Adopting the “network effect” | Wealth management

In the current economic environment, investors, both seasoned and new, are looking for strategies to protect their assets in the event of high volatility and potential recession. As there is no one-size-fits-all solution for financial advice, the continued demand also highlights the need for financial plans tailored to an individual’s personal situation and lifestyle. Working with a collaborative, holistic company can provide investors with a solid foundation for growth and stability, a plan of their own, and guidance that helps them feel more secure during tough financial times.

In a typical wirehouse environment, there is usually a very isolated approach with advisors focused on their individual services with little or no collaboration between specialties. Many advisors end up leaving the main distribution centers to take advantage of other existing services to help customers and run their own business, with fewer restrictions and more support. Enter the “network effect”. It’s the idea that successful wealth management companies shouldn’t operate in silos, but rather engage in collaborative work. Using a cross-functional system allows each advisor to rely on others within their network.

The network effect results in the fact that each customer is considered a customer of the company as a whole, and not of a single adviser. This approach allows the company to meet a multitude of needs for each client, while the client can tap into the expertise of a variety of finance professionals employed by the company.

Since many advisors operate in isolation, their models may not be able to meet the wide range of needs of their clients, given the lack of expertise in all aspects of the industry. Typically, advisors are “experts” on the investment side of financial planning, but that’s only one piece of the proverbial wealth management pie. The network effect covers the entire planning wheel, including tax, educational and estate planning as well as alternative investments and risk management.

This one-stop-shop mentality benefits not only the business and the client, but also financial advisors, who can leverage their strengths with clients and create more scale. The network effect also helps counselors tap into an abundance mentality and embrace working together to benefit everyone involved. This mindset, in turn, empowers the business, which can provide seamless planning to its customers. By taking the concept further, a culture of excellence is created that can be easily leveraged by partner firms across the country, similar to a law firm model.

Investors and clients are looking to simplify their lives and are looking for all-in-one resources to effectively manage their finances. Firms that emphasize collaborative working and embrace the “network effect” can provide their clients with expanded resources, expert advice, a reliable team, and a connected and integrated network, while enhancing their own value and by increasing the effectiveness of their advisors.

Rob Gorman, CFP, is founding partner and chief operating officer of Apollon Wealth Management.

Comments are closed.