Five things advisors should do right away for CRM2


Most investors will start receiving their first CRM2 fee and performance reports in early 2017, for the 2016 calendar year. Between now and January 2017, advisors should be proactive and stay out in front of CRM2.

Here are five key things advisors should be doing.

  1. Talk to clients now about their reports. Start having conversations with clients now before the CRM2 reports are sent to them. Ensure that the first time a client hears about their fees and performance is not when the CRM2 reports land on their kitchen table or in their email inbox. Don’t let the CRM2 performance and fee information catch them by surprise.

  2. Explain fees in client-friendly terms. Advisors should be ready with client-friendly explanations of all the fees clients pay; both directly as account administration and transaction fees, and indirectly as fees paid by third parties to their firm. If clients are going to see high fees, advisors should be prepared to deal with the potential sticker shock – especially as at least 65% of investors don’t have any idea how much they pay in fees right now (according to a recent survey by Justwealth Financial.)
  3. Articulate your value to justify the fees. Advisors should prepare to have comfortable, confident conversations with their clients about the "fee-worthy value" they provide. This goes beyond a mere value proposition – it is all the things an advisor does for each client, including the “intangible” or hidden things they do, that will justify the fees the client pays.
  4. Understand money-weighted returns. Advisors should understand how money-weighted returns work, how they differ from time-weighted returns, and how they can be used to track each client’s progress toward their goals. Our recent research shows there are still significant misconceptions about money-weighted return calculations, and that many advisors are not promoting money-weighted returns as a good thing for investors. 
  5. Determine who's at risk in your book. It’s also important for advisors to analyze their book – which clients are most at risk? Money in motion is a very real threat as clients see their fees in dollar figures for the first time and start thinking about alternative solutions.

    Money in motion is also an opportunity. Advisors who embrace the new transparency and handle the fee and performance conversations well will be in a better position to attract new business from other advisors that don’t adequately demonstrate value for the fees.

At CRM2 Navigator, we provide a wide variety of client-centric and advisor-friendly tools, training, webinars, workshops and communication programs. We help advisors clearly explain fees and performance in a way that reassures and resonates with clients, retains business and attracts new opportunities. Our training enables advisors to have comfortable, confident conversations with clients about the value they provide. 

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