Financial advisors and the asset managers they partner with often have different views on what makes the relationship valuable. A recent report from Cerulli Associates highlights a notable gap between what advisors actually prioritize and what asset managers believe advisors want.
The Core Disconnect
Cerulli surveyed over 100 asset managers and a group of advisors to understand their expectations. The findings show that 52% of asset managers think advisors are looking for help with business development and client acquisition. However, only 16% of advisors say that is a top priority.
Brendan Clark, CEO of Clark Capital Management, says this result is not surprising. He notes that most advisors see business development as a strength they already possess. What they often need instead is support for client-facing tasks, such as building custom portfolios, managing tax-efficient sales, and generating performance reports.
“Advisors want tools to use when they sit down with their clients and kind of enable that engagement,” Clark said. “So when you think about that, it’s a lot of point-of-sale support for them.”
Where Priorities Diverge
Asset managers are often seen as wholesalers whose main role is to provide access to investment products like mutual funds, ETFs, and custom portfolios. But the Cerulli report shows advisors expect more, even if business growth help is not at the top of their list.
When asked which practice management resources they value most from an asset manager, advisors selected:
- Client engagement strategies (37%)
- Financial planning support (29%)
- Behavioral finance coaching for clients (27%)
Each advisor could choose up to three options. Asset managers’ responses differed in several ways. For example, 48% of asset managers listed client engagement strategies as one of their most valuable offerings, but advisors did not rank it as highly.
What Advisors Say They Want
Individual advisors have varied expectations. Kashif Ahmed, founder and president of American Private Wealth in Bedford, Massachusetts, says he would be satisfied if asset managers simply provided access to investment opportunities. Although many firms claim to offer extra services at little or no cost, Ahmed believes those expenses eventually show up in higher fees.
Ahmed says he refuses to meet with wholesalers who pitch help with improving his firm’s customer relationship management (CRM) system.
“No, no, no, you’re in the mutual fund business,” he said. “What are you doing even calling me for this? You know, the fact that they have you out in the field doing this nonsense and paying you for this — that’s getting added to the expense ratio.”
Bryan Byrer, founder of Millennial Financial Planning in Indianapolis, says he hasn’t used many of the auxiliary services offered by the asset managers he works with. But he appreciates that they are available if needed.
The primary asset manager he works with, Dimensional Fund Advisors, offers various services, including surveys to help advisors benchmark their practice and one-page fact sheets on the behavioral psychology behind investment decisions.
“They also do portfolio analysis, and I did that actually shortly after I built my first portfolios,” Byrer said. “I walked through it with them. That definitely helped me to feel a lot more sure about how I constructed the portfolio.”
How Asset Managers Develop New Services
Clark Capital regularly presents “Live from Philly” webinars on topics like estate planning, business succession, and taxes. A talk last summer generated so much interest that the speakers couldn’t keep up with questions during the Q&A session.
So the estate and tax attorneys on Clark Capital’s advanced wealth planning teams filmed over two hours of video answering those questions, broke the footage into small segments on specific topics, and sent them to advisors. They also used the initial questions to create study guides, handouts, and presentations that advisors could attend for continuing education credit.
Clark says webinar and service ideas often come from regular meetings with advisors. One recurring request is succession planning for baby boomer business owners nearing retirement.
“They could be looking to liquidate that business, and they need help with that,” Clark said. “The normal advisors out there don’t have that capability. So we built this advanced wealth planning team, which is a team of estate planning attorneys, to engage with the client’s local tax and estate planning attorneys and help guide them through that kind of event.”