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Financial Advisor Value – What Value Are Your Really?

Wednesday, June 8th, 2011

financial advisor holding moneyThe brutal truth is that most (i.e. 90%) of financial advisors provide no value. Don’t take that personally and don’t get defensive. There may be a breakthrough here that can make you very successful and turn you into a financial advisor marketing powerhouse.

I just finished reading a financial publication from the fall of 2008. The articles were absolutely worthless. One article said that REITS looked good (they are down 50-60% as I write this). Another article opened with a statement “mutual fund managers are cautiously optimistic about value funds.” Is that another way of saying “We are optimistic but if you lose money, we told you we were cautious.” Another article talked about how you need to educate your clients during bear markets and why this is such a good time to buy (the Dow was at 11,000, now 7300 2-24-09). I like to read old publications because you realize how valueless opinions are and how supposed experts know nothing more than lay people.

If you have been espousing your opinions and making forecasts for clients, you have no value because you have a 50% chance of being wrong. Forecasts and opinions are equally wrong by the brightest PhDs so please keep your opinions to yourself. If you’ve been telling your clients this is a great time to buy, you don’t know that. The Dow could go to 3000 or stay flat for 10 years. Sorry to tell you that those forecasts and opinions you have are worthless and potentially quite detrimental, but its not personal–ALL opinions and forecasts are worthless.

The other financial advisor value proposition often stated is helping clients stay logical and not get emotional about their money. If I were your client and I had just lost 50% of my portfolio, how much would I pay you for that hypothetical value of helping me stay logical or stick to my plan? I would have to say this assistance you provided had no value to me.

So before you go to work tomorrow or pursue any additional financial advisor marketing tactics, ask yourself what substantial value you can be–not that same old diatribe you’ve been telling prospects and clients for years. How can you actually deliver something that has objective, substantial financial advisor value?

Here are some possibilities:

1. Actually make people money in the market  You won’t do that in the way you have been taught. Please read “How to Make Money in Stocks” by William O’Neil or “Beating the Dow” by O’Higgins to understand how money is made.  Stop using funds and the other packaged crap that other financial advisors use.  These packaged products are generally good for the manufacturer, good for the distributor (the BD), pay you good commissions and can be junk for the client.

2. Stop blindly listening to what you have been told like “buy and hold”, “you can’t time the market”, “diversify.” Have these “rules” helped your clients get rich or helped you add financial advisor value?  Start thinking for yourself.  Start reading voraciously.  What really seems to work and not work.  Develop your OWN philosophy and point of view and stop following the crowd. IN addition to the books above, read “What Works on Wall Street” by O’Shaugnessey.

3. To add to point 2, have an investing system for your clients like top producers do.  For example, buy low and sell high.  That means you need metrics to determine what is “low” and “high.” Or have a momentum system to buy or sell what is trending.  But you must have a system or methodology as you cannot blow with the wind and sell what the next wholesaler recommends. I successfully use a very simple but objective system as explained in “Beating the Dow” which outperforms most mutual fund managers.

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Differences Sell—How to Differentiate Yourself from other Financial Advisors

Tuesday, November 4th, 2008

 
It amazes me that most financial advisors go through their career saying the same things as their competition, selling the same products an services and never setting themselves apart. Why would any client come to you if you are not different than your competition? If you don’t have an answer, it may be why your prospecting is hard and your business does not grow as fast as you desire and you don’t havethe client quality you crave.  The focus of your financial advisor marketing must be differentiation.

We have spelled out this simple formula for thousands of advisors. Maybe 1% have followed it and they are among the more successful financial advisors.

First, specialize. If you are a generalist, no one wants to consult you. Every prospect thinks their situation is unique or that they are unique. So decide how you want to specialize and do it. For example, if you want to specialize in working with retirees, then:

1. name your business appropriately, something like “Nestegg Protectors”
2. have a tag line “ We help you protect the financial assets you’ve accumulated”
3. have a brochure and a web site that detail how you help retirees with your specialty and what they will gain by employing you

Second, write a financial book on your specialty: “ Six Mistakes Retirees Make that Destroy Their Nestegg and How to Avoid Them.” If this seems like a daunting task, it’s because you simply don’t know how a book is written. Bill Clinton did not lock himself in an attic for 14 months. He simply dictated his answers to a writer’s questions into a cassette recorder.

The writer then took those dictations and wrote the book.

Comments from advisors who have had books written for them:

“Just a note to let you know how successful the co-authored book program has been for me. I mailed copies to CPAs that I wanted to meet with and I was able to set appointments with several. I also use the book as the second mailing in my referral program, which has made the program even more effective. I have made over three hundred thousand dollars from new clients to whom I have given the book. Thanks again for helping me make my marketing effort more successful.”Dennis R., St. Louis MO
 

Next, you must publish a financial advisor newsletter or insurance newsletter if an insurance professional. This shows that you are a knowledgeable professional on top of the evolving issues in your field. Would you rather have your knee surgery done by a physician who completed medical school 30 years ago and does not read any medical journals or the one that publishes “Knee Surgery Monthly—latest techniques in knee bone and cartilage repair.” You want to go to the newsletter publisher because that professional is obviously on top of their field.

Similarly, your prospects want to go to such an expert.

You don’t need to write a word to publish your financial newsletter. Simply buy the articles. We’ve provided hundreds of FINRA reviewed newsletter articles and newsletters to financial advisors and they have built a professional reputation without writing a word.

This is very little work to differentiate yourself, set yourself apart from the competition and gain clients that other advisors cannot. And you only need to set these differentiating factors in motion and outsource the continued writing to maintain your specialist image.

Note that suggestions in this article address ghost written materials.  Please follow the disclosure requirements if you are licensed by FiNRA found at http://www.cecouncil.com/Documents/d8d04a07-32ba-4405-b16a-b5efef81bc65.pdf

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Three-Step Transition from Financial Sales Person to Financial Advisor

Tuesday, September 30th, 2008

The tremendous benefit that accrues from status as a financial advisor is that you have no agenda, no product to sell, and no objective other than do what’s right for the prospect and the prospect can sense that. Because prospects do sense the difference between a financial sales person and financial advisor (no matter what term you use to describe yourself), financial advisors gather more assets per client and have longer term, far more lucrative client relationships. And, at the end of their career, financial advisors have a practice to sell—their client relationships have value.

Few people make the transition from sales person to advisor. Consider these figures: there are approximately one million people in the US with a securities or insurance license. There are approximately 80,000 people entitled to use either the CFP® or ChFC® credential. That’s not to say that only people with one of these credentials are practicing as true financial advisors (or that some with these credentials are product sales people and not advisors), but those that are serious about their financial advisor status do pursue one of these designations because they know that these designations are the best chance of quickly communicating their status as an advisor to the public. In short, about 8% of people with a license to sell financial or insurance products have made the effort to “brand” themselves as a financial advisor.

So the first step in the transition from sales person to advisor is to get educated—whether by enrolling in one of the recognized designation programs or through self study. You cannot advise if you don’t have adequate knowledge. Does this take a consistent effort to study each week over an 18 month period? Yes. Do most people make the effort? No. Do the people who make the effort get rewarded? Yes—the CFP® Board reports that financial planners with the CFP® designation earn 50% more than non-CFP financial planners. So if you struggle to earn more, knowing more is the first step to your goal.

Once you earn a credential or reach your goal. You’re not done. You need to invest about 200 hours annually in self continuing education. I know that most credentials require 40 or so hours a year of continuing education but this is insufficient. Not only do you forget what you know, and must spend time staying current, you need to continually add to your knowledge base. Since your prospects and clients are getting more knowledgeable in financial matters, the value you add will diminish if they keep growing and you don’t.

The next step in the transition is your presentation. When you sell a product, you typically spend most of the time talking, explaining the features and benefits of your product and convincing your prospect why they need it. As an advisor, you spend most of your time asking questions, because you don’t care what products and services you eventually sell. These are simply tools to accomplish your prospect’s objectives. Your job is clearly defining those objectives and then presenting a course of action, a course which uses products or services as the tools to fulfill the objective. You no longer care about the sale of a $50,000 annuity. Your objective is to be the sole financial advisor and gather all of the client’s assets so that they can be managed appropriately. When you build sufficient value and trust so that the prospect turns over their assets for your stewardship, believe me, the compensation will follow and a true advisor does not need to worry about that.

Third, you need to decide who you want to be as an advisor.What market niche do you want to serve and what market niche will value your service?How do you want to market yourself?What other professionals do you need to align with?What’s your unique selling proposition?What’s your financial philosophy or template in working with a prospect?

Unlike a sales person who just wants the sale or willingly gives the prospect what they want to buy, the most successful advisors don’t give clients what they want. Successful advisors show the prospect their formula, their paradigm for handling money (e.g. asset allocation, marketing timing, use of products that must provide guarantees, asset laddering, etc). If the prospect wants something else, the successful advisor shakes hands and removes himself from the engagement. In other words, prospects will either agree to your model for managing their finances or not. There is no other way to be a successful advisor. After all, does a surgeon ask the patient which technique should be used for the surgery?

Sound like a lot of work? It is, but the time will pass anyway. You’ve got nothing else to do than raise your level of expertise and provide greater value, or simply tread water in your career, doing re same thing day in and day out. You’re wasting time now making small sales and extracting only a small portion of business that is attainable from each client. So the time you invest in your transition from sales person to advisors pays off as a very sound investment. Isn’t life about seeing how much value we can deliver to others? So get on your journey, the clock’s ticking.

Post provided by Javelin Marketing

Annuity Leads for Financial Advisor Marketing
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Overworked? Your Problem is Not Time Management

Tuesday, September 23rd, 2008

The most widespread yet ignored problem shared by most financial advisors is the lack of focus. Interestingly, most advisors fail to see that this problem is at the root of all of their other problems.

For example, most advisors will tell you there are not enough hours in the day. They believe this time shortage is due to a deficiency in their time management skills or the nature of a business where there’s simply too much to do. In fact, the shortage of time has to do with lack of focus in their business, attempting to deal with too many products and services and attempting to deal with too many different types of clients.

Let’s take an example. Joe Advisor meets with Mrs. Jones, age 68. He constructs a portfolio of blue chip stocks and bonds. This is the same portfolio he has constructed for another 25 clients, so it was highly efficient for him to do the same thing for one more client. The other 25 clients are also in the same age range as Mrs. Jones—between ages 65 and 78. By having the homogeneous subgroup of clients, Joe is able to take the same approach, use the same products, provide the same service and is able to maintain the portfolios as if they were one portfolio.
At the end of the meeting, Mrs. Jones asked Joe if he can help her son Harry, age 49, who started a new construction business, set up a retirement plan. Hungry for a new client and eager to do more business, Joe agrees to call the son.

In a 30 minute phone conversation with the son, Joe answered a lot of minute questions regarding retirement plans and accommodated the son’s need to be educated about the difference between an IRA, profit sharing, a money purchase plan and a defined benefit plan. The son also mentioned that he was interested in the most aggressive growth funds available because he had a long investing time horizon.

Joe quickly went to work to find information on a profit sharing plan as he had not set one of these up for two years, given that many of his clients were retired. He also spent 55 minutes doing research using Morningstar in order to find two or three good aggressive growth funds since he was unfamiliar with those types of funds which he typically doesn’t use. Joe invested almost 90 minutes for what will be a $10,000 investment for the son to start his profit sharing plan.

Joe will earn gross commission of $400 from this transaction with a minimum investment of three hours. Compare this to the meeting had with Mrs. Jones. The first and second meetings were total of two hours and Mrs. Jones invested $250,000.00 from which Joe will earn $2,500 per year. Dealing with the son has caused Joe to take on business which is highly time inefficient, a digression from his normal business and has forced him to spend more time than he should with the new client.

Joe will also need to keep his eye on the performance of this aggressive growth fund for this one client, his only client that owns this fund. If this sounds familiar, here’s the immediate action you must take:

1. Decide on one niche of clients that you choose to prospect
2. Determine what products and services are most desired and most beneficial for this group of clients
3. Build all marketing and sales functions around this one niche of clients
4. Gain mastery in the few products and services that will serve these clients

Assume momentarily that the three products for this market are fixed annuities, bonds, and blue chip stocks. Pick, at most, your two favorite annuity companies to deal with, one blue chip stocks strategy such as the Dow dividend strategy, and find a newsletter that recommends fixed income instruments so that you know which bonds to select monthly without having to do research. Use the same building blocks with every client so you can finally have the life you dreamed.

Your job is not to cater to the desires of every prospect but rather find prospects that fit the model you use.

If you focus, you can leave the office at 4:00 P.M., you can train assistants to do much of your work for you, you can treat the portfolios of all your clients as though they were one portfolio to be watched. You have far less work to do when you have greater focus and you gain greater expertise in your client niche and in the products and services they desire.

This is the key to having a sane life as a financial advisor. The longer you continue to deal with everybody, give them whatever they like and spend more hours than you should at the office, the longer you delay having the life you want and investing time building a practice that will have no terminal value.

If you hesitate to turn business away so that you can focus on a target niche, consider this recommendation that the marriage counselor gave to an unhappy husband: your marriage will improve when you stop dating.

Annuity Leads for Financial Advisor Marketing
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Sales success through zigzagging and stumbling

Tuesday, September 16th, 2008

Few people in the financial services industry ever become seven-digit earners but there are thousands that attain this sales success, which means it is possible for all. In fact, the financial services industry offers more opportunity for large earnings than possibly any other industry. So why do so few get there?

It’s the same reason that there are very few Albert Einsteins or Thomas Edisons. The folklore is that Edison made 10,000 attempts to invent the light bulb. Most financial advisors will not attempt something even a second time if they don’t get instant sales success. And therein lays the difference between those that earn more than the rest can imagine and the rest.

Really large producers know a secret about life. If you keep knocking at the door, it eventually opens. It’s a matter of how long one is willing to stand in front of “no success” that determines if you achieve sales success. But in a culture of “instant gratification,” it’s hard to stay with something that doesn’t work. And so, most people in financial services move from one idea to the next, one product to the next, one marketing system to the next, always in search of the Holy Grail but never finding it, never realizing that the big producers create their own grail through sheer commitment to stay the course.

Big producers simply have a commitment to an idea (usually not how much they earn), but of making something work, or of proving a point or of doing something better than anyone else. They continue to experiment, stumbling along in a zigzag fashion toward the target, making changes here and there to their approach, allowing their problem to continuously simmer in their thoughts. And by having the tenacity to hold the problem, the solution often comes coincidentally, like Newton being hit on the head by a falling apple and realizing the structure and formula describing gravity and mass.

How does this apply to you on Monday morning and your sales success? If that seminar you did was not successful, don’t give up and try something else. If you’ve been soliciting CPAs for 3 months with no referrals, don’t give up and try something else. If you’ve been running an ad that was not instantly successful, don’t give up and try something else. Stay with your problem and find the solution. Be willing to stand in the place called “I don’t know what I’m doing” because then you take steps to learn and find out what you don’t know (or find the person that has already solved your dilemma). In the Internet age, all knowledge is at your fingertips so you only need seek out the information or the person who can help you.

I get solicited every month to help people with their ideas (which are usually not in my area of expertise) and I wonder how many of these we will ever see:

• A nationwide financial planning firm for women

•A training to teach financial advisors to manage family business succession from one generation to another and building a network of such advisors

• A training to teach advisors to integrate the investment plan with the estate plan

• A plan for financial advisors to enroll their clients in a medical identification program, so that if injured anywhere in the world, the medical facility can instantly access the client’s medical background

• A training program sold through financial advisors that helps people be better investors

I meet many advisors with the same story of broken dreams, “I started in the business selling product X. But then the market went down so I shifted to Y. And then you know what happened to interest rates, so I shifted to Z. And then….

The sad fact of this recount is that had the advisor stayed with product X and not abandoned the original plan so quickly, that advisor may now be the best known provider of X in their town with wild sales success to their credit. Everyone else would have exited that business leaving the last man standing to win the spoils.

On Monday morning, take list the ideas and approaches you have abandoned in the last year or are ready to abandon and stop.

–Make three phone calls to people who you think can help you or refer you to others that can (you will likely find an expert through a zigzag network of referrals from one person to another).

–Do several Internet searches using various key phrases related to your problem (which will probably take you on a zigzag course to insight). It’s likely by the end of the week, you will have made a leap in solving your current dilemma or abandoned opportunities by zigzagging and stumbling along.

“Genius is 1% inspiration and 99% perspiration.”Thomas Edison

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Business Development-How to Get the Types of Clients You Want

Thursday, September 11th, 2008

The title of this article is bad. It emphasizes what you want, but if you want to win specific new clients and win at business development, the focus needs to be on them. While this sounds simple enough, most professionals conduct their marketing without an understanding of their potential clients. We assume we know what they want but the assumption is often incorrect. So the first step is to know exactly what your potential clients, your prospects, value.

Take this simple example. What do business owners want? We assume they desire more profits, better cash flow, higher value for their business, and better quality employees. But top on their list may be to spend more time with their families. If you assume rather than KNOW what your target market desires, your business development efforts will flounder. Once you know what they really want, your marketing can be so much more effective because you can market a solution for what they really desire, not what you believe they desire.

To make your business development laser sharp, you have two ways to learn what prospects really want. You can contact ten potential clients and have a one-on-one interview with each. So that they will be open to you, decide to write an article for your State society or local chapter so that when you call your interview candidate, you frame the meeting correctly: “Stan, My name is Bob Richards. I am a financial planner here in town and I am writing an article for the local Financial Planning Association about the professional and personal challenges faced by CFOs of manufacturing firms. For my article, could I interview you and get your ideas over lunch on Friday?” This approach opens the prospect to truthful answers rather than leaves them guarded that their responses will come back to them in a business pitch.

You must conduct ten of these interviews to get a solid profile of your prospects as the foundation for your business development plan. Alternatively, you can conduct a focus group. To do this correctly, you want to read books on conducting focus groups or possibly hire a local market researcher with experience (elance.com and guru.com are excellent sources of this type of specialized help for projects).

Now you know what your prospects desire. There are several ways to reach them so that you have the opportunity to explain how you can assist them to get what they want. The following recommendations may seem unconventional and that’s why they have value. Many people with financial planning backgrounds market passively and don’t have the business development results desired (i.e. they rely on referrals). If you use the same passive and reactive tactics as everyone else, you won’t stand out as special and you won’t win business.

The Best Business Development-WIN Client Referrals—don’t wait for them

Identify current clients that are either part of the group you desire as clients or can introduce you. Once you do, call them and ask them for help. “Tom, I am always working to improve the quality of my services and determine what people really want. Can I ask you what you like working about me best? (Write down everything your client says). I appreciate those comments. Would you be willing to join me for lunch and help me with my business development process?”

At lunch, you explain to Tom, your client, that you believe he can help you with your business development program. You show him the following letter that you typed up that repeats the comments he made to you on the phone just a few days earlier when he told you what he liked best about working with you. Here’s a sample letter:

Dear ,
Bob Richards has been my financial advisor for many months. As busy as he is, Bob returns my calls the same day I phone him. Additionally, Bob is the only advisor I have ever had to walk me through my investment statements, insurance policies and tax returns so that I really understand what’s going on. As a result, I have felt more comfortable about my financial situation with Bob than at any other time. He also keeps in touch with me every couple months so I know he is always looking out for my interests. I highly recommend you call Larry at 800-xxx-xxxx if you want a top quality financial advisor or please call me and I can answer any questions.

You ask, “Tom—is this accurate? Would you be okay signing these letters as a way of introducing me to other CFOs, business associates and friends and helping me with my business development?” You then proceed to get a list of appropriate people to mail and use Tom’s letter as the first part of a drip marketing campaign to this select list.

Professional Referrals—what can you do for them?

Other professionals may send you business just because you’re a nice and competent person, but it works better if you seek the referrals proactively. Here’s the fundamental element of success if you want referrals from other professionals: what can you do for them? Even if you are new in the business, you could open the phone book, call another professional and say, “I am a financial advisor here in town and my clients often have need for (legal work, business brokerage services, business financing, etc). I may be able to refer some of these people to you but I wanted to learn about your business and determine if my clients would be suitable for you. Can I take you to lunch on Friday?”

Here’s the point—think about what you can provide another professional if you want them to send you business. And once they see you can be of value to them (because you send them business), tell them the types of people you seek to meet and this will give a big boost your your business development efforts.

Seminars

Seminars are a super powerful business development tool and you control the results. You can be a total stranger in town and if you send an invitation for a compelling presentation to your target market (lists are easily purchased—see the SRDS Direct Mail List Source at the main library), you can have 25 to 100 of the right people in a room to listen to your wisdom. While the structure of successful seminars could take up a book you can obtain a number of articles at http://www.financial-seminar.net/.

Telemarketing

Many professionals don’t use telemarketing but it is inexpensive and effective. Of course, you won’t be doing the calling because you will hire someone to do this for you, paid largely on a success basis. You can have people telemarket to:

1) Fill seminars
2) Identify qualified prospects with a survey

Here’s an example. You could have a telemarketer call and do research. Assume that your target market is people with $500,000 or more in an IRA because your specialty is IRA distribution planning. Your telemarketer calls with a survey and two of the questions are: does anyone in your household own an IRA? Is it under $100,000, between $100,000 and $500,000 or over $500,000? You’d be surprised at how many consumers answer such questions especially if they get something (e.g., $50 of coupons at the supermarket which you can print from dozens of websites).

Once your qualified prospects are identified, you can mail them a specific item of interest and then have the telemarketer call again and set appointments.

Direct Mail & Advertising

Hire a copywriter so that you get good results. Writing copy is a science that most professionals do not take the time to study and consequently, don’t get good results from direct marketing efforts of mistakenly conclude this is a low-end type of marketing. However, the following process gains you inquiries from exactly the type of people you want to meet.

You send a postcard or run ads in local publications offering a booklet. Let’s say your target market is CFOs. You run your ad in the local business journal and send your postcard to a list of CFOs offering your booklet, “New Profit Strategies for Corporate Cash Management.” By targeting your target market and offering an item of specific interest to one of their concerns, you gain responses from the right people. After you send your booklet, you can follow up with a call and set appointments.

Summary

The key point of business development and getting the clients you want–get ACTIVE. You don’t wait for the business you want to come your way or pursue low impact tactics as networking. If you take active steps to identify the people you want as new clients, learn what motivates them, and offer them what they want, they are happy to choose you as their financial advisor.

This post provided by Javelin Marketing

Annuity Leads for Financial Advisor Marketing
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What You’ve Been Told About Getting Referrals is Wrong

Friday, September 5th, 2008

There’s a ridiculous notion in the advisor community that keeping your clients happy is the way to get referrals. While happy clients are a necessary condition to get referrals, it is not a sufficient condition. Sure, your clients must be satisfied with your advice and service, but that’s not enough to have them send you the quantity of referrals you would like.

It’s an absurd assumption to believe your clients walk through life thinking as follows: “I love my financial advisor. My day won’t be complete until I do something nice for my financial advisor. What could that be? I know! I’ll get him a referral!” Your clients have more pressing things to think about like their own welfare. And most of them are not clear how they can help you because you have not made it clear.

Of course, you will get an occasional referral from a happy client. But any advisor that is in a growth mode should be growing their assets by at least a million dollars a month. If your referrals generate that amount of new assets, then you must be a super individual. But I’ll bet you get maybe three or four unsolicited referrals a year and the new assets are insignificant. Being a nice guy or gal and waiting for your phone to ring is not a formula for success.

Most financial advisors realize that this passive referral method does not work and many attempt another method to get referrals. They don’t sit back and wait, they ask. But the way they ask is unproductive. They use the “ambush method.” Here’s what that looks like. In the middle of a conversation with a client, you verbally ambush them, “Say Bob, who do you know, someone like yourself that also wants tax free income from conservative investing?” Taken off guard, your client begins to stammer, “uh, uh, geez, I’m not sure. I can’t think of anyone. Give me a couple of your cards and if I think of anyone, I will pass them out.”

This unstructured way of getting referrals lacks any system or structure. It’s ad hoc—you forget to ask half of the time and the other half of the time you get the stammering response from your client. If you want great results—in referrals, in portfolio performance, in your business—you must have a structured process.

Here is the process.

Step 1: At the beginning of the relationship, you ask your new client, “What do I need to do during the next ninety days so that you would feel comfortable introducing me to your friends and associates?” If you have reasonable clients, they will say things like

  • Call me back the same day I call you
  • Let me hear from you every two months so that I know you are looking out for my interest
  • Explain my statements and insurance policies to me so that I understand them

Step 2: You write down what your clients tells you and over the next ninety days you do what your client has requested.

Step 3: You contact your client after ninety days, review what they asked of you and have them confirm that you have done it. Now that they are clear about the quality of you and your service, you then ask them for a favor. You ask them to join you for lunch and for their help with your business development program (ask them to bring their address book).

Step 4: At lunch, you have them sign letters introducing you to their friends and associates (which you take back to your office and mail). The read sound something like this:

“Over the last few months, Stu Jones has been my financial advisor and he’s been the best advisor I have had. As busy as he is, he calls me back the same day I call him. He stays in touch with me regularly so I know he is looking out for my best interest. He is also the only professional that has taken the time to explain my insurance and investments to me so that I really understand what’s going on. I highly recommend Stu. Feel free to call me at xxx-xxxx or call Stu directly and meet with him at xxx-xxxx.

There you have it. It’s what most advisors lack: a structured process that prepares your client from day one to assist you. They tell you the conditions of satisfaction to meet in exchange for their help. You simply fulfill their conditions. So far, the record is 150 referrals from one client using this approach. Many advisors receive from 5 to 20 signed letters from one client. Overall, 40% of these clients who receive a letter of introduction become clients of the advisor within a year.

So if you want to sit back and wait, you may get what you deserve. The meek may inherent the earth but those with a structured active process will get referrals.

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Annuity Leads for Financial Advisor Marketing
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Five reasons that financial designations matter for financial advisors

Thursday, August 21st, 2008

Potential prospects are more readily drawn to financial advisors with financial credentials and financial designations. In a poll of retirees asked what was most important to them in a new advisor, “specialized training” and “a credential evidencing specialized training” ranked 2 and 3 respectively out of 8 choices.

First, a financial designation implies that you think enough about what you do to get some extra training or experience, i.e. you are serious and committed to your own profession. Would you rather get your tax problems solved by Joe Bean, Accountant, or Joe Bean, CPA? You may not even know what the qualifications are to become a CPA but you automatically assume that the professional with a financial designation has raised themselves to a higher level of expertise, expertise you want for your benefit. You also assume that this individual is committed to their profession.

Compare this to the average person in financial services who has no financial credential. Can we assume that they are just interested in the next sale, in making a living and have little commitment to their “profession?”

Secondly, in financial services, the public has come to see people in the industry as sales people. Financial services has never become a profession because most people in the industry are not professionals. Before you get insulted, let me give you one definition of a professional. A professional is committed solely to the prospect’s agenda. When you go to your doctor, he is committed to making you well. He has no agenda to sell you drugs, medical devices or a surgical procedure. The same is true of CPAs and attorneys—they are committed to your agenda. But people in financial sales always have their own agenda—to sell a product or service and the public knows it. Therefore, a financial designation helps separate you from the sea of salespeople and to appear as a professional.

Third, the public assumes that the credentialing organization provides oversight of your activities and that you operate at a higher standard than your un-credentialed competitors. In the public’s eyes, not only have you met some initial standards for the financial designation, but you have kept your record clean. This is true. The CFP® Board, the state Board of Accountancy, the State Bar association regularly censures or defrocks illegitimate members holding their designation. This gives the public a high comfort level in dealing with financially credentialed professionals. Would you rather go to any plastic surgeon or a “board certified” plastic surgeon (even though your don’t know the board or how a physician gets to be board certified).

Fourth, maintaining a financial designation requires continuing education in every field. The public would rather use the services of someone who is up to date than someone who may have gotten their license 20 years ago and now has outdated expertise.

Fifth, the designation turns an unknown (you) into a known. No one knows if Joe Bean, financial professional is a good and honest guy. He is an unknown. And if you want to see prospects procrastinate, just give them uncertainty. The more certainty you add about yourself, the faster prospects commit. A financial designation is a method of adding certainty, solidity and making people feel more comfortable dealing with you. And since people make their decisions emotionally, you want them to feel comfortable.

One important caution—do not get bogus financial credentials. There are plenty around that have no substance, do not have proctored exams and are a false front to give psuedo-credibility where none is due. For example, I received a fax about the Certified Retirement Planner designation in order to “put an end to the embarrassment of presenting yourself as an insurance agent…in less than 30 days, you can become a Certified Retirement Planner , doubling your income almost immediately.”

You can bet that there is no substance to this program, no rigor, no proctored exam, no CE requirements, no State Insurance CE, no recognition by the CFP(r) Board or The American College. In fact, use of this designation may even be illegal in many states. So get a legitimate financial credential that illustrates your expertise.

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The Transition from Financial Sales Person to Financial Advisor

Wednesday, August 20th, 2008

Financial Advisors Earn More

The tremendous benefit that accrues from status as a true financial advisor is that you have no agenda, no product to sell, and no objective other than to do what’s right for the prospect and the prospect can sense that. Because prospects do sense the difference between a financial sales person and financial advisor (no matter what term you use to describe yourself), financial advisors gather more assets per client and have longer term, far more lucrative client relationships. And, at the end of their career, financial advisors have a practice to sell—their client relationships have value.

Few people make the transition from sales person to advisor. Consider these figures: there are approximately one million people in the U.S. with a securities or insurance license. There are approximately 78,000 people entitled to use either the CFP® or ChFC® credential. That’s not to say that only people with one of these credentials is practicing as a true financial advisor (or that some with these credentials are product sales people and not advisors), but those that are serious about their financial advisor status do pursue one of these designations because they know that these designations are the best chance of quickly communicating their status as an advisor to the public. In short, about 8% of people with a license to sell financial or insurance products have made the effort to “brand” themselves as a financial advisor.

So the first step in the transition from sales person to advisor is to get educated—whether by enrolling in one of the recognized designation programs or through self study. You cannot advise if you don’t have adequate knowledge. Does this take a consistent effort to study each week over an 18 month period? Yes. Do most people make the effort? No. Do the people who make the effort get rewarded? Yes—the CFP® Board reports that financial planners with the CFP® designation earn 50% more than non-CFP financial planners. So if you struggle to earn more, knowing more is the first step to your goal.

Specialty Knowledge Attracts More Business

Of course, the CFP® and ChFC® credentials are indications of a fundamental and general knowledge base. But depending on your business, you should get specialty credentials. For example, if you do have a product specialty, such as long-term care insurance, then get one of the long-term care credentials like Certification in Long-Term Care (CLTC) or Long-Term Care Professional (LTCP). If you specialize in working with seniors, then you want to get the Certified Retirement Financial Advisor™ (CRFA) credential or Chartered Advisor for Senior Living™ (CASL). If you focus on estate planning, then consider the Accredited Estate Planner designation.

The important aspect of credentials is that they not only provide knowledge that allows you to deliver value, they have marketing value in attracting new clients. The more you specialize, the more attractive you become to potential clients.

Continual Learning is Mandatory

Once you earn a credential or reach your goal, you’re not done. You need to invest about 200 hours annually in self continuing education. I know that most credentials require 40 or so hours a year of continuing education but this is insufficient. Not only do you forget what you know, and must spend time staying current, you need to continually add to your knowledge base. Since your prospects and clients are getting more knowledgeable in financial matters, the value you add will diminish if they keep growing and you don’t.

Professionals Charge Fees

You must become a registered investment advisor so that you can charge fees for investment advice (check with your State about any licensing requirements if you want to charge fees for insurance or estate planning advice). Even if you work primarily on a commission basis, why are you doing analysis or preparing recommendations for free? That’s insane and no other professional does it. All you’ve got to sell is your time and your insight and giving it away for free is no different than Home Depot having customers take whatever they want off the shelf—no charge. You do not have a legitimate business when you give away your primary asset for free.

Now some advisors are stopped by the prospect of becoming an RIA because they think it’s difficult. Yes, your State may require you to pass the FINRA series 7 and 66 exam. But passing exams is the minimal mark of a professional as passing of an exam is not a mark of competence. Take initiative and take a review course if necessary. But don’t wait for someone to push you because it won’t happen. No product company, insurance company or broker dealer will call you up and say “I’m calling to tell you, you need to be an RIA and collect fees.” It won’t happen because there may be nothing in it for them.

This is an age of self learning. There are dozens of articles that have appeared in the industry press covering RIA status. There’s no shortage of information—you just need to go get it. Many agents will simply be able to use the RIA of their broker dealer or insurance company to charge fees, but either way, charging fees is essential to professional status and to survival in this business.

In fact, the only way you can provide full and complete service is to charge fees. For example, when doing a financial plan, would it not be a good idea to review your client’s P&C coverage? Most planners don’t since they don’t sell P&C insurance. This lack of attention leaves the client exposed. If you charge fees, you get compensated for complete caretaking of your client.

Form a Network With Other Professionals

You need to affiliate with other professionals because you cannot know everything. Those that have the CFP® or ChFC® credential use other professionals more, not less. They realize how much there is to the tax, estate planning, employee benefits and financing issues that they don’t know. But they know enough to be the quarterback for their clients and call in those professionals when needed. So stop going it alone. That’s not how professionals bring value to their clients. If you need a heart operation, does your family doctor say, “no problem, I’ll do it,” or does he bring in a specialist?

If you don’t make the most of every client relationship by filling all their needs either yourself or through your network of professionals, another advisor will and take your business away from you. If you don’t upgrade your knowledge and the value of your service, the public won’t need you because they are rapidly increasing their financial knowledge and will soon have no value for someone who simply has product knowledge.

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Rethink Your Prospecting

Tuesday, August 12th, 2008

Many financial advisors would like more and better clients. But their client prospecting is often wasted and misplaced. Here are three concepts that can help you attract more and better clients:

Make yourself scarce

We live in a culture where people want what they cannot have. In order for people to want you, you must make yourself scarce. That means you only deal with people who fit your profile (yes, turn away business). In all financial marketing you do, communicate that you only deal with a certain segment of people.

Here’s an example. Bob, a 10-year financial advisor, only deals with people age 60 and over. His firm is called Senior Alliance. His business card says “Retiree Investment Management.” He does not deal with people under 60. If his client says, “Can you help my son—he’s 48 and he has some money,” he declines and refers the son to a colleague. By being so picky, his clients refer him to others as “He’s a specialist in dealing with people like us.” No client wants to go to a generalist. They want a specialist. What do you specialize in? If you come up short with an answer, then you cannot attract clients as a generalist and need to select a focus.

Another example is the financial advisor who specializes in an industry, For example, an advisor who only prospects chemical engineers. He becomes known in that circle, writes a columns for the engineers’ magazine and becomes an invited speaker at conventions. I know a guy who sold hundreds of life insurance polices to United Airlines pilots by visiting their layover facility at major airports. He gave talks to a group of pilots as they were waiting for their next flight.
Be different. Every time you open an account, it’s because you offer something different than the client’s current advisor. Yet most financial advisors look alike—many do the same activities, offer the same products and services and are indistinguishable from the next financial advisor. Why should the prospect deal with you?

You distinguish yourself from others by crafting your business differently. One way is to focus on a certain niche as described above and making yourself scarce. Another way is to run your business differently. For example, if most financial advisors recommend mutual funds, then you recommend stocks (and have a well researched argument with evidence as to why stocks would be better). If other financial advisors offer bond funds for fixed income, you offer individual bonds (and have a good presentation as to why individual bonds would be better). If other financial advisors have no system for selecting stocks, then you specialize in quantitative systems like the Dow Dividend Strategy, Value Line or CANSLIM (as documented by William O’Neill in How to Make Money in Stocks). Show people why “guessing” about stocks is no way to invest and why a structured system brings all-important discipline to the process. If other financial advisors raise money for third party money managers, you be the money manager (if you use a structured system, the time it takes to manage portfolios is negligible as the system does the work).

If every one in your office sells growth stocks, then specialize in precious metals or whatever interests you. Team up with the other financial advisors in your office and split commissions. They are not talking to their clients about metals and this business will be lost. It would be smart for both of you to split commissions and have him introduce you to his clients (other brokers will bring you business if they you are not competing with them, that you specialize in an area they don’t know about—metals, options, 401k, etc).

Write
In our culture, people who write are considered experts. If your name is in the newspaper or on the spine of a book, you will stand out from other advisors. You do not need to write a word. Many firms and others have an article service and ghost writing service to make you an author overnight (be sure and comply with the FINRA disclosures on ghost writing).

Think of the difference when you can give a prospect a copy of your book. Do you think he is more inclined to open an account with you? What about sending information to a referral and you include in the envelope two articles from the daily newspaper in which you are interviewed and one article you authored. Have you increased the probability of that prospect becoming a client?

As you implement your marketing, ask yourself each week how you are being different and distinguishing yourself from every other broker in town. Why will prospects leave their current advisor to join you?

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