By Marc S. Freedman, CFP®
Adapted from Oversold and Underserved: A Financial Planner's Guidebook to Effectively Serving the Mass Affluent by Marc S. Freedman, CFP®
Why do your clients stay with you in difficult times?
We actually asked our clients during a client advisory council meeting in 2002, and the answers surprised and moved us. It was clear from that experience that our responsibility to deliver performance or to temper emotions is nothing compared with the relationship of trust that helps us to uncover unspoken emotions about money and provide confidence in uncertain times. Here are some ways we've gone about building a practice where down markets don't necessarily equal client crises.
Know Your Market
More than anything else, I believe we want to work with people we like. But for many of us, our client base consists of anyone who expresses a desire to engage our services.
You know intuitively that refining your client base should lead to efficiencies. But have you ever considered how focusing your business could result in the emergence of a practice that reflects your values and beliefs? Targeting our client base dramatically increased the efficiency and profitability of our firm among existing clients and brought us greater clarity about the kinds of clients we wanted to work with going forward.
Be Aware of the Impressions You're Creating
First impressions go a long way. When you are building a relationship with clients, you must remain aware of both the tangible and intangible surroundings that can affect your clients' abilities to remain focused on you. By reminding yourself of how the five senses create impressions, you will stay in your clients' good graces.
Imagine that a new prospect walked in your office door, right now. What first impressions might be made?
- Are client statements and reports scattered around the office?
- Are you dressed to impress?
- What pictures are hanging on your walls?
- Has the furniture been dusted?
- How is a prospect greeted when they enter your office?
Beyond the first in-person experience, though, it's important to consider what you do before you meet with a prospective client.
- How do you formally introduce your firm to a prospect?
- When it is time to schedule an initial consultation, what, if anything, do you deliver to them in advance?
- What expectations should prospects have about how their time will be spent by you?
I have always found it fascinating that so few financial planners have taken the time to develop a personalized introductory kit about their firm. While many planners will spend money on marketing systems, direct mail campaigns and advertising techniques, rarely do you find a planning firm that spends money on its image. When you have a personalized introductory kit, a prospect can take the time to learn about your background, your experiences, your process and your expectations.
We talked at some length about the introductory kit previously in this magazine (See "How to Develop a Personalized Introductory Kit" in the November/December 2008 issue of Practice Management Solutions), but briefly, we include a personalized brochure, a planner biography, a fact finder (also known as a questionnaire), Part II of our ADV, a privacy notice, our financial planning contract and a business card. You can also include press clippings, a current newsletter, etc. We also recommend a letter that helps your prospect understand what's in the introductory kit and what they can expect from their initial consultation.
Get the Facts-All the Facts
I believe that in order for our clients to say they received financial planning, they must feel confident that their planner:
- Asked questions about their goals, challenges and successes (I call this discovery)
- Explored how effectively the client has elected to protect their family, their health, their life and their legacy (I call this capital protection)
- Discussed issues that affect the quantitative elements of their financial life with particular attention to how changes in cash flow, market volatility, inflation and other factors will affect the clients' expectations (I call this wealth management)
As a result, at every meeting, we take the time to review our clients' goals, challenges and successes, and to keep them current, we build a comprehensive net worth statement based on documentation they provide at the outset of the relationship and verify it with them. And, we document everything carefully.
Go the Extra Mile in Your Analysis
If there is one skill that I think financial planners need to hone more than any other, it is their understanding of how cash flow and tax planning advice can cement a relationship with their client. Your advice in this area, alone, is generally worth the financial planning fee they pay you. We have found that in most mass affluent cases, we can find savings or offer ideas that more than cover the cost they paid for the plan. Clients will understand how financial planning services are different from investment advice when you commit yourself to spend time analyzing your client's cash flow and tax planning issues.
In addition, take the time to better understand the effects of health care costs, Medicare and Social Security. As your clients age, they will look to you for answers on retirement programs and medical benefits offered through the Social Security Administration and other non-government related entities. As a financial planner, you need to maintain a clear understanding of how the operations of these programs work so that you can effectively integrate them into your planning and recommendations.
Create an Advisory Council
Your clients know you better than any prospect. Rely on them for advice and don't be afraid to ask them tough questions. For example, do your clients have a comprehensive grasp on the services you offer? Are you sure? Do they wonder whether the services you perform for them and the specific products you advise are the same for everyone?
Get their feedback when you consider offering a new service or marketing campaign. The more honest you are with them, the greater appreciation they will have for your genuine desire to serve their needs and the needs of future clients.
Times of uncertainty challenge practices of every type, but when your practice is built around lifelong relationships with people who share your values, clearly see the value in the work you deliver and appreciate your role in their lives, you'd be surprised at how few (troubled) phone calls you field.
