In the current economic environment, investors—both seasoned and new—are seeking strategies for safeguarding their assets in case of sharp volatility and a potential recession. As there is no one-size-fits-all solution for financial advice, the ongoing demand also highlights the need for financial plans tailored to an individual’s personal circumstances and lifestyle. Working with a collaborative and holistic firm may provide investors with a solid foundation for growth and stability, a plan that is unique to them and advice that helps them feel safer during troubling financial times.
In a typical wirehouse environment, there tends to be a very isolated approach with advisors focused on their individual services without much, if any, collaboration across specialties. Many advisors end up leaving major wirehouses to leverage other existing services to help clients and run their own businesses, with fewer restrictions and more support. Enter the “Network Effect.” This is the idea that successful wealth management firms should not operate within silos, but rather engage in collaborative work. Employing a cross-functional system allows each advisor to lean on other within their network.
The Network Effect translates to each client being viewed as a client of the firm as a whole, and not just of one advisor. This approach enables the firm to meet a multitude of needs for each client, while the client can tap into the expertise of a variety of financial professionals employed by the firm.
Because many advisors operate in isolation, their models may not be capable of addressing the wide spectrum of needs their clients have, given the lack of expertise in all aspects of the industry. Typically advisors are ‘experts’ in the investment side of financial planning, but that is just a slice of the proverbial pie of wealth management. The Network Effect addresses the full planning wheel, including tax, education and estate planning as well as alternative investments and risk management.
This one-stop-shop mentality is advantageous not only to the firm and client but also for financial advisors, who can leverage their strengths with clients and create more scale. The Network Effect also helps advisors tap into an abundance mentality and embrace joint work for the benefit of all involved. This mindset, in turn, strengthens the firm, which can provide seamless planning for its clients. Taking the concept further, a culture of excellence is created that can be easily tapped into by partner firms throughout the country, similar to a law firm model.
Investors and clients are looking to make their lives easier, seeking all-in-one resources to efficiently manage their finances. Firms that emphasize collaborative work and embrace the “Network Effect” can provide clients with extensive resources, astute advice, a reliable team and a connected and integrated network—all while enhancing their own value and increasing the effectiveness of their advisors.
Rob Gorman, CFP is Founding Partner & COO of Apollon Wealth Management.