While at Wealth/Stack 2019, we asked a number of financial advisors the same question:
What is one thing about your business you don’t feel the industry pays enough attention to?
The answers varied widely. Respondents hailed from around the country (and some even outside the U.S.), with assets under management ranging from less than $1 million to $600 million. Some were decades-old asset management stalwarts, while others were just starting out with a Netflix-style subscription model for financial advice. Here are some of the best answers.
ESG Investing Can Improve Client Discipline, Net New Referrals
Bair Financial Planning
Headquarters: San Diego, California
Assets under management (AUM): $70 million
Percentage of assets in ETFs: 33%
Victor Orozco, managing partner/director of operations:
A lot of our industry assumes ESG [environmental, social and governance] investing isn’t really an issue, because it isn’t something clients are asking for. But nobody asked for a multifactor international ETF, yet somehow that finds its way into portfolios.
We’re in fact getting more and more questions from clients about ESG issues. When clients reach out to you and ask, “Do I have private prisons in my portfolio? Or gun manufacturers?” and you’re able to tell them no, it’s amazing how engaged they get, and how happy they become with their portfolio. They may not even know if the portfolio is up or down, but they get excited knowing they don’t have those stocks in their portfolio.
If clients can have their most sensitive part of their life—their money—integrated with their values, then they feel like they’re heard. And they’re less likely to want to get out quickly, because they’re more emotionally tied to their portfolio.
Nobody gets excited talking about their multifactor international ETF. But when they find out they have a fund that’s looking at gender equality or LGBTQ issues—whatever theme is important to them—they talk about that to their friends, their family, their colleagues.
Growth For Growth’s Sake Is Self-Destructive
Mitlin Financial
Headquarters: Hauppauge, New York
AUM: $55 million
Percentage of AUM in ETFs: 45-50%
Larry Sprung, president/founder:
As a smaller firm, we’re looking at how best to grow. Everybody is in this rush to scale and get larger very quickly. We’re trying to discern whether we should be thinking along those same lines, or whether we’d be able to survive long term as a stand-alone.
Many firms are making their decisions about this based on what the industry as a whole is doing, without really sitting down and investigating if that’s the right way to grow. They’re jumping to just get bigger quickly, and not necessarily taking the time to do the research. You have to make sure you’re not just growing for the sake of growing. You have to be thoughtful and strategic.
It’s Tough Making Money By Serving Younger Clients
Lundeen Abrams Advisors
Headquarters: Minnetonka, Minnesota
AUM: $18 million
Percentage of AUM in ETFs: >50%
Suzanne Abrams, president:
There’s a real dearth in service for younger people. The industry is really motivated by AUM, and younger people don’t have the AUM that makes anybody want to work with them.
I know there’s new energy around creating flat-fee-based plans for young people, but it’s really difficult. That’s one of the hardest things—taking care of younger people but not being paid very well for it. It’s not an easy problem to solve with the way the existing paradigm is.
