Portfolio Construction vs. Investment Planning
By Corey Keltner, Practice Development Specialist
A number of SSN reps have recently asked about the logistics of moving to advisory. Many have been happy to keep client accounts at a mutual fund or variable annuity company for most of their careers. Others have been using brokerage commission accounts. It seems that the potential regulations coming this year have created a new demand.
This conversion is a big undertaking and if you are considering making the move to advisory business, SSN has some worksheets and ideas to help you. Over the last month, I have been talking with advisors who either made the move or are in process of switching. These conversations ranged from the mistakes that were made to the basic logistics of how to get things done. I broke down the major steps into 5 parts and decided to keep things simple and straightforward.
Before you begin, make sure you are set up with a Registered Investment Advisor. This usually means that you possess a Series 65 or 66. SSN Advisory Inc. is our Corporate RIA and would be the default if you have not formed you own RIA. Contact me if you need help getting started here.
Step 1. Sell the Idea to Yourself
Many reps are reluctant to make the switch for a variety of reasons. Sometimes the best way to make a decision on something is to sit down and write out the pros and the cons. You must decide that the positives of moving outweigh the negatives of staying put. This is also a good time to determine what questions you need to answer or situations need to be clarified before you move forward.
Step 2. Decide on a Program to Use
Advisory programs can be tricky to figure out unless you think through the issues ahead of time. Since advisory accounts have some similarities and differences with commission accounts, making the translation is crucial. Taking the time to clearly define what you want a program to accomplish for you will pay off in the end.
Step 3. Build Your Database
Getting all of your clients sorted on a spreadsheet is a simple process. If you use Albridge, then running a “Client’s by Assets Under Management” report will get you well on your way. You can also use Albridge to sort specifically by direct accounts or even a particular vendor. You may also choose to pull information from DST, Streetscape, NetX360 or even your CRM. The key is pulling the accounts that you actually want to move and getting enough information to be useful. We have a simplified spreadsheet available to help you get started and a more elaborate version if you prefer.
Step 4. Action Plan
Most of the time the move to advisory will take one or two years to complete. Meet with your clients in the same annual or semi-annual fashion, but use this meeting to have the advisory conversation. If you start with your easier clients and work your way up to the more difficult ones, you get a chance to perfect your conversation and deal with all of the major concerns. It is also a good idea to start with your “B” clients and work your way to the “A” clients over time. There is a sample timeline on the Resource Hub to help you get started.
Step 5. Client Discussions
Client discussions can be broken down into the presentation, talking points, and handling of objections. The presentation can come from a third party provider or you may consider using a proposal tool to differentiate the old and new portfolio. The talking points will help you make a compelling case for the move. Finally, being prepared for the major objections can help ease your process. Not only do you need to handle their concerns well but you also must know what you will do if they decide not to move. Some advisors choose to differentiate service levels between advisory clients and commission clients. This can help you make your case more compelling.
Advisory business has been a growing part of SSN’s overall revenues for some time now and we expect that trend to continue. We believe advisory business is a major part of the long term sustainable practice. The good news is that many advisors have paved the way for you already. As you make this switch, know that years of trial and error of the early adopters will make this a much easier process for you.
Please email Corey Keltner if you have any questions at