Three Costly Communication Errors
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I help advisors convert prospects into clients, often restructuring the way they communicate. Here are three costly but common errors. To keep the clients you worked so hard to convert you can’t afford to make these errors.
One of the first issues you confront with a new client is how to invest their portfolio. If you are an evidence-based advisor, there’s already an understanding that you’ll use low-management-fee index funds, exchange-traded funds or passively managed funds.
Previously, this exercise was simple and straightforward. When I wrote The Smartest Investment Book You’ll Ever Read in 2006, I recommended three index funds from Vanguard.
The advent of factor-based investing and alternative funds has made “passive” investing more complex, but that doesn’t mean every client requires a portfolio that incorporates this thinking or these funds.
One of the advisory firms I coach uses a single core fund for almost all clients. When I inquired why, he told me that he explained the pros and cons to his clients and many of them felt simplicity was a significant benefit to them. He said: “They love getting a statement with one line item. They tell me that, for the first time, they understand their investments.”
It’s possible these clients are sacrificing higher expected returns for simplicity, but isn’t this their decision and not yours?
Few advisors present choices to their clients in this manner.