Well in advance of the possible adoption of a fiduciary standard for the financial services industry, some companies are taking steps to prepare their advisors to comply with one. Third party asset management firm Genworth Wealth Management is among them, with a proprietary six-step process it’s introduced to help its advisors meet the challenges of a higher level of client service.
“On one level, the concept of putting the client’s interest first is very simple and important,” says Michael Kim, Genworth’s senior vice president of business development. “But at another level, what we are seeing is that advisors are not prepared to handle this set of responsibilities.”
Genworth supports more than 6,000 financial advisors and manages more than $20 billion in AUM. “So we feel like we are in a very unique position to see the important trends in the financial advisory community,” Kim says.
He estimates that thousands of Genworth advisors have begun using the process, which is incorporated into the Genworth platform.
According to Kim, the automated process covers the following steps:
1. A discovery process, which uncovers client needs and expectations.
2. A determination of a client’s market outlook. “Meaning that, if you are the client and if you had a very pessimistic view of the market, the portfolio we would recommend would be very different than for someone with a very positive outlook,” Kim says.
3. The construction of a portfolio composed of different asset allocations, including completely transparent fees.
4. The selection of managers or strategies, with further discussion of fees.
5. The ongoing rebalancing and reexamination of the portfolio.
6. The reporting and monitoring of the accounts.
The process is automated and can largely be handled with a series of key strokes, according to Kim.
“We’ve created the Easy button for advisors,” he says, adding that Genworth’s goal is to free their advisors from the logistical demands of compliance so they have time to build personal relationships with clients. “At the end of the day our belief is that, if an advisor is providing personalized advice, they are subject to fiduciary requirements.