Financial advisors used to spend a considerable amount of time handling client portfolios. Whether trading existing funds or researching new ones, the practice will likely use less and less of advisors’ energy as algorithms and AI get ever better at rebalancing, tax-loss harvesting and potentially enacting pre-decided plans for trades as favorable conditions become available. But unless everyone turns to chatbots to answer their investing concerns, advisors will remain the resource many rely on for explanations about what they should do, and what they shouldn’t, in their financial lives. This suggests behavioral coaching, and the client relationships necessary to accomplish it, will become more integral to advisors’ practices.
Asset managers realize this and are providing fodder for such a relationship shift. Firm participation in the advising process is not new, as many firms have long written thought leadership content meant to equip advisors with a level of expertise on both evergreen and timely topics they can then speak on with clients. Firms have also offered advisors client-ready materials they could pass off either as a precursor to meetings or as a further illustration of a point made on a call.
What has changed is both the branding and the content type. More firms now offer advisors materials they can use to facilitate a client interaction, like a worksheet that can be worked through in real time or a client-friendly tool that can turn an abstract idea into a visual that illustrates an advisor’s point with client data. For branding, more firms are jumping on the bandwagon of allowing advisors to take the firm’s client-ready material and put their logo and company name on it. While they may lose recognition from the end investor in the short term, firms seem to realize that if they offer advisors useful tools, the firms will become more ingrained in advisors’ workflow and therefore, hopefully, in their investment considerations.
Consider Vanguard’s Market Hindsight Tool. Seated within the firm’s Behavioral Coaching page on the firm’s advisor site, the tool provides a means of coaching clients against selling out of a down market by illustrating how costly that choice would have been in downturns of previous years. Advisors input the client’s portfolio amount and then choose a specific date range, or select from a series of Ghosts of Bear Markets Past. Some of the options include the 2001 Dotcom Bubble, the 2008 Financial Crisis and the 2020 Covid-19 Outbreak. By inserting clients’ current portfolio value, along with their stock/bond allocation, the tool allows advisors to explain what would happen to their specific portfolio in the given scenario, and therefore if a similar event occurred today, through concrete numbers and visuals rather than abstract pleas to not leave the market during a downturn.
Manulife John Hancock takes a further step into client meetings by offering advisors complete presentations to use as they try to explain different topics to clients. The firm’s Social Security page, for instance, houses a downloadable presentation for advisors to deliver to clients. And if the polished slides and adjoining client-ready FAQ flier weren’t enough, the firm also provides a video demonstrating how advisors can present those presentations. Social Security isn’t the only topic Manulife John Hancock gives this treatment to. The firm also offers presentations with complimentary sample videos for Medicare and Behavioral Finance. For advisors who need a step-by-step guide for explaining sometimes opaque topics, Manulife John Hancock positions itself as a coach of sorts that can be turned to. And if it’s a resource with that, why not also with client funds? a subconscious may think.
But advisors still need materials they can deliver to clients outside of meetings, for topics that deserve multiple visits in differing formats. Corporate Insight’s advisor survey revealed that many RIAs prefer to use content from firms that they can brand themselves, and many asset managers are answering that call. BlackRock’s Brand & Share, for instance, allows advisors to choose one or many client-ready materials from a secure site library provided by the firm, then encourages advisors to put their logo on that content. Asset managers across the coverage set are offering this self-branding option, with Capital Group most recently joining the party with a new Marketing Lab. But where BlackRock stands out is its option to also change the color palette and font of the provided materials, meaning advisors can put forth market explainers and other informative materials that carry their unique design choices. While the material may no longer carry the BlackRock name front and center, by giving advisors what they want BlackRock is positioning itself for greater use, thereby increasing the eyes on its thought leadership that promotes its world view. Advisors may be more likely to explain what alternative investments are using BlackRock’s explainers. And those explainers position alternative investments as an integral part of every portfolio; helpful, given BlackRock offers a suite of alternative investments.
These firms and more were covered in Corporate Insight’s Asset Manager Monitor – Advisor June report on Client Education Resources. Subscribers can access the full report on the CI client portal. Not a subscriber? Learn more about CI’s asset management research options here.
Tim Drugan
Tim Drugan is an analyst on CI's asset management research team.