Transitioning Independent Investors Into Clients

September 15, 2020

With changes in the market, people who had previously managed their own investments are looking for professional help. To ensure a smooth transition from independent investor to client, there are a few topics you’ll want to address early on.

Before digging in, ask why they initially became an independent investor. Perhaps it was because they had time to devote to the research, but now they no longer do. Or maybe it was because their financial goals were far enough in the future that they felt comfortable with a larger margin of error.

Whatever the reason, knowing why they chose to make their own investments and why they’re now seeking professional management is an important place to start.

1. Risk

Discussing risk goes a long way to easing the transition from independent investing to professional management. Many independent investors might not realize it, but deep-seated emotions often drive investing decisions. This hinders wealth building and can run counter to an investor’s true risk tolerance. But a Wealth Management Advisor helps take the emotional buying and selling out of the equation by thoughtfully discussing risk with clients. You can help make sure that the amount of risk the investor takes on is appropriately aligned to accomplishing both their long- and short-term financial goals.

2. Time

As an independent investor knows, learning how to structure a portfolio takes time. Then there’s managing the investments, tracking performance, making adjustments, keeping up with the latest research and monitoring the economy. While these tasks may have offered a stimulating challenge early on, an investor may no longer have the hours to spend on them. By explaining the time-savings value that your professional management offers, you can mitigate any potential sense of lost independence an investor might feel handing over their portfolio.

3. Fees

For independent investors, professional management fees can be a touchy subject. But there’s no getting around the fact that they’ll be paying for your services, so be upfront about the costs associated with professional wealth management. You can also help the investor think of this “cost” differently than merely a set of fees. For example, if an independent investor makes a bad decision today, what’s the time and money cost tomorrow, next month or even next year? Does it make sense to pay a little more today to have the right investment strategy for the long-term?

4. Resources

The access that an independent investor has to resources and research varies greatly and depends on time, money and an investor’s own initiative. As they transition their assets into the hands of a Wealth Management Advisor, let them know about the arsenal of support, research and resources you have available to help build a strong portfolio for them. One of the greatest ways to ease their doubts about working with an advisor is to give them the peace of mind that comes with knowing their investments are being managed by someone with experience and an extensive support team.

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