Financial professionals used to enjoy a position of great power-they had financial information, knowledge, and product access that normal consumers did not have. But today, that status has changed. Information is a click away; knowledge is given out for free and financial products are easily available online. In fact, the client can be their own expert, because they have the same facts as their advisor.
The financial professionals are under increasing pressure to communicate and demonstrate their value in the client relationship over emerging approaches such as the robo-platform or DIY approach.
So what is left for the financial professional to do?
Luckily, a lot!
For most people, there can be a big gap between knowledge, understanding, and taking action- which needs to be bridged!
As mentioned in my previous articles, we all have different money stories, personal beliefs, and behaviors towards money, which can make planning difficult. Despite you having lots of facts and information, you can still be stunned by your doubts and biases, indecision, or lack of experience. The information helps but not the wisdom, and it needs to apply in action. No actions, no results/outcomes.
The same goes for the success of financial professionals. It isn’t really only about using the right methods or business tactics or having the best processes, but more about having the right mindset that makes it easier to implement those methods or processes. The challenge is quite often, most financial professionals have many limiting beliefs that they are not living up to their potential, and worst, know it and become “uncomfortably comfortable”, just accept it and settle for things as they are, because changing them, would require change.
When we shift our mindset about how we do business by focusing more on the value we add through our work and providing an excellent client experience for our clients, we would then only experience greater success, satisfaction, and freedom.
The studies from Vanguard, Morningstar, and Envestnet have influenced how we think about where our value is derived as financial professionals, beyond just portfolio performance alone. In short, value can be defined based on the client’s perception of value (or what they really care about) relative to fees paid, market performance, and financial goals. The studies also found that clients value an advisor who helps them reach their financial goals above anything else!
When you know your worth and the value you could deliver to your clients, put a price tag on it and start charging what you are worth and create equitable relationships that serve your business as well as you serve your clients.
Below are the works that financial professionals do for clients:
Wow, isn’t it noble and remarkable to be true financial planning professional? Thumbs Up!
But at the back of the mind of many financial planning professionals (who provide a financial plan), they have yet to hit the high watermark of annual earnings from advisory fees since the product commissions and wrap-based business became the norm.
Luckily, Malaysia Boleh!
Financial professionals have the privilege to earn both, the commissions and the advisory fee, for some!
So what’s in it for the financial professionals?
1. High loyalty
Client loyalty has been considered the ultimate goal in the financial service business. Generally, we know that the most satisfied clients are the most loyal clients which support our business goals. Clients who receive high value from their advisor are more loyal. When financial planning professionals add value to the client’s financial journey, the level of satisfaction increases and thus resulted in high loyalty which is essential to growing the business.
2. More referrals
Referrals are the most obvious form of return on the client commitment. Clients who work with an advisor to manage some or all of their financial affairs with a written financial plan tend to make more referrals. It’s found that on average, the engaged client provided more than 2 referrals to their advisor.
3. Increase share of wallet
When the clients engaged an advisor to manage their finances, the advisor has the potential opportunities to provide the full range of services available to them or upsell, and thus increase the share of wallet from the engaged client. There is also an opportunity for the financial professionals to partner more closely with other experts to ensure clients’ all needs are met.
4. More profitable
Engaged clients are much more likely to include other family members to implement family wealth management. They are more profitable because they provide referrals, bring their families to the table, and take advantage of the broader range of services. Financial professionals are able to build on the trust and satisfaction from client engagement to improve revenue and profitability.
5. More freedom
Many financial professionals believed that they must have as many clients as possible by casting a net in search of prospects. They are convinced that they have to work long hours over many years to be successful. My experience suggests that it’s more about the focus on the right clients you want to serve comfortably with a deep understanding of your client’s unique situation and providing an excellent client experience. It’s almost impossible to achieve this quality relationship if you are trying to serve the tom, dick and harry, as a solo financial professional.
Ideally, you only need to serve 50-100 quality clients and work only 40-45 hours a week, with 60-80 days off per year, and yet it’s still profitable, on your terms!
Financial professionals should focus their time and energy on the work they love and the people they truly enjoy. By doing so, you gain back your time and freedom, as well as building a successful practice and the work-life balance that you desire.
The financial planning business may seem to be less lucrative and time-consuming but that’s for a short period of time. And we know that our clients are better off, which gives you a great sense of fulfillment and happiness. It also gives us a chance to be “human’ again, when life issues beyond numbers are being explored and solved.
So, what is stopping you from pursuing a more efficient lifestyle practice that you desired?