Get More from an Advisory Relationship with Client-Centric Investing
With the 2008 global financial crisis fading in the rearview mirror, investors are slowly regaining their confidence in the stock market with a halting willingness to take on more risk. However, many still find it challenging to overcome the trust deficit created by financial advisors who view them as assets to be managed rather than people with life ambitions.
To those advisors, the market indices and benchmarks mattered most. However, to the client, it was all about their financial future. All too often, advisors focused on standard deviation, Monte Carlo analysis, and risk-return lose sight of the emotional characteristics that drive investor behavior. They then become perplexed when their clients decide to break from a perfectly good investment strategy to follow the herd over a cliff near a market bottom.
Why clients abandon the strategy
Through the advancement of digital technology, today’s investors are more knowledgeable, tech-savvy, and empowered. They are also much more attuned to their need for meaningful investment advice focused on their needs, priorities, and preferences.
However, studies show that investors’ emotions are often triggered when they don’t understand their investment strategy. When they don’t understand why their money is invested the way it is, they lack the conviction to stick with it and will abandon the strategy at the first sign of trouble, which invariably leads to underperformance.
The financial advisor plays a key role in this. In addition to helping clients to create a strategy, it’s the advisor’s primary role to help them understand the strategy and then coach them through the turns in the market. The critical role of the advisor is to instill the patience, discipline, and confidence most investors lack when investing on their own.
To gain client confidence, the strategy must be entirely about them
That becomes more challenging if the strategy is based on something other than the client’s objectives. Advisors who rely on investment performance to convince their clients their strategy is sound risk losing their confidence when their portfolio underperforms. However, when they understand the strategy and how it benefits them specifically, they are able to make smarter decisions and enjoy their lives more.
Financial advisors who fail to recognize this and continue to create investment strategies based solely on abstract investment principles will continue to widen the trust deficit. Advisors who place their clients at the center of the investment strategy and build it from the inside out will not only gain the trust of their clients but also become partners in pursuing their client’s most important financial goals.
Creating a client-centric investment strategy
Client-centric financial advisors strive to maintain an utterly agnostic view of the investment strategy until a complete investment profile is developed, pinpointing your clients’ specific goals, priorities, time horizons, risk tolerance, and attitude about money. They provide their prospective clients with the opportunity to tell their life’s journey, followed by an in-depth discovery of who they are, what’s important to them, and where they want their journey to take them. For your clients, the discussion brings greater clarity to their vision for the future. For advisors, it forms the framework for creating a customized, goals-based portfolio.
Advisors who use an open architecture are better positioned to practice client-centricity, as they are not limited in the types of investments that can be used to construct a portfolio based on their client’s goals, risk tolerance, and preferences. The focus of the asset allocation strategy is defined by the client’s goals rather than by traditional asset class definitions.
When a portfolio is aligned with a client’s profile, portfolio performance becomes less about meeting arbitrary benchmarks and more about meeting their specific needs. This enables clients to stay focused on their long-term objectives rather than the short-term fluctuations of the market, which are meaningless in the long run.
When the strategy is sound, but the client still loses confidence
A strategy can be well built, properly diversified, and aligned with a client’s long-term goals — and still fail in one important way. The client may not fully trust it when markets become difficult.
That’s the gap many advisors run into. The strategy makes sense. The allocation is appropriate. But if the client doesn’t understand how it connects to their life, their priorities, and what they’re trying to accomplish, confidence starts to weaken when it matters most.
Client-centric investing closes that gap. It gives clients something more than a portfolio they’ve been told should work. It gives them a strategy they understand, a purpose they can relate to, and a reason to stay with the plan when emotions begin to rise.
That’s when advice becomes something a client can hold onto — not just something that makes sense.
How you handle these conversations is what keeps clients on track
The challenge isn’t just building the right strategy. It’s knowing what to say when clients begin to question it — and how to bring them back to a place of understanding and confidence.
Those moments don’t follow a script. They require clarity, consistency, and the ability to explain the same ideas in a way that still feels relevant when emotions are high.
If, after all of this, you specifically want to explore one type of solution Don stands behind…
A Strategic Resource for Advisors Seeking Meaningful Differentiation
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For those looking to refine how they communicate their value in an increasingly competitive landscape, this experience provides a self-paced approach with an option to work directly with Don in a one-on-one strategic coaching session.
