Most advisors in our profession genuinely enjoy helping their clients succeed. They understand the importance of adding value to the client relationship so that it’s beneficial for everyone. For some advisors, financial planning is the key differentiator. For others, it’s building personal relationships. Some advisors focus on their client service; for others, it’s often investments that drive their value proposition. All of these factors are important to your clients’ success, but they’re not equally weighted in terms of opportunity — and opportunity costs. What we’re talking about is a distinctly scarce commodity: your time.
Across the industry, scale is becoming more and more important. Advisors have reluctantly realized that no matter how hard they try, they can’t add more time to their day. While they use tools like Zoom and Calendly and digital onboarding to increase efficiency, they still can’t fix the problem. Advisors may choose to work more hours to squeeze in more tasks, but most are unwilling to tilt the work-life balance too far toward business. They’re already working long hours!
Given that advisors face many competing demands for their time, where do they spend the bulk of their day? Research from State Street Global Advisors indicates that the majority of their time, 37%, is devoted to investment-related tasks. Next, financial planning comes in at 16% and client-facing activities at 15%, with compliance, prospecting and other categories taking up the remainder of their time.
It’s surprising to learn that advisors spend twice as much time on investment activities than anything else, including time spent with clients. They could be missing out on important opportunities, including:
New assets and referrals. Research consistently shows that the most successful advisors spend more time with clients than on any other task. According to John Bowen, founder and CEO of CEG Worldwide, 84% of clients say it’s essential that their advisor emotionally connects with them and “gets” them. It’s cause and effect — advisors who build strong client relationships can better acquire new assets and gain high-quality prospects and referrals. And these assets will likely be maintained by the next generation because those heirs have probably been introduced to the advisor and understand their value.
Some advisors still think their value to clients is their investment prowess, including portfolio construction, custom solutions and, yes, stock picking. But how many advisors could honestly answer that the investments and portfolio choices they make as an individual contribute greatly to the portfolio’s returns?
The benefits of outsourcing. Given the time crunch most advisors face, why spend double the time on something that isn’t likely to give you a great ROI? One way to better leverage time and scale services is by outsourcing your investments through managed portfolios or similar services. Chances are, you use a tax preparer or CPA to complete your tax forms, leverage a service for payroll functions or hire a landscaper to take care of your yard. You could probably complete all of these tasks on your own, but you’d rather not spend the time or energy to do so. There are experts in those areas who can do it better than you because that’s all they focus on.
Given the widespread adoption of model portfolios in our industry, the fact that advisors still spend more than a third of their day working on investment-related things seems a bit antiquated and inefficient. For those advisors who want to grow their practices, consider the money value of your time and where you can spend it to greater returns — with your clients.
Kristine McManus serves as chief advisor growth officer at Commonwealth Financial Network.
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