Be A Better – And More Competitive – Advisor

16928968 M Cropped

Many financial planners pride themselves on the close relationships they maintain with clients and the unique financial plan they provide each one based on their very individual circumstances. We certainly do at Pinnacle.

When it comes to investment management, however, many advisors offer only one investment strategy. They may offer multiple risk models to reflect the ability of clients to assume risk based on their individual circumstances, but nonetheless, they offer only one investment strategy to all clients – a very one-size fits all approach more befitting a robo-advisor.

A few years ago, Pinnacle decided to turn this paradigm on its head. Pinnacle began offering clients four investment strategies instead of just one. This decision reflects one of the most important lessons we have learned since building our own asset management capability fifteen years ago: that there are multiple strategies that can successfully generate returns for clients over time, but they each require a client to assume different investment risks. Therefore, by understanding a client’s risk preferences, we can help them choose an investment strategy appropriate for them. And once they choose an appropriate investment strategy, we can then help them select the right risk model from Conservative to Aggressive.

This is a huge deal!

First, clients expect us to provide them fiduciary advice personalized to their unique circumstances not only in the planning arena but also in the investment arena. And we do.

Second, clients operate in a world where they are accustomed to choices. We provide them choices; and by providing choices, we affirm our independence. We are no longer selling the only horse we have.

Third, we are discovering that by offering multiple strategies, advisors can have a more fruitful “compare and contrast” conversation with clients that improves education, expectations setting and better protects against the cocktail party conversation with friends.

Fourth, it means that advisors increase the probability of closing prospective clients because now an advisor is likely to have the preferred investment strategy.

Fifth, and finally, it reduces business risk. There will always be a few clients disappointed by investment performance. They will hear that a friend produced better returns, or they focus too much on short-term “zigs and zags” in the market instead of full market cycle performance. With one investment strategy, that client is lost. With multiple investment strategies, there is an opportunity to find another strategy better suited to their needs.

The Pinnacle multi-strategy platform currently offers four investment strategies to both Pinnacle clients as well as independent advisors through our Strategic Partnerships. These strategies range from more passive buy-and-hold strategies like Strategic Market and Dynamic Market to more tactical risk-managed strategies like Dynamic Prime and Dynamic Quant.

Copyright:  andreyuu / 123RF Stock Photo

About the Author

Peter McGratty CFAPeter is co-founder and Vice President of Strategic Partnerships of Pinnacle Advisor Solutions and is also the author of From the Corner Office.View all posts by Peter McGratty CFA →

Leave a Reply