How can advisors best serve their clients in these unprecedented times?
It is a hot topic in the industry and the subject of a recent webinar for advisors and the press hosted by Vanguard CEO Tim Buckley and Tom Rampulla, his Managing Director of Financial Advisor Services.
Here are some highlights:
Interact with customers virtually, but don’t forget in-person interactions for the future.
“Virtual has worked pretty well,” Rampulla said. There is a lot of excitement about virtual engagement, but in person it always matters a lot. “
He cited a Vanguard poll showing that 87% of retail investors were happy with their virtual interactions with advisers and 90% who had video conferences with advisors rated them as good or better than in-person meetings. Thirty percent expect to go virtual for most of their interactions with advisors.
“You’re going to see a shift to virtual and we’re all going to have to make that change,” Rampulla said.
He envisions advisors using a “dual mode of engagement” in the future, which will allow them to cover more clients, including those who are not local, and to use in-person meetings for the most common topics. most important and sensitive of the customer.
But Rampulla warns that in a virtual environment, advisors “must find ways to be more engaged with clients, to be more than a face on a screen.”
“Embrace the technology,” Buckley said. “Meet customers where they are. Virtual models are more than just a platform [and know] when to meet in person. “
Vanguard is in the process of “re-architecting” its virtual advisor platform and has tested the new software with a dozen advisers over the past six months, according to Rampulla.
The company is also exploring data from 8 million retail clients over the past 45 years to learn more about how they invest – research that can help advisors serve their clients better.
Bonds are still valuable despite low rates.
“A lot of people question the fairness of holding bonds in a low yield environment, but they have a proven track record, ”Rampulla said, noting that global (covered) bonds gained 3.5% while equities worldwide lost 6% in the first half of the year.
“Bonds are there to add balance to a portfolio, to stabilize the ship in the storm,” Buckley said. Actions are the veil that moves you forward. He noted that the 60/40 Balanced Portfolio “is still viable”, not to mention its impending death. “I’ve heard that before.”
The stock market is not disconnected from the economy …
“The current economic environment is a poor predictor of future returns,” Buckley said. “The markets are looking to the future. They care more about the next five years than the next five months. He recalled the financial crisis of 2007-2009, when stocks returned double-digit numbers (that was only in 2009) as unemployment hit double-digit numbers (only in October 2009).
“We think the stock markets are now pretty rational,” Buckley noted, adding that they are supported by supportive central bank policies and government budget spending.
But he warned that now is not the time for investors and advisers to try to identify the various market winners. “This is the time for diversification and discipline. There is too much uncertainty there. “
To that end, Rampulla noted that counselors need to “be there” for their clients, helping them rebalance their portfolios while guiding clients to achieve their goals, acting as behavioral coaches to avoid panic sales.
“Customers never forget this,” he said. “It builds confidence.”
Muni bond investors have been the most nervous among retail investors at Vanguard, selling in panic and locking in losses, Rampulla said.
… But the US economy is currently on life support.
“The activity is very limited… [and] and businesses don’t make a profit, ”Buckley said (second quarter GDP fell at an annual rate of 33% and the latest weekly jobless claims rose for the second week in a row, up 1.434 million).
“The shape of the recovery will be the shape of the virus,” Buckley said. “It’s the only shape that matters.”
But that form can mutate, which can undermine efforts for a vaccine, Buckley said. He doesn’t think demand in the economy will fully recover until there is a working vaccine.
There are “hard times ahead,” Buckley said, warning advisers against any attempt to predict the future. “We’re not out of it, and neither of us have ever experienced times like this.”
– Check out April Rudin: Pandemic Forcing Big Shift in Advice Industry on ThinkAdvisor.
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