Wednesday, December 30, 2015

Financial Planners - Social Media One Good Investment To Make Now



"The newest paradigm shift in financial planning 
is being driven by the emerging trans-generational wealth transfer
 - the largest in history."  

Some interesting numbers fell across my view this week, which should be of interest to any financial advisor.

These numbers from the US would probably be a close match for the experience in Australia too, though many US businesses are in front when it comes to client servicing standards by comparison.


  1. 2% of children inheriting stay with the parents' financial advisor
  2. With the death of their husbands, only 45% of women stay with the current financial advisor.


What does this mean for financial advisors? It's vital to learn to build strong relationships or risk losing out in the coming avalanche of inter-generational transfer of wealth that is about to unfold.

What we want from our financial advisors

Here's what one recent survey in the US found about clients' views on what's important to them. This is the response according to an article on Forbes

“The CFA Institute & Edelman Investor Trust Survey.”
The survey asked respondents which of the following factors was the most important to them in selecting an investment manager (while the question in the survey related to investment managers specifically, but I would argue that the results are relevant to advisors and other industry participants as well):
  • Trusted to act in my best interest – 35%
  • Ability to achieve high returns – 17%
  • Commitment to ethical conduct – 17%
  • Recommended by someone I trust – 15%
  • Compliance with industry best practices – 8%
  • Amount/structure of fees – 7%
By more than 2 to 1, more respondents felt that the most important thing to them in picking an investment partner is that they feel that they can be trusted to act in their best interest. Returns were less important, and fees were at the bottom of the list."
We can see from this that trust is a big factor for clients. That should come as no great surprise and yet if we look at the focus of activity in the financial services industry, there is little that is remarkable in service standards that would lead us to have any great trust in one firm over another.

Building relationships just doesn't seem to be a priority for financial planners and financial advisors, whose focus is often on rate of returns, fees and commissions.  To gain trust, matching priorities needs to be demonstrated.

Doing The Right Thing

From this we can see that ethics is important to clients. They want to feel that  they have placed their trust in someone whose behaviours they can reasonably expect will follow the client's best interests and that the advisor will be sufficiently in tune with their wishes and investment style to recommend products and strategies that take into account the wishes, capacity for financial resilience, temperament, aspirations, wider goals and the risk management needs of the client.

 What does ethical and professional financial expertise look like?

Financial advisors don't just need to  be professional and have high standards of ethical behaviour. They need a way to show that. How do customers know how this plays out in your business? How do their friends see that this is an important issue to you and how you run your financial planning business? It is in our actions that our values play out. It is the topics that interest us the standards we hold for ourselves, the public platform we develop to showcase these aspects of our professional and personal identity as well as the services standards that we set in place within the business.

Establishing Trust

We love to be really heard. Talking less and listening more is a good start. But it is not enough to just listen, we need to also carry that through to understanding how that fits into a broader context. So listening is not very useful if what we are told is not translated into the plan that is to be implemented.  This is an element of what we could call 'ecology' and should be consistent not just with the words spoken, but the beliefs and values behind the words. Listening is one step in the process. Clarifying and assuring you know what that means to the customer, is the next step to the really important end stage - understanding.

We Do Things Differently Now

While conservative establishments like financial planning companies have established ways that things get done, all of which are likely to be convenient for the financial houses,  not necessarily so for the customer.

Customers are not standing still. Technology is putting information as close as their fingertips and they don't want to hang around for yearly statements and feedback when they can now access other things they need in real time. The old business models will have to change and become more convenient and accessible for clients.  That's also key to streamlining processes and opening new means using technology to find additional touch points to stay in contact with clients, be of value to clients and establish your relationship with them as being a useful addition to their life.

Leveraging Time and Information To Create And Post Quality Content

Technology, social media platforms like Facebook, Twitter and Linkedin, blogs, instant message and SMS text services can all help to make life more simple and functional and save time for advisors and clients alike. Maintaining contact in the ways that are most beneficial and wanted by the client is also how you show that you have listened and heard what they want when it comes to how they want to work with you.

While some aspects of service can be automated and direct, when it comes to public methods for informing and educating around financial matters, this can be in your hands as the trusted advisor, for both clients and others in their network who could become clients in the future. But this can only happen if you have the means and have developed the resources necessary to be a visible as the credible expert and trusted industry authority.  When that happens you are placed well for them to turn to you as their first and most reliable source when it comes to matters of a financial and life planning nature.

Where To Start 

Begin with forgetting your assumptions about what you think you know about your clients. The chances are that what you think about your client base is not right. Those clients you think are your best clients may not be any more. And those "C" grade clients you have not seen for years - could be someone else's "A" grade client ... or will be in the future.
  • Begin with a good analysis and review of your client base. This cannot be just on fees, but needs to be assessed using a range of metrics that are objective and subjective and take into account the lifetime value of a customer to your business. 
  • Audit your current method of servicing customers
  •  Map the current servicing strategy in diagram form 
  • Check metrics on rate of business lost  
  • Identify bottlenecks in the service delivery area  
  • Quantify system for and metrics for new business acquisition   
  • Quantify lost business and system reporting method  
  • Diagram customer feedback system  
  • Review marketing plan
Finally

That's a good start. Each of these areas will take some digging to get the information you need to fully understand the present situation.

The next step from there on is to develop your plan what you want to achieve in the future term and how to go about proceeding to What Happens Next.





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