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Explaining Third-Party Asset Managers to Clients

Business Builders

Maybe you’re thinking about outsourcing to a third-party portfolio manager, but you’re not sure how to explain it to your clients.

Actually, we get that a lot here at First Ascent. So, I surveyed a group of advisors who work with First Ascent to get their feedback.

The consensus was that advisors had success when they led with their own value proposition. They framed their conversations around setting goals and describing how they as the advisor would help build a plan to achieve them. They introduced First Ascent into the conversation latter once they discussed products and services to achieve those goals.

Many advisors also had analogies that they used to describe their role and where First Ascent fit. One advisor described himself as a coach that drafted players for different positions. His job was to find the best player to accomplish a certain job, and to hold that player accountable.

Another advisor used the medical analogy of a general practitioner who took care of the client’s overall financial health. They made referrals to specialists who were expert in different areas, just as a GP would refer patients to an oncologist or surgeon that they’d vetted. Finance and medicine are both broad fields, and no one has the time or resources to expertly manage every aspect with the attention it needs.

One advisor described it like this: “I position myself as a planner… I explain that I cannot do both the planning and provide the level of due diligence and research required of a prudent investment manager, so we hire people who specialize in that area; just as I can advise them on the basics of estate planning, we hire an attorney to complete and execute the documents.”

Another interesting take was from an advisor who emphasized how they remove conflicts by outsourcing investment management. “I tell them that by bringing in managers who are specialists in their area I put myself on the same side of the table as my client. I get to stay objective and help my client hold the managers accountable, rather than trying to explain away my own performance.”

Of course, fees factored in to most descriptions. Advisors highlighted how our low, flat fees were unique in the industry, and how our narrow focus on portfolio management meant we could devote attention to keeping costs and expenses low and reduce portfolio drag.

Advisors also emphasized that First Ascent does not work with retail clients and only partners with financial advisors. They highlighted that partnership as a source of strength, both through the research and specialized knowledge that First Ascent provides, and through our operational expertise in trading and managing accounts to keep clients on track with their larger financial plan.