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Segment Advisors by Temperament and Behavior

by Eric

Firms are still too focused on segmenting advisors geographically or by channel, as opposed to using more relevant factors. kasina has been talking about this issue for a while (our "Six Segments" report tackled it back in 2004). At our recent National Accounts Roundtable, the question of how to best segment advisors by temperament came up again. By temperament, I mean what turns them on about their job. In one Roundtable session we compared the "portfolio manager" types on the one hand to the "asset gatherers" on the other. These orientations drive how advisors think about products, what services they require, and what they value in a wholesaler or National Accounts contact.

Of course there is a continuum. This generalization does not capture the nuances of each advisor, but it does confirm what I saw first-hand while running the Retail Financial Planning group at a major mutual fund firm. Our planners fell broadly into two categories: those who were "advice-focused" and those who were "client-focused". The former loved tinkering with plans, dealing with the investments, and crafting fantastic advice - the analytical aspects of the role. The latter loved the relationships with clients - the human aspects of the role.

Distinguishing between types of advisors is vital to serving them well. Whether asset managers segment coverage by geography, channel, or a combination of both, it is important to remember that there are different types of advisors within these segments. A small, independent RIA in Spokane may bear more resemblance to a Merrill Lynch advisor in New York than to his partner in the next office.

Broadly speaking, "portfolio manager" or "advice-focused" advisors will not be apt to use preferred or packaged solutions, but will care deeply about the makeup of products. They will need research support and product information. "Asset gatherers" or "client-focused" advisors will accept recommended solutions more readily, but will also look for help building and running their businesses, so that they can use their time to focus on the clients.

All of this reinforces the fundamental importance of understanding the advisor community. kasina and Horsesmouth recently developed FA Vision, a service that enables our clients to better understand what drives advisors and that captures what advisors think of asset managers, their products, and services.

The advisor channel continues to evolve and progress throughout this recent turmoil, and segmenting advisors by temperament is more important than doing it by channel or geography. To sell to these folks, asset managers need to know significantly more about advisors than simply where they live and for whom they work.