Industry |

Quality Conversations Start with the Right Technology

Warren Seubel

Director of Global Direct Sales at Addepar

Since the 2009 market bottom, registered investment advisors (RIAs) have enjoyed a bull market. Triple-digit returns have directly contributed to the bottom-line profits of many AUM-based firms. 

This stock market rally has allowed RIAs to focus on expanding their client base. Many successful practices leveraged technology to increase advisor recruitment, improve prospecting techniques, and tailor client experiences. (See how with our recent piece, “Leveraging Technology to Build a Better Practice”). 

Our clients have been using Addepar at the center of their tech stack since our founding ten years ago. RIA Database recently confirmed that firms using Addepar with AUM under $2.5 billion outgrew the market by 465 basis points in 2018, and firms with AUM between $2.5 billion and $10 billion outgrew the market by 295 basis points. 

The question becomes: can these businesses use the same strategies to have successful client retention when the next market correction comes?

A Time of Crisis

During the financial crisis, we saw the impact a lack of portfolio visibility can have. This lack of understanding hurt portfolio performance and decision-making and our founder, Joe Lonsdale, made it his mission to improve financial transparency.

His solution was a highly flexible data aggregation, analytics, and reporting platform. He saw the need for a personalized experience and a digestible way for investors to understand their exposures. This is especially important during periods of high volatility. Clients will experience less fear, be less impulsive, and be the most receptive to advice.  

Customization Promotes Deeper Conversation

Transparency and thoughtful technology will set advisors apart in the face of a market downturn. Client relationships and communication will also be more important than ever.

Advisors value our customized ownership structures, attributes, and portfolio views. These tailored capabilities allow every investor to see a comprehensive and accurate picture. 

Advisors who put technology at the center of their practice can also zero in on areas of concern, highlight key risks, and create detailed proposals. The end goal is to minimize surprises and manage client expectations around volatile markets. 

On-Demand Reporting Enhances Understanding 

Flexible, on-demand reporting ensures confidence in long-term investment plans. During a market correction, it is critical to instill confidence in risk controls.

Going beyond standard reporting gives clients a better sense of their portfolio performance at any moment. With Addepar, advisors have the ability to calculate on-demand performance for any date range. 

Advisors can also perform a variety of risk and exposure analyses. Our network of integrations even enables stress-tests through different market cycles. This on-demand access at advisors’ fingertips means they can immediately answer any client’s concern. 

Finally, investment understanding and client experience are further elevated by our portal. Impromptu meetings to address market turbulence can be turned into proactive discussions. Each conversation can end with an in-depth presentation of suggested changes.

Conclusion  

Attempting to time the end of a market rally is never a wise business or investment decision. However, leveraging technology increases transparency and reaffirms strategies. The advisor is able to demonstrate that they provide a steady hand at the helm. The right technology partner will enable an advisor to ease client fears and stabilize a book of business regardless of the market environment.