by Tom Bradley
Over the last decade, I’ve been a noisy advocate for better client reporting. More recently, it’s become clear to me that despite new regulations, increased media coverage and modest progress, most industry players aren’t seeing how their clients are changing with respect to their information needs.
To explain, I’ll first look back. Most investment firms have operated under the assumption that by keeping clients in the dark, they’re less likely to leave. I know, it sounds cynical, but it’s the only explanation I can come up with for an industry that hides the price tag on their product and mumbles incoherently about how it’s performed.
Remarkably, the ‘in the dark’ strategy has been successful (I’m not being cynical, just realistic). For every client that’s lost because of poor reporting and communication, advisors have kept 10 who don’t know enough to pull the exit chord.
Well, it now feels like the worm is turning. This is strictly anecdotal, and sounds self-serving, but it appears my fictitious ratio (10-to-1?) is declining dramatically. It may not be one for one yet, but from what our team is seeing, advisors’ obfuscation is causing more and more investors to move.
We sign up new clients everyday and have been running at this pace for a while. What’s changed this year is that a good number of new Steadyhanders achieved perfectly good returns with their previous provider (we go through the numbers with them). Despite this, they want to come on board anyway.
Their reasons have a common theme. They’re sick of guessing about fees and returns. They aren’t getting much attention and as a result, aren’t sure what services they’re entitled to. They have doubts about who’s side their advisor is on (“Would you like a credit card and mortgage with your portfolio?”). Or in some cases, they’re just tired of being talked down to. They want a safe environment in which they can ask questions and learn more about their portfolio.
In our view, the demand for common-sense communication and transparency is accelerating. The ‘in the dark’ business model is in serious decline.
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