Do you know?  And are you your client’s primary advisor? A recent survey of advisors and clients by Cerulli and Associates has some sobering results for many advisors. On the second question – of the 1500 advisors surveyed who concentrate on clients with more than $5 million in investible assets, 73% said that they were their client’s primary advisor while only 34% of the corresponding clients agreed with that assessment. Quite a disconnect.

Back to the question in the title – How many other advisors do your clients have? According to Cerulli’s report, which covered over 7800 households, about 25% of advice-seeking households use multiple advisors, with the percentage increasing to 33% among those with investible assets of $2 million to $5 million. That percentage grows to 58% for those with more than $5 million in investible assets.

Clients with multiple advisors also tend to keep less of their net worth with their primary advisor. By the end of last year, only 22.6% of investors surveyed kept more then 90% of their assets with their primary advisor; this percentage fell to 13% for those with more than $5 million.

All of the statistics quoted above showed gains from a similar survey conducted in 2008 – a continuing reaction to the financial crisis.

So, do you really know how many other advisors your clients have? The opportunity here is for those advisors who are able to focus on the entire relationship, even if they don’t have all of the assets. The advisor who plays this role is often referred to as the Alpha advisor (or quarterback). While it may be too late to stop your clients from diversifying among multiple advisors, providing the key service of reporting on all of their assets – whether for a fee or not – should position you above their other advisors. It’s also a great marketing and prospecting tool to help you grow your business and increase client retention.

It doesn’t’ seem that the trend toward multiple advisors is set to reverse itself, especially after the last few months, where images of 2008 are entering our dreams once again. So don’t fight the trend – react to it and succeed from it. Become an Alpha advisor.

It’s Bad – but it’s not 2008 bad.

Yes, it feels eerily like 2008. And yes, in a few short weeks, many of the stock market gains of the past three years have evaporated. But it is my opinion that as bad as it seems, we are in better overall shape than we were in 2008 – the credit markets are functioning and companies are in better financial shape than they were.

More about this later – but my point here is that this is my opinion. DO YOU HAVE AN OPINION? And if so, and you are client-facing, have you communicated this opinion to your clients? At times like this, clients want to hear from you.

Over the past few weeks, one of my clients has sent out three special notes to clients. One of these notes simply including a synopsis of the market commentary of a very well know market guru. Each time I received a communication from him, I felt a connection – that he was on top of his game. He is also calling clients to give the personal touch, but even if you do that today, that client still will want to know next week that you are still thinking about them.

Communicate with your clients – or they will not be your clients for long!

Back to the opinion portion of this post. Am I scared? Absolutely. My biggest fear is that politicians here and abroad (most notably Europe) are unprepared to deal with any crisis of this size. This is more a crisis of confidence than a meltdown of the system itself. And that is a good thing. We need our leaders to emerge with real ideas about cutting our deficits and kick-starting the economy. Because if we don’t, even though this is not 2008 again, things are not likely to improve for a long time.

Global stock markets are in turmoil, confidence is eroding and layoffs are accelerating. That described the situation three years ago in the midst of the financial crisis. Add European debt problems, an increasingly dysfunctional government and continued high unemployment and you have today’s reality.

We don’t do special editions of our newsletter very often, but decided to issue one today.

Cost cutting has begun in many companies – and probably rightfully so. But there are right ways to cut costs and wrong ways. Our newsletter provides some perspective on this topic with the hope that rational cost cutting takes place – reductions that will truly position companies for future success.

Click here to read the full newsletter.

As we talked about a few weeks ago, in order for a consultant to truly add value, he or she must be able to:

1. Provide an in-depth assessment and analysis of the business area(s) in question; AND
2. Be able to provide not only a roadmap to solve the problems, but also be able to help implement the  solutions.

It is this second point where many consultants fall short. Top consultants are able to formulate a solutions roadmap that includes other solutions providers as appropriate and necessary. The larger the network of experts that a consultant has working relationships with, the better off clients typically are (recall the mention in our earlier post of the faculty of our partner firm Consult P³).

There is, however, another very important attribute that makes a consultant valuable. He/she must be willing to tell you the truth – to be brutally honest – whether or not you as the client are ready to hear it. There is a shared burden in this respect. As a client, you should only be willing to hire a consultant if you are receptive to getting an honest assessment and be willing to take constructive criticism. One of the most disheartening things you can ever do for your employees is hire a consultant, solicit feedback, get people excited that change is on the way, and then do nothing.

Likewise, if you are prepared to hear the good the bad and the ugly, you need to make sure that the consultant you hire is willing to do that. The best consultants know that their analyses might so infuriate the client to the point that there will be no future business. If a consultant is willing to be that truthful – to tell the truth, the whole truth and nothing but the truth – then they may be the right consultant for you.

The consultant should of course be tactful as well – but you see the point. Hire a consultant only if you are ready and willing to hear the truth and make the necessary changes to improve your business.

I spent almost eight years at Morgan Keegan and still have many friends who work there. So it saddens me to see what’s happening to the firm. Many will say that the sale to Regions Bank was the beginning of the end. While to some extent this may be true, what has led the firm to where it is today is greed – turning the other way and ignoring the unsustainable returns of the mutual funds that have now caused the firm so much trouble. If something seem to be good to be true…..

Now what happens? Probably one of two outcomes. Either the firm will be sold to a private equity firm or to another broker/dealer; insiders speculate that talks have been under way for awhile, and now that the “for sale” announcement has been made by Regions, it better happen fast or the advisors will start running for the doors.

The two inevitable losers from any sale – the home office staff and the City of Memphis. If a private equity firm buys the firm, you can bet that belts will be tightened and staff levels reduced. The same goes if the firm is bought by another broker/dealer – the odds of the home being in Memphis are pretty slim, and no one at Regions has the same loyalty to Memphis as Allen Morgan and his mostly long-retired gang.

For advisors, a sale to a private equity firm would be better; a sale to a wirehouse would result in a mass exodus, retention bonuses not withstanding. But even if Morgan Keegan remains quasi-independent, and is not melded into another broker/dealer, you have to wonder how far the firm is behind the competition now – certainly from a technology point of view – given the amount of money and time it has had to dedicate to the many lawsuits it has faced.

Yes, unfortunately, there are many losers. The dedicated home office that appears to be a loser under any scenario. The many advisors who didn’t sell a lot of the funds in question, have not been sued by clients, yet nonetheless have suffered from the reputational damage that has been done to the firm.

It saddens me that this is happening to this once great firm. Hopefully I will be proved wrong, and the end-result will not be a negative one for my friends at the firm.

Over the past few weeks there have a number of reports and studies released about the types of communications advisors want from managers. The results are similar and not surprising – less is more (fewer e-mails) and performance isn’t everything. Duh!

It never ceases to amaze me that so many people fail to understand that communications have changed. Whether you embrace social media or not, it has changed the way that people interact. In order to be successful and develop long-term relationships, you have to deliver to people the content that they want, and you need to deliver when they want it and how they want it – period. If you don’t, someone else will.

How do you know what to deliver, how to deliver it and with what frequency? Ask the question. We all get too many emails. We all get tired of self-promotion. So why do so many people in our industry not get that? While these studies looked at managers and advisors, the message is germane for all industry participants. While you may not get it – the person you are trying to reach certainly does. And the fact that you don’t hurts your chances of success.

Even if you have a long-standing relationship with someone, it’s always helpful to periodically ask if they want any change to the types of information that you provide them, how frequently you provide it and how you provide it. If nothing else, they will appreciate that you asked.

Communications 101 in today’s world – give ’em what they want – not what you want – embrace it or be left behind.