Information That Will Increase Your AUM

July 15, 2014

by Dan Solin

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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

Most advisors I meet are extremely competent. They spend a lot of time keeping up with the latest developments in the world of investing, which we all know isn’t easy. A review of current commentaries on Advisor Perspectives is illustrative. Subjects under discussion include yields, equity premiums, Morningstar’s “category flux,” copper prices, the “consumption drag” and emerging markets.

And that’s just this week.

It’s important to continually refine your knowledge, and it’s impressive so many of you do so. Presumably, one reason for spending this amount of time is to be in a better position to persuade prospects to become clients.

There is an immense amount of data on subjects related to investing, and there is an equally impressive amount of scientific and peer-reviewed information about the process of persuasion. If you ignore that data, you are not maximizing your potential for increasing assets under management (AUM). And it’s AUM that is the sine qua non for every advisory firm. Fees from AUM drive the top and bottom line.

You most likely approach investing based on a defined set of sound academic principles. In contrast, many advisors approach meeting with prospects on an ad hoc basis. The meetings vary widely, based on personalities and biases. If this dichotomy describes the way you do business, you should consider making some changes.

There are many ways to approach a meeting with a prospect. However, there is only one evidence-based way. You can be successful – and many of you have been – using an approach that is inconsistent with the evidence. But you will maximize the possibility for success if you follow evidence instead of ignoring it.

Here’s a suggested course of action:

  1. Spend at least as much time, effort and money learning the science of persuasion as you do enhancing your investing knowledge.
  2. Adopt a standardized format for use by every advisor in your firm, for every meeting with prospects.

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