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Are You a Vendor or a Trusted Advisor?

  • By TailorMade
  • |
  • July 11, 2016

“Are those new glasses…“ is how the conversation starts. A father having a discussion about his son graduating to the next phase in life where making money necessitates investing through a broker. Like many things on TV, they get some things right and completely whiff on others.

In these collection of commercials from that lovable discount brokerage that has gone Full Service (a.k.a. “Chucky”), the central theme is about whether one is asking enough questions about fees when it comes to investing… then closing with a tagline equating to one can do better about how their wealth is managed by visiting a website… then getting $500 when you become a client.

Father and son discuss financial advisor services

As noted above, half the message is on target while the other half is way off. Clients asking “better” questions about fees and other things represents a great thing and should be welcomed by all. It might be a slight change in how things work, but let us not forget that in the business world, status quo, rarely leads to longevity, so this change is a good thing.

There is no doubt that in both today and tomorrow’s DOL world, fees and value for those fees will be a very important topic not only for the client and your business, but also for all the watchers too.

For the fee itself, there is absolutely nothing wrong for providing a service for a fee. This payment model has been around for thousands of years. As it relates to our industry, it is a relatively newer twist on the method for being compensated while providing financial services. For some advisors the fee represented by the commercial is exactly on point. It is a percentage based on the assets under management, plain and simple. This is where investment advice for a price starts and ends.

For others, the fee may start with that same percentage, yet it represents compensation for the other services delivered to their clients that go beyond just asset management. Hopefully for most, it is here that marks the distinction between being a vendor or having a relationship with your client.

Hello Watson

The future is here, asset allocation and basic investment decisions are all being commoditized through technology. In part, this is the heart of the commercial’s pitch in that they can do it cheaper, which equates to a better overall value.

For those who have been around a bit, we know there will always be noticeable and very meaningful differences when comparing what individual firms can offer and deliver to their clients when it comes to actual investments and allocation since it is not all about ETFs and institutional asset managers.

The commercials might be white noise for some clients, still, that margin is being closed with each generation of intelligent hardware. Like it or not, for this subject of fee for asset management services, the writing is literally on the wall being broadcasted with every sporting event:

  • If you are providing a commodity you are a vendor
  • Price represents the featured differentiator
  • And, we all know, vendors are easily replaced when their services are commoditized and fungible.

Remember, price is only an issue in the absence of value.

Opportunity Knocks, Can you Deliver

Again, with change comes opportunity. Clients asking about fees represents a tremendous invitation for both you and that client provided that your definition of Wealth Management, unlike the commercials, encompasses a platform beyond investing and asset allocation services. As for the commercial and its closing message, to assume that Wealth Management is solely about investing and fees is a big swing and miss where we stand.

As we are fond of saying, you can get the same allocation pie chart from any broker. This fact is constantly being reinforced by the commercials and explosion of roboadvisors in the marketplace today. Then again, for us and most of the advisors we partner with, Wealth Management is not solely about investing and managing liquid assets, rather it is a great deal more.

In addition to a client’s liquid wealth, knowing about and providing solutions for their illiquid wealth whether it be a closely held business or real estate coupled with their legal, tax and emotional (family) situations are equally important when it comes to addressing their goals and objectives.

Changing One Letter

In fact, as one goes up the wealth scale, the definition of Wealth Management becomes very clear that while investment management and the performance is important, blunting the impact of taxes and being protected from frivolous lawsuits also matters. What good are returns and performance if taxes and outside forces significantly reduce your client’s net worth annually?

Providing a deep bench of services that transform into solutions as they relate to asset management, tax, legal, charitable, insurance, business and asset protection client matters is where the “vendor” status stops and “relationship” status begins.

Moreover, in providing solutions above and beyond asset management services, there is a subtle transition marked by an advisor who advises their clients than one who gives their advice on a particular topic.


It is time to expect more from Wealth Management. It is not a man vs. machine issue, it is which human vs. which human issue. It is a reactive service model vs. a proactive service model. It is when the questions stop and when the next line of questions begin.

As a dedicated partner resource for the right advisor and right client, our role is to help you deliver enhanced and comprehensive Wealth Management solutions for your clients and your firm that works in both today and tomorrow’s planning world.

TailorMade Financial

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