Trends in Wealth Management: Are you ready for the next "value shift"?

1. TRENDS INWEALTH MANAGEMENT How you prepared for next “Value Shift”? Copyright 2014, Cannon Financial Institute, Inc. Unpublished, All Rights Reserved under Copyright Laws
2. Trusted Advisor Copyright © Cannon Financial Institute, Inc. All Rights Reserved Copyright 2014, Cannon Financial Institute, Inc. Unpublished, All Rights Reserved under Copyright Laws 2 Integrity Competency Compassion
3. The Wealth Journey Need Need Need Copyright © Cannon Financial Institute, Inc. All Rights Reserved Copyright 2014, Cannon Financial Institute, Inc. Unpublished, All Rights Reserved under Copyright Laws 3 A B C Time Wealth Education Expense Illness, Disability Pre-mature Death Plan for Retirement Grow Wealth Legacy Plan Manage Retirement Income Safe Capital LTG Capital Need Aspirational Capital Protection C’’ C’ Goal Based Planning Identify Goals Identify Resources Identify Gaps Identify Solutions Solutions
4. Our Opportunity and Our Challenge Primary Secondary Tertiary 75% 75% 20% 20% Client Share of Wallet Client Assets 5% 5% Copyright © Cannon Financial Institute, Inc. All Rights Reserved Copyright 2014, Cannon Financial Institute, Inc. Unpublished, All Rights Reserved under Copyright Laws The challenge is how we move from Tertiary Provider to Secondary and Primary Advisor Client Base 4
5. Stock Broker Financial Advisor Wealth Manager 1980’s Information Research Executions 1990s Portfolio Construction Manager Selection Portfolio Reviews 2000s Risk Profiling Asset Allocation Rebalancing Wealth Planning Copyright © Cannon Financial Institute, Inc. All Rights Reserved Copyright 2014, Cannon Financial Institute, Inc. Unpublished, All Rights Reserved under Copyright Laws 2010s Retirement Income Planning Life, Health, Disability Protection Education Planning Legacy Planning Banking and Debt Management Decision Making Evolution to Wealth Manager INTERNAL Expert with the Answers Advisor with the Questions 5
6. Skills Needed to Capture “Held Away” Assets Highly correlated to shift in consolidating relationships, these three attributes are also enhanced through planning. Advisor Skill Required Correlation to Consolidation in Relationships Strong Weak Motivates Me To Take Action Looks Out For My Best Interests Understands The Needs Of Those In My Situation Easy To Get Along With Is Straight Forward About Fees Can Explain How Products and Services Can Help Me Will Disagree With Me Knows a Great Deal Technical Emotional Copyright © Cannon Financial Institute, Inc. All Rights Reserved Copyright 2014, Cannon Financial Institute, Inc. Unpublished, All Rights Reserved under Copyright Laws Has Experience Is Responsive Source: The VIP Forum’s Survey of High-Net-Worth Baby Boomers, December 2009. INTERNAL Medium 6

Notas do Editor

Ask the participants what the ingredients are for earning someone’s trust. List them on a flip chart.
Using the flip chart results – identify the three key ingredients
Explain what each is:
Integrity – your deed follows your word
Competency – the ability to get the desired results
Compassion – Empathy, the ability to see the world through someone else's eyes and demonstrate understanding
Link this to the Wealth Journey
Journey from A – B – C
Wealth accumulation from A – B
Wealth Utilization from B – C
What are the Goals people want to achieve along the way?
Explain how people typically think about their money in buckets – mental accounting
Explain that with Goal Based Planning we work with clients to help them connect their money to their goals so they can make really smart decision aimed at achieving the goal
Explain that most people have multiple relationship with financial firms
There is usually one relationship that the client looks to for most of their help – The Primary Advisor, followed by a Secondary Advisor and then one or more Tertiary Advisors
The Primary Advisor usually has 75% of the Wallet Share, the Secondary 20 % and the Tertiary 5%
Many firms have nearly 75% of their clients viewing them as their Tertiary Advisor, 20% as their Secondary Advisor, and 5 % as the Primary Advisor
Point out that by moving from Tertiary to Secondary is increase of four fold in share of wallet and that from Secondary to Primary an increase of three and a half fold. The journey from Tertiary to Primary is factor of 15!
Your Challenge is to move from Tertiary to Primary, How?
To start we must realize that the role of the advisor is, and has been changing for some time
In the 80’s, before technology and communication advancements the primary value add of a “broker” was information, research and execution. Now you can get all that on your phone.
In the 90’s the attention shift to Portfolio Construction and choosing Professional Managers to run the money. This was in response to the fact that with advancing technology, people could do for themselves what their “broker” used to do for them.
In the 2000’s the attention shifted to Asset Allocation after the Tech Boom and Bust taught everyone that diversification matters
In the 2010s the focus is moving towards helping people accomplish what they want…as opposed to chasing higher returns. This is in part, because diversification and asset allocation did not immunize portfolios from to the effects of the financial crisis. We knew this though right…you can diversify away systemic risk. We were just naïve enough to believe that it really could get that bad. But it did. The biggest risk for most during that time was making a bad decision based solely on emotion because they had no idea where they stood relative to the things they were trying to accomplish. The advisor and clients that did well during the financial crisis were the ones who stayed the course, because they understood the levers they could adjust in order to achieve their goals even with their portfolios down 20%, 30% or 40%. Perhaps all it meant was that they need to work two or three years longer, or save another $1,000 a month, or re-examine the goals themselves. They had peace of mind because they had a plan and they had an advisor who helped them make sense of what was going on so they could make smart decisions.
Compare that to those who panicked and sold at the worst possible time.
The role of the advisor used to be the “Expert with the Answer”, now the advisor of tomorrow is about being the “Advisor with the Questions” in order to help people make the right decision
Consider how this will change the kind of conversations you have with your clients…What will this mean?
We can move into that Primary Advisor role provided we do the right things. Lets look at the traits that lead to consolidation relationships
This report shows the various traits of advisors and how they impact the behavior of clients as it relates to consolidating assets with a single advisor – It is how we capture the “Off Us” assets
On the left hand vertical axis we measure the impact each of these traits. The higher on the chart, the more impact they have.
On the horizontal axis along the bottom we measure the degree to which each of these traits relies on Technical Skills vs Emotional Skills
Go through each Trait starting at the bottom. Ask the Participants where on the Chart they think the trait should be. High or Low. “How important is it to clients?” “Will it cause them to move more assets to you?”
This requires new skills in order to conduct new conversations with your clients. Learning how to ask really good questions, so the client can do really good reflection and thinking. What do they really want? Why is that important to them? What makes that meaningful. Helping client to clarify their values, crystallize their goals, understand how they are currently positioned what they need to do to move forward. It’s new “value add” entirely.
Through this you will demonstrate those traits that they value most.

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