Recently I was speaking with a journalist writing an article for TD Ameritrade on the topic of value. Specifically, the question posed was “How can financial advisors demonstrate added value to their clients?” This is a question I felt quite qualified to answer as it is a continual focus at our firm.
It’s very rare that a prospect or client walks into one of our offices and says “I’d like a 7% return on my investments please.” Instead, we hear things like…
“I want to make sure I don’t run out of money in retirement and become a burden to my children”
“I want to put my 3 kids through college, so they aren’t burdened with debt when they graduate”
“I’d like to buy a beach house in the next 3 years to capitalize on family time while our kids are young”
The reality is, most of these goals require funding investment accounts and said accounts producing investment returns that grow the dollars to an amount required to accomplish the goal. But that’s not what the client is asking for; they are asking for a plan, education, clarity and confidence in achieving their most important goals.
I have written previously about our goals-based investment philosophy. To paraphrase, each goal is independently analyzed, funded, invested and tracked. When tracking the goal, we talk about investment performance in the context of how it is either helping or hurting you achieve your goal. The actual percentage of return is benchmarked against what the goal requires versus an arbitrary industry benchmark, like the S&P 500.
What this does is it allows the client to understand what the portfolio performance actually means to their life. It gives them confidence that they are on track or helps them prioritize the things needed to get on track. When the beach house keys are handed over, or the kids graduate college, no one remembers the ups and downs of the market. Instead, they remember the feeling of control and comfort as they worked towards their goal(s) with their Crown Wealth Group advisor. There is real value in that emotional response, much greater than a percentage of return.
While goal planning and investment management are an important part of most client plans, we do not feel our value is derived solely from those activities. In fact, most of our new client referrals come to us for other reasons. We have set up our firm as a multi-family office, offering single point of contact financial management for our clients. We coordinate the advice delivery and execution of that advice across all facets of a client’s financial picture. We manage all the experts on the client’s team - to save them time, get them better/holistic answers and find areas for them to save money.
To us, and to our clients, that is where the differentiating value is. There are hundreds of advisors that believe the same as we do around investment philosophy, but it is rare to find another firm that takes on all the other areas of a client’s life. Our client’s value that above all else and it is why 95% of our new clients come from current client referrals – introductions that we are extremely grateful for!
Nick Kolbenschlag - Chief Executive Officer & Co-Founder