Thursday, April 20, 2006

How to gain new investment management clients

On CNBC's Power Lunch today, they mentioned that wire-house brokers have a problem. Boomers are increasingly deciding to seek investment help from independent advisers, not brokers. Independent advisers now have an estimated 14% of the market.

Actually, affluent boomers should be flocking to the wealth managers at trust institutions. Reason, the robust list of advantages that Bill Ottinger summerized recently in Trusts & Investments.

Ready, set, memorize!
• portfolio managers who are not driven by the sale of specific products to earn personal compensation

• portfolio managers who are full-time investment professionals, not salespeople pushed to meet sales quotas

• performance-based fees as opposed to sales commissions and hefty bond spreads, i..e., wealth management shares part of the cost risk—“We sit on the same side of the table as our clients.”

• low institutional trading costs for clients on both equities and bonds with no sales commissions, markups, or profit to the bank

• bond selection that is not limited to in-house inventories or the necessity to sell available high-spread bonds to generate sales commissions; the advantage for clients: increased objectivity

• the luxury of ‘staying power’ in portfolios; if portfolio performance is positive, theris no pressure to make trades simply to generate new revenue and sales commissions, so portfolio managers maintain longterm objectivity in managing client assets

• absence of unwarranted risk or speculation in client portfolios, plus the assurance that on-site audits and examinations by external and internal examiners are an annual occurrence

If you're with a community institution, you can offer those advantages with the same personal touch as an independent adviser. If you're part of a megabank, you'll have to work at making your services as human and accessible as possible. Anybody got any tips for success?

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