Warning: How Financial Planning Can Cost You Clients

Wednesday, March 14th, 2012

The last twenty years have seen many changes in the invest­ment indus­try. Among the most impor­tant being the adop­tion of finan­cial plans by many advi­sors as a cor­ner­stone of their client offering.

As a whole, this has been a huge pos­i­tive for both advi­sors and clients. But a plan is only as good as how it is imple­mented and my recent con­ver­sa­tions with some investors illus­trate the impor­tant steps advi­sors must take to fol­low through on their plan­ning efforts.

The pos­i­tives of finan­cial planning

Con­ver­sa­tions with investors quickly drive home the ben­e­fits of finan­cial planning.

Espe­cially in rocky mar­kets, finan­cial plans give clients con­fi­dence that they have a roadmap to their long term objec­tives. They answer the “how much do I need “ques­tion that is a top con­cern for investors; and iden­tify how much clients need to save to hit their goals. Finan­cial plans can also drive home the rea­son that investors need port­fo­lios that offer returns above the risk free rate; even if clients don’t like the volatil­ity that comes with those portfolios.

Price Pow­ell of research firm, Cor­po­rate Insights has worked with many lead­ing invest­ment firms mea­sur­ing client sat­is­fac­tion and share a wal­let among over 50,000 investors.

He’s iden­ti­fied eight attrib­utes that cor­re­late with higher lev­els of client assets. First among those is hav­ing a finan­cial plan in place. In Powell’s words, “He (or she) who owns the plan owns the client.”

Note that you don’t need a 30 page plan for clients to feel they have a path to suc­cess. Espe­cially for less com­plex sit­u­a­tions you can often do every­thing you need to in six or eight pages (and many clients pre­fer a more suc­cinct doc­u­ment in any event.)

The pit­falls of finan­cial plans

Last fall I spent some time talk­ing to investors and was struck by con­cerns about their finan­cial plans among some of the clients I spoke to. These con­cerns didn’t relate to the plans them­selves, but rather to what hap­pened after the ini­tial plans were developed.

Investor com­plaints (which, just to be clear, come from a small minor­ity of clients) fall into the three categories.

The first can be sum­ma­rized as “What­ever hap­pened to my plan?”

These are clients who worked with their advi­sor to pre­pare a plan but haven’t heard any men­tion of it since. Clients expect that their plan will serve as a roadmap against which their progress will be mea­sured. Even if the news is not good, advi­sors need to incor­po­rate a con­ver­sa­tion about how clients are doing again their plan into every client review.

The sec­ond set of com­plaints relates to plans that are out of date.

“My plan was pre­pared eight years ago and hasn’t been updated since” one investor told me. “My wife and I have both switched jobs and our cir­cum­stances have changed dra­mat­i­cally. I just don’t think that a plan based on where we were almost ten years ago is rel­e­vant today. We men­tioned this a year ago but nothing’s hap­pened. We’ve been talk­ing about whether we need to change advi­sors to ensure our plan is up to date.”

The final cat­e­gory of com­plaints is directed at advi­sors who are seen as being overly passive.

“Given what’s hap­pened to mar­kets, it was no sur­prise that we’re behind on our plan” was what still another investor told me. “When we met with our advi­sor, we expected that we’d have a con­ver­sa­tion about either mov­ing some of our goals back or mak­ing some changes to get back on track.

Nei­ther of those things hap­pened; instead she said that we should expect to fall behind at cer­tain points and that we shouldn’t be con­cerned. We walked away won­der­ing if we’re work­ing with the right advisor.”

Incor­po­rat­ing finan­cial plans into client conversations

Every expe­ri­enced advi­sor knows that the plan itself isn’t what dri­ves value to clients; it’s what hap­pens as a result of the plan.

Clients who go through the plan­ning process typ­i­cally expect that their finan­cial plan will be an ongo­ing topic of con­ver­sa­tion with their advi­sors. It may be that you haven’t fallen vic­tim to any of the traps investors com­plained about when it comes to finan­cial plans. Just in case, con­sider these questions:

1. Are dis­cus­sions of progress against their finan­cial plans incor­po­rated into every client review?

2. Have all of the finan­cial plans for your clients been updated to reflect their cur­rent situation?

3. Are you being proac­tive in sug­gest­ing amend­ments to client goals or strate­gies in light of what’s hap­pened to markets?

The answer to all three ques­tions may be yes; but if you fall short with any of these with even a few clients now’s the time to rem­edy this. That way, clients will feel they’re get­ting the full ben­e­fit of the time they’ve invested to develop their finan­cial plan, and won’t be vul­ner­a­ble if approached by another advi­sor promis­ing that work­ing with him or her. Your clients will always have up to date plans in place.

    Lat­est Advi­so­r­An­a­lyst Prac­tice Growth Sto­ries

Tags: Adoption, Attributes, Benefits Of Financial Planning, Client Assets, Client Satisfaction, Confidence, Conversations, Cornerstone, Corporate Insights, Investment Firms, Investment Industry, Investors, Pitfalls, Portfolios, Roadmap, Rocky, Term Objectives, Twenty Years, Volatility, Wallet
Posted in Dan Richards | Comments Off

5 Guaranteed Ways To Lose a Prospect

Wednesday, September 7th, 2011

In the roman­tic com­edy “How to lose a guy in ten days”, Kate Hud­son is a mag­a­zine colum­nist who is writ­ing an arti­cle on dat­ing traps for women; to write her story, she delib­er­ately uses these pit­falls to try to chase away a poten­tial boyfriend, played in the movie by Matthew McConaughey.

Recently, the U.S. advi­sor site Hors­es­mouth adapted this idea to cre­ate an arti­cle on “Ten things never to say to prospects.”

Here are five of those prospects – killers, adapted with per­mis­sion from the Hors­es­mouth arti­cle. Remem­ber, do the oppo­site of what’s out­lined here to increase your chances of land­ing a prospect.

“Sorry I’m late.”

Your goal when meet­ing a prospect is to make a pos­i­tive impres­sion that will encour­age peo­ple    to invest all their assets with you.

So, the first words out of your mouth should never be an apol­ogy for some­thing that you could have pre­pared against, such as being late, mis­plac­ing vital doc­u­ments or look­ing like a Cat­e­gory Five storm tore through your office.

“Let me tell you about my myself”

Prospects are meet­ing with you to see if you can help them – and aren’t inter­ested in a mono­logue about your degrees and des­ig­na­tions.   The best way you can com­mu­ni­cate your    pro­fes­sion­al­ism is to ask them ques­tions about their sit­u­a­tion and talk about pos­si­ble ways that you could assist them.

If you do want to fill prospects in on your cre­den­tials – con­sider send­ing a brief overview prior to the meeting.

“I don’t know any­thing about you. Tell me about yourself.”

A car­di­nal rule for a first meet­ing is to try to learn some­thing in advance that can allow you to be more pre­pared, and not waste time going over basic infor­ma­tion. Never assume there will be a sec­ond meeting—you need to make the first meet­ing count.

Know­ing some­thing about your prospects before­hand can give you an edge in impress­ing them. For instance, if you know they’re with a local firm, plan ahead by doing a bit of research on their com­pany. Know some of the issues they may be fac­ing with the changes in the defense indus­try. And if they’ve come in as a refer­ral, don’t for­get to call the client who referred them before and meet­ing and spend five min­utes learn­ing more about the prospect.

“Bring last year’s  tax return to the meet­ing ”

This may make sense in some cases, espe­cially where a prospect is time pressed or has said that they are anx­ious to make a quick decision.

As a gen­eral rule, though, this is a mis­take – because most of the time you haven’t earned the right to ask for per­sonal infor­ma­tion before the first meeting.

Remem­ber, the goal of the first meet­ing isn’t typ­i­cally to sign up the client – nor­mally, the goal of the first meet­ing is to get a sec­ond meet­ing.

“I only work with peo­ple who give me all their assets.”

Almost all advi­sors want prospects to give them all their assets to man­age, but you need to first sell them on the ben­e­fits of work­ing with you and help them see the advan­tages of hav­ing a finan­cial quarterback.

After all, for clients, it’s clear what’s in it for you in man­ag­ing all their money. For this to work though, you have to demon­strate what’s in it for them.

One advi­sor says : “Many of my clients enjoy the peace of mind of hav­ing their assets con­sol­i­dated in one cen­tral place. I would love a chance to serve as your number-one finan­cial resource.”

    Lat­est Advi­so­r­An­a­lyst Prac­tice Growth Sto­ries

Tags: Apology, Assets, Cardinal Rule, Credentials, Designations, First Meeting, Kate Hudson, Killers, Local Firm, Magazine Columnist, Matthew Mcconaughey, Monologue, People, Pitfalls, Professionalism, Prospects, Romantic Comedy, Traps, Vital Documents, Waste Time
Posted in Dan Richards | Comments Off

Five guaranteed ways to lose a prospect

Wednesday, January 5th, 2011

In the roman­tic com­edy “How to lose a guy in ten days”, Kate Hud­son is a mag­a­zine colum­nist who is writ­ing an arti­cle on dat­ing traps for women; to write her story, she delib­er­ately uses these pit­falls to try to chase away a poten­tial boyfriend, played in the movie by Matthew McConaughey.

Recently, the U.S. advi­sor site Hors­es­mouth adapted this idea to cre­ate an arti­cle on “Ten things never to say to prospects.”

Here are five of those prospects – killers, adapted with per­mis­sion from the Hors­es­mouth arti­cle. Remem­ber, do the oppo­site of what’s out­lined here to increase your chances of land­ing a prospect.

“Sorry I’m late.”

Your goal when meet­ing a prospect is to make a pos­i­tive impres­sion that will encour­age peo­ple to invest all their assets with you.

So, the first words out of your mouth should never be an apol­ogy for some­thing that you could have pre­pared against, such as being late, mis­plac­ing vital doc­u­ments or look­ing like a Cat­e­gory Five storm tore through your office…

Read more…

http://​cli​entin​sights​.ca/​a​r​t​i​c​l​e​/​f​i​v​e​-​g​u​a​r​a​n​t​e​e​d​-​w​a​y​s​-​t​o​-​l​o​s​e​-​a​-​p​r​o​s​p​ect

    Lat­est Advi­so­r­An­a­lyst Prac­tice Growth Sto­ries

Tags: Apology, Assets, Chase, Invest, Kate Hudson, Killers, Magazine Columnist, Matthew Mcconaughey, People, Pitfalls, Prospects, Romantic Comedy, Traps, Vital Documents
Posted in Dan Richards | Comments Off