For the last decade, Mike has been providing registered investment advisors and RIA firms with proven methods to help grow their AUM, expand their market share, increase their revenue, and recruit additional advisors.
What is risk management from your point of view?
From our point of view at Quantum, we like to start the whole risk management conversation with what “financial advice” really means. Does it mean that as a financial advisor, you collect money to increase your AUM? Does it mean that you create distribution plans for clients? Or, do you focus only on controlling the yield environment?
For the last decade in America, we’ve been experiencing the longest bull run in the history of the stock market. But regardless of what happens on a macroeconomic level, pretty much every client has experienced at least one major event that changed their life. These major life events represent risk to them.
What do you mean by major, life-changing events?
For some people, it’s a spouse or someone close to them dying. For others, it’s the financial loss they experienced in the 2008 market crash. For another person, it might have been an unexpected change in employment status.
The thing is, risk management is not just about market risk. As an IAR, you should be establishing an almost “parental authority” with your clients—establishing a deep trust that will keep them bonded to your firm for the long term.
That trust is earned. You can help competitor-proof your practice by understanding all the types of adverse life events that can affect your clients, and by putting strategies in place to help them hedge against the many forms of risk they face.
Your client’s life is bigger than their portfolio—that’s more important to them than anything.
What if a market correction comes along?
For the last decade or longer, many advisors have just been hitting home runs. With equities and bonds at all-time highs, that’s been pretty easy to do. Greed and euphoria can kind of take over.
Although no one knows precisely how, when or even if this will happen, a market correction can change all that.
Let’s say such a correction takes place. You have $100 million in AUM and the market drops 20%. As an advisor, your clients just lost 20% of their portfolio value largely due to market or drawdown risk. But as a business owner, you just lost $20 million in AUM, too—which means a 20% drop in your billable fees.
Protecting all lines of revenue has to become a priority for advisors who own their own practices. RIAs partner with us because Quantum has strategies to help them diversify into other fixed asset classes not directly subject to market risk. Like fixed indexed annuities* or indexed universal life. These products can offer principal protection, new revenue streams for your practice, the opportunity for lifetime retirement income for your client, and more.
In many cases, expanding into the insurance space can be an absolute win-win for both advisor and client.
What do you tell advisors about retention and referrals?
That’s the beauty of what we do here at Quantum. Yes, we offer access to alternative asset classes—more than 400 FIA products from 35+ insurance carriers. We use proprietary software that’s updated weekly so that our team can compare premiums, features and benefits based on your client parameters in order to produce custom case designs.
In addition to providing client-centric alternatives, we also help advisors implement specific marketing strategies to solidify client relationships. We have proven that we can increase client retention—and garner more client referrals—by putting into place repeatable business processes for our advisors.
There’s nothing cookie-cutter about this either. We uncover the advisor’s true passion and value proposition and create an overall system along with the many tangible pieces necessary to communicate and capitalize on that. Customized design and development is one thing, but consistent implementation is also key to success.
* If you’re not sure how fixed indexed annuities compare to bonds, two different respected Yale professors have completed in-depth research studies. Ask me for a copy of their whitepapers.
To learn more, contact Mike Whorton by calling 800.440.1088 or emailing Mike@thequantum.com.
FOR FINANCIAL PROFESSIONAL USE ONLY – NOT FOR USE WITH THE PUBLIC
These materials are for informational and educational purposes and are not designed, nor intended, to be applicable to any person’s individual circumstances. It should not be considered as investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action. The Quantum Group, and its affiliates, have a financial interest in the sale of their products.
The Quantum Group USA, LLC. In CA. d/b/a Quantum Distribution & Insurance Services.