Pull Yourselves Together: Conversation starters for investors and advisors

Posted by Realize Rev on 3/24/16 9:49 AM

At the end of February, we wrote a blog post called "The Times They Are A'Changin: Fiduciary Rule implications for investors and advisors" about updates to the Fiduciary Rule proposed by the Department of Labor. We are following this topic closely because we are big fans of progress, but it's true – regulations are stressful for the financial services industry. Even conscientious advisors with the best intentions can get tangled in the red tape of compliance.

Revolution Partners team members pledge to serve our clients' best interest above all, and we think our business model is well suited to thrive in the inevitable turmoil of change. This is a commitment we make voluntarily, with or without industry-wide reform. And thankfully, we know we aren't alone. 

We recently read an op ed in the Wall Street Journal called "Creative Destruction at a Broker Near You." This article was written by leaders of a company designed to provide highly automated investment services to smaller investors at low fees and minimal dedicated service. We have been studying "robo advisors" for their benefits and disadvantages for some time, but that's for another post. Today we want to highlight the "Creative Destruction" article because we respect financial services companies who understand the evolution of the industry and are planning for it. We agree with the authors that, "The financial-services industry will be stronger and more effective because of innovation, and the fiduciary standard will accelerate the process of changing outmoded and ineffective financial business models."Mainwaring.pngFor too long, brokers have been able to wear two hats – sometimes salespeople, sometimes advisors, and consumers haven't always had a clear enough understanding of how distinct revenue streams may impact the fees they pay for the management of their personal investment portfolios. 

The White House Fact Sheet on this topic makes clear that new regulations have been drafted primarily to try and protect "middle-class" investors from being sold high-cost products by brokers, stifling the investors' ability to maximize retirement savings. Without a doubt, affluent advisors will feel the impact as well.

It is a good time for all Americans to open the lines of communication and ask some questions of their advisors. 

Here are some good conversation starters:

1) How are you compensated for your work? Does it vary from client-to-client? Is it ever based on the products recommended?

2) Why do I own these particular investments? How do you come up with a recommended allocation?

3) How many relationships do you oversee? 

4) What service experience should I expect as a client of your practice? May I look over your shoulder to see what kind of tools you use to manage my relationship, as an example?

5) How is your firm investing in your practice in ways that will positively impact me as your client?

We think technology is a critical component in accelerating the evolution of the financial services industry for savvy, discerning investors. Therefore, we work diligently to deliver an integrated, workflow-based dashboard for our advisors, so they can be informed advocates and proactive counselors. And for our clients, we believe that transparent, secure technology solutions can help provide peace of mind so they can uniquely Realize Life’s Worth™. This is an ongoing effort; it's our life's work.

Read more of our thoughts about technology in our blog post Maneuvering "The FinTech Revolution" and on our page Experience Revolution Partners.

We can all work on evolving the business for our clients, and we can all be better off for it.

Do you have multiple advisors?

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