Pursuing Relationship Alpha with SS&C Rendezvous
Alex Hagmeyer – 10/12/2023
Building a business requires spending time on activities most highly correlated to growth. And yet, industry benchmarking studies continue to show that advisors spend 10 to 25% of their time on investment management and 50% on current client management.
Our goal for the SS&C Rendezvous team is to help advisors drive efficiency in their practice. We are working to implement world-class model portfolio delivery and proposal generation tools into the SS&C Black Diamond® Wealth Platform. This efficiency translates into more time spent generating relationship alpha, the most valuable alpha an advisory practice can harvest.
What is Relationship Alpha?
Relationship alpha, as opposed to portfolio alpha, is the process of delivering products and services that support clients in reaching a range of life goals, thereby building confidence, loyalty, and deeper engagement. Once discovered, relationship alpha turns advisors from stock pickers to financial coaches. During a recent advisory workshop, one RIA executive stated an obvious but often overlooked principle:
“The relationship an advisor has with their end client is an RIA’s most valuable asset.”
Relationship alpha is not easy to scale; however, by outsourcing or systematizing certain background functions, advisors are free to focus on their clients and thus allowing relationship alpha to flourish.
Tools to Achieve Relationship Alpha
To unlock relationship alpha, a firm can utilize a combination of personalized financial coaching, robust proposal generation technology, and streamlined model portfolio management, all integrated seamlessly into their advisory practice.
- Model Portfolios
Many advisors are expanding their offerings beyond investment management to include enhanced services such as educational, tax, risk, charitable, and generational planning. This holistic wealth management experience is known to stimulate referrals and organic growth. Outsourcing investment management via third-party model portfolios allows advisors to intently pursue these growth-driving services while partnering with their clients to identify the right model portfolio(s). This posture makes the advisor a co-investor alongside the client rather than a defender of their investment management practice. This slight nuance goes a long way in generating relationship alpha.
To support advisors on Black Diamond, we’ve added a Model Marketplace feature to Rebalancer. This feature delivers 68 third-party ETF-only, multi-manager asset allocation models across a spectrum of investment objectives and risk targets. Each of these models can seamlessly be subscribed to and assigned to client accounts and households in the platform, for no additional cost.
- Proposal Generation
While outsourced model portfolios can reduce the advisor’s time spent on investment management, certain client touchpoints– namely client portfolio check-ins and prospect proposals – can also be systematized to save time. We refer to our work here as Proposal Generation. Leveraging research in goals-based wealth management, we have built a process for advisors to integrate their client’s goal specification into selecting model portfolios that maximize the likelihood of achieving financial goals.
For example, as clients approach large expenditures where risk tolerances should change, our goals-based portfolio allocation algorithm can detect the change in expected cash flows and automatically prioritize a workflow for the advisor to recommend a tax-efficient transition to a lower market risk portfolio. Similarly, should the principal decline enough in a market correction to offset the current strategy from achieving the client’s goals, a strategy adjustment recommendation can help an advisor communicate changes. This same componentry is leveraged in Black Diamond’s new prospective client data model to streamline otherwise time-intensive operations: data gathering, modeling, customizing a model portfolio, identifying a tax-efficient transition plan, and creating a client-facing proposal report.
Between the new Model Marketplace and Proposal Generation features, the SS&C Rendezvous team is building model delivery and client proposal systems that will dramatically increase the capacity for firms to pursue relationship alpha. As always, we look forward to discussing these topics further with you and your team.
For more information on how SS&C solutions such as Rendezvous and the Black Diamond Wealth Platform can support your unique advisory business, request your personal demo, call 1-800-727-0605, or email firstname.lastname@example.org.