security selection or manager section, depending on how you run your books. At the end of the day, picking the next small-cap manager is going to add value in basis points terms, not in handle terms.” — Scott Welch

On client expectations, time horizons, and performance reporting:

“You want to look for a client base that doesn’t watch CNBC. Beyond that, you really need to explain the portfolio concept, pointing out that no one can be 100% right, 100% of the time. It’s just impossible. So one of the analogies I have used is a garden: Different things are going to pop up at different times. Put it into terms that the clients understand.”  Patricia Edwards, CFA

“We don’t report short-term performance. We don’t want clients to think in the short term. We don’t focus on that. What we talk about is: ‘What kinds of things have we done to move our clients forward?’ How much closer are you to whatever it is we are doing the planning for? It is not based on numbers; it is based on goals.”  Deena Katz

The rise of robo-advisers and the evolution of online advice:

“The bottom line is that there are firms out there now [that] have a lot of capital behind them, that don’t care about profitability for now, and they are presenting to a technologically savvy investor base and charging 10 bps. Advisers had better have a very clear value proposition to share with clients.”   Scott Welch



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Photo credit: W. Scott Mitchell

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