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Discovering the Two Dimensional World of Wealth Management

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In the wealth management world, I truly believe that most wealthy high net worth clients are living in a one-dimensional world with their financial advisor and wealth manager. What I mean by a one-dimensional world versus two dimensional is that advisors have clients convinced it is all about the performance of their portfolio. They do a great job managing their portfolio and the market keeps going up for years, so that is what the clients believe is the value and that is what advisors believe is the value. They don’t know what a two-dimensional world is, which is performance and comprehensive advice.

Why do I believe most clients and advisors live in a one-dimensional world?

Being in the financial industry for 29 plus years, coaching top-performing financial advisors daily, and speaking to thousands of advisors, my two-dimensional world resonates with every audience I have ever been with. This is a huge challenge for the wealth management industry. We know that 43% of advisors have no value promise, and the financial professionals that do, cannot clearly articulate their value past performance and portfolio management. So I ask you a simple question. What is the probability of success in reaching ALL of your goals ( 4-6 or more goals for the wealthy including a written estate plan including your legacy, celebrations, philanthropic goals and charitable giving) with your current planning? Is it 60-70 or 80% probability? Rarely can people answer this one simple question with clarity. What is your probability of success in your planning and would you like to improve it?

Beyond performance

Performance is critically important, but what else could you do with your success? How can you make it two dimensional for your ideal clients? Steve Jobs essay on his deathbed entitled the worlds best doctors is a must-read for anyone understanding the wealthy. He said” Treasure love for your family, love for your spouse, love for your friends. Treat yourself well and cherish others. As we grow older, and hopefully wiser, we realize that a $300 or a $30 watch both tell the same time. You will realize that your true inner happiness does not come from the material things of this world. Whether you fly first class or economy, if the plane goes down – you go down with it.” It is worth reading here.

What clients are NOT getting from their advisor

In a recent workshop, I asked a group of advisors to name what prospective clients are not getting from their current advisor.

Here are some of the answers:

– No comprehensive plan that covers areas such as tax, estate, risk management, insurance, debts, cash flow, health, and only focuses on investments
– No clear understanding of the client’s values on paper
– No clear understanding of the client’s goals in writing with the exception of one, retirement
– No understanding of total fees ( investments and advice) and complete transparency, as clients are even more confused by fees on statements

The list was long and the discussion could have gone on for hours, as it is clear, that advisors know what the clients are NOT getting, but the critical problem is this –  Do the clients know what they are getting and not getting?

Related: What Does Nostradamus Have to Do With Financial Advisors?

Related: What Is a Future Ready Financial Advisor?

Forty percent more assets under management

If clients only see you as a financial advisor that makes me money ( one dimensional), it makes sense to me that 97% of investors with more than 2 million in investable assets have two or more advisors. ( source CEG Worldwide) The wealthy have two one dimensional advisors, both talking about performance. However, on the opposite side, clients who only deal with one advisor for performance and comprehensive planning advice ( two dimensional) usually only have one advisor for all of their wealth, who coordinates everything with a network of other professionals. This is a multidisciplinary way of managing their wealthiest clients “complete financial life management”. But wealthy investors with performance ( one dimension) and a comprehensive planning advice in all seven areas of their financial life, who are two dimensional clients ( including, tax, estate, risk, investments, insurance, debt, and cash flow) are 20 times more optimistic about their future, and advisors have 40 percent more Assets under management. ( Source: 2016 Fidelity Millionaire Outlook Study ( Median investable assets of 1.75 Million) If you want clarity around your practice for the future, getting to a comprehensive two-dimensional world is critical for you, and your clients, before a market downturn occurs.

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