What Investors Don’t Want In An Advisor
June 24th, 2021
What clients want from their advisors can be difficult to pin down because their needs can be quite different. However, they have a lot in common when it comes to what they avoid. Investors don’t want their advisors to have multiple streams of income; products should be built on anything that's not kickbacks. They want clear and transparent fees that they can see on paper (or electronically), so they can understand them. It’s a red flag if advisors claim exclusivity on an investment. They want to be reached out to as the primary interest. Finally, and most importantly, they want a customized plan. Generic one-size fits all investment can seem like kickbacks are in place, there is a lack of effort or a lack of understanding. They want a unique experience and a unique portfolio, not a cookie-cutter one.
The Most Underserved Market is Looking for Some Pop
June 24th, 2021
Global wealth has skyrocketed since the onset of the pandemic; it rose by 8.3% in 2020. North America, Asia (ex-Japan), and Western Europe are the primary holders of this wealth and the most underserved communities in these regions are those with between $100,000 and $3 million in wealth. This group holds 331 million people globally and has $59 trillion of investable wealth. Financial and Wealth managers don’t properly care for this market segment, which has relatively simple needs. They get standardized products with poor client experience. Anna Zawarsky, global leader of BCG wealth management said “wealth managers must embrace a new approach that lets them reach a larger audience in a cost-effective and scalable way, but with a highly personalized offering.”
Magnifi can help advisors solve this issue through its clear and simple engagement tools which bring clients closer to their investments, even for those advisors who specialize in mass affluent clientele. For example, Magnifi allows advisors to demonstrate and activate portfolio enhancements (e.g. finding comparable funds with lower fees and better performance), showing clients the value they bring to the table as well as personalizing the experience.
The Right Balance of Technology is Key to Client Attraction and Success
June 24th, 2021
Technology has augmented investing in a variety of ways in the last decade, but its presence is still growing. One of the most transformative aspects is how technology has ushered in new investors who can select products that align with their interests. However, leaderboards and rewards can have harmful impacts on clients by putting on social pressure. This can alter judgments and lead to bad investments. ‘Gamification’ can go too far and push clients to harm their portfolio, but the right amount of technology still allows clients access to information related to different assets and how they align with their portfolio. Investment technology can nudge clients in the right direction for their portfolios without having perverse incentives. For example, clients might want to better understand what is driving investment selection in their portfolios but maybe should not take over that function.
As a specific example, Magnifi allows advisors to introduce specialized firm model portfolios to clients, allowing the client to better understand the rules governing the investment selection of their portfolios without having to get deep in the weeds.
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New Investors Want New Companies
June 9, 2021
IPOs are more attractive to new investors than ever before. For most of investing history, private equity and IPOs have been harder for retail investors to be a part of, but information and fintech are increasing access for retail investors. Novice investors are also drawn to these types of investments, driving the fintech innovation into IPO launches, but by and large many IPOs remain closed off to retail investors. This has forged and cemented a place for alternative launch platforms or companies that have broadened their investment availability. Firms in this market are mostly new businesses but they have drawn an impressive amount of capital from reputable banks and investors. Younger investors see themselves as planting the seed for future companies and getting in on the ground floor of a large potential upside. However, many investors should be cautious as a significant proportion of newly listed companies can pose an increased risk.
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Advisors Must Adapt to the Changing Needs of Wealthy Clients
June 9, 2021
Wealth and investment management are ever-changing, but a new generation of clientele is shifting that landscape even more quickly. High net-worth individuals (HNWI) are more interested in ESG investing than ever, 27% of those with more than a million dollars in investable assets are interested in sustainable investing. As more intergenerational wealth is transferring a new generation is taking the reins and signaling different interests. Many want customized solutions to meet their needs. Clients demand personalized products, digital solutions, and data analytics tailored for their needs. Additionally, clients have more international investments than ever, and navigating that can be difficult. Specialized monitoring and optimized tax advice help clients navigate their global portfolios. Meeting the needs of the next generation of wealthy will be difficult, but those equipped with the tools to do so will have the edge.
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