Are you the linchpin of your client’s financial affairs?

Business owners and wealthy individuals today utilise the services of a whole range of professional service providers. Typically they have relationships with an accountant, a solicitor, a tax adviser and a financial planner. Pulling all the pieces together into a coherent strategy is a tricky business, and I suggest that (without doubt) the person best placed to complete this work is the financial planner.

The financial planner / financial adviser is the only person who tends to have oversight of everything that is going on in a client’s financial life, both within the client’s personal life and their professional life. The other professionals tend to work with clients on a more transactional basis, while the financial adviser’s relationship is different. He / she understands the long term financial objectives of the client, completes a very detailed factfind of the current circumstances and develops a roadmap to achieve those financial objectives.

I personally see my financial adviser as the hub of my financial affairs because he provides a broader range of value to me. Yes, he has of course developed my financial plan and ensured I have the right investments, retirement planning and protections in place – I’d expect no less! But he also guides me in relation to much broader financial-related issues.

Having been the beneficiary of such value-added services, I’ve identified below a few areas in which you can add value to your clients beyond the preparation of traditional financial plans and beyond the products that you recommend to your clients. Why bother with these? To build your client’s appreciation of the value that you can bring, and to make you the first port of call when changes in their circumstances arise. All of this helps you to build deeper client relationships and to bring more long term value to your clients.

 

Budgeting

I’m starting with an easy one that is often overlooked by financial advisers as not needed by clients because “everyone does it”. I disagree! People tend to do personal budgeting in a very unstructured fashion, usually in their heads. The opportunity is here for financial advisers to bring templates to their clients and help them structure their budgeting and to examine all of their day-to-day spending.

Apart from the value that the exercise brings, for married clients it is a great way of engaging the spouse too in the overall process, as their spending is equally important in the overall picture.

 

Future Cashflow Planning

I refer to this a lot, but only because I see it as such as a valuable service offered by some financial advisers. It may not be appropriate for every client, but it is hugely valuable to those who are suitable. The reason for this is simple. Traditional financial planning focuses on the starting point (as identified within the factfind – where you stand financially today) and the end event (death, investment maturity date, retirement date).

Future cashflow planning focuses on every year between now and your death, highlighting times of particular financial challenge to you in the future. Knowing the challenges that you will face gives you an opportunity to plan to overcome them.

 

Tax Advice for Individuals

Business owners and professionals will usually have an accountant. Most PAYE workers probably don’t. That doesn’t mean that they can’t benefit from tax advice; some want help in completing their tax returns, some want general tax advice. There’s a growing trend internationally of financial advisers moving into this space, in fact some financial advice firms are now employing accountants or tax advisers to provide this service and other tax advice to clients.

Now this approach is not going to be for everyone. At a minimum though, you should have a relationship with a good tax expert that you can plug your client into. The benefit for you is that it’s another demonstration of your value, as you are the catalyst for your client receiving the broader solutions needed.

Financial advisers also play a very valuable role in helping clients prepare for later in life and indeed end of life through retirement planning and life assurance solutions. However there are a number of other ways that you can help your clients prepare for these latter years, again helping to position you as the hub of their financial affairs. Some of these areas can also potentially bring you into contact with your client’s adult children, an important target market for many advisers.

 

Advice about Bank Accounts

Neither my bank manager nor my accountant spoke to me about having multiple signatories on my bank accounts, both personal and business accounts. But my financial adviser did. This is very practical advice, ensuring that in the event of my death or loss of capacity, that my wife would be able to access my money without jumping through all types of legal hoops…

 

Enduring Power of Attorney

This is a legal document that can be set up by a person during their life when in good mental health. It allows another specially appointed person to take actions on their behalf should they become incapacitated through illness in the future. This prevents assets being frozen and going under the control of the courts and allows the person acting on your behalf to make a range of personal care decisions on your behalf.

Anyone who has been through this situation, needing to access the assets of a relative who has lost their mental capacity (e.g. to pay for their care) will know the value of having an enduring power of attorney in place. It can be incredibly frustrating being unable to carry out simple actions on the person’s behalf without it.

At the same time, many people also draw up a “Living Will” which captures their preferences in relation to areas such as end of life care, their preferences in terms of resuscitation etc. when close to death.

A financial adviser won’t set this up. However they can be the catalyst for it happening through setting out the benefits of it to their clients and guiding them to put it in place. The adviser may even be able to refer them to a solicitor who will carry out this work with the client.

 

A Will

Again this is an area where financial advisers can guide their clients to ensure that they have a will in place to ensure their assets are distributed as they intend on their death. A simple process usually carried out with a solicitor.

 

These are some areas that financial advisers can help or guide their clients through. They add real value to your relationships; way beyond the product solutions you advise clients about and put you firmly at the hub of your client’s financial affairs.

Are there any other areas beyond products in which you advise your clients?

Image courtesy of Agnes Meilhac

Is your website punching its weight?

Financial brokers today recognise the importance of having a really effective website. After all, it’s the first touch point that many consumers have with your business. If you’ve a fairly basic website or one that hasn’t been revisited in a while, here are some tips that can double or more the effectiveness of your website!

 

Make it Easy to Navigate

Don’t make the user have to “work out” where to find the information they are seeking. Make the navigation so simple that a complete technophobe will find their way around it! The main navigation bar, which to my mind should always be at the top of the page and not down the side, is really critical. It is through this that most users will enter the site from the homepage, so think this through very carefully. Think very carefully of what to include on this, as it typically will only cover 6/7 site areas. And then consider very carefully what you are going to call each section. Use standard terminology that makes sense to people, such as About / Our Services / Contact Us / News or Blog.

 

Focus on Financial Planning

I look at a lot of financial brokers’ websites. Probably the biggest bugbear that I have is the lack of focus on financial planning. This is the extremely valuable skill that you bring to your clients, helping them identify their financial objectives and then finding and implementing the best solutions to help them achieve those objectives.

However many websites talk only about financial products. This makes you appear as a hard-edged salesman, selling the latest and greatest products, not doing justice to your skill at all. I strongly suggest that you develop a very prominent, specific section in your website about financial planning and explain the value that you will bring to clients.

 

Reduce the Amount of Content

Yes, this is not a typo! Obviously this may not apply to every website, but in the main, too many of them are packed out with superfluous content. While it might please you seeing lots and lots of pages with long explanations and technical details about every product available, frankly the user will just get bored. And boredom is fatal on the web as the user just leaves your site.

Use your Google Analytics to identify your poorly performing pages from where people are leaving the site. You will often see that these are long technical pages. Either shorten them or get rid of them!

 

Update your News Section / Blog regularly

This is one of the most valuable areas of the site for a number of reasons. I’m not talking about taking a newsfeed from some online source or sending links to other people’s content. This section is for regular and relevant blog entries that educate users and demonstrate your expertise and these play a number of valuable roles. First of all, they draw people to your site after you share a link to a useful article you’ve written. This of course in turn opens up the possibility of the user finding out more about you and the services you offer.

Google loves fresh, original content. In fact new, authentic content that engages users and in turn is endorsed by them through sharing it, liking it or commenting is one of the most important drivers of bumping you up the search results. This is of course on top of the value that clients and prospective clients will get from knowing that you are a Financial Broker with a finger on the pulse and demonstrating your expertise and ability to solve their problems.

 

Have Clear Calls to Action

Users will come to your site for a range of different reasons. Some may be simply browsing around, others may be looking for specific information, some may want to buy and may be looking for your phone number. Try and appeal to all of them by having a range of Calls to Action. The last group are easiest – make sure they can easily see your phone number without having to go looking for it! For the others, have Calls to Action that will enable them to stay in touch with your business, even after they leave the site. Do you make it easy for people to connect with you on LinkedIn from your site? Make it easy for them to subscribe to your newsletter. Maybe offer an online Chat facility to answer their questions there and then.

 

Mobile is Key

More than one third of searches happen now on mobile devices. Your site simply must be responsive, ensuring that it is easy to read on a phone or other device. People today have lost patience with having to “pinch” the screen to go looking for the information that they want – this results in a terrible viewing experience. Responsive sites alter the screen layout to suit the device on which it is being viewed – a “must have” today.

Also in relation to mobile, if someone is looking at your site while out and about, very often they are simply looking for contact details. So again make sure your phone number is very visible.

For some Financial Brokers, these changes will mean a few hours work. For others they might mean a new site. For everyone though they are worth it. Research of financial brokers is happening more and more online so you want to make sure you are demonstrating why you are the best choice for prospective customers!

Image courtesy of angus campbell king

What will you measure in 2017?

So will 2017 be a good year or a bad year for you? How will you know at the end of the year, and what measures of success do you use?

Is it all about total income for you, or are you focusing more on building up your recurring stream, and one of your key metrics is the level of recurring income that you have built up? Or are you looking further ahead than that – some firms have now switched their focus to looking further forwards. Based on their increasing trail commission and fee incomes, they are forecasting what their income will be next year / in 5 years time / in 10 years time. This gives them a real sense of the future health of the business.

While income is a very important metric, profitability tells a truer story of the health of the firm as it takes account of the expenses of the firm, and helps to better determine the future value of the business rather than simply your clientbase. This is what you and other owners (or prospective owners) are really interested in!

As there are so many factors that can impact your profitability, most firms will look to dig a little deeper to examine some of those factors that are impacting their profitability. Set out below are just some of the metrics used currently by different advice firms, that help them to determine the performance of key inputs to their profitability. You might want to consider tracking some of these, if you’re not doing so already.

 

Client metrics

  • Number of clients: this can be measured at an overall level and also within segments of your target client groups.
  • Average revenue per client: this will give you a sense of whether you are building greater value into your propositions and whether you are reaching your ideal clients. Again this may be carried out at a segment level.
  • Average recurring revenue per client: this will give you a good sense of the future health of your business.
  • Number of new clients: always a good measure of whether you are growing as a business or not!
  • Client satisfaction: this will give you a sense of your likelihood to hang onto your clients into the future. Again this can be carried out at a segment level. The Net Promoter Score is a very simple but useful measure of client satisfaction.
  • Risk register: Are there problem cases that need to be monitored? If so, a firm oversight needs to be maintained, both in relation to the number of cases and progress of these cases towards a solution.

 

Staff measures

  • Sales Performance: This may be based on volume, margin or other relevant measures.
  • Activity: This may be the number of new clients secured, first meetings secured, financial plans completed etc. It is always useful to get a good sense of the activity levels of each of your sales team.
  • Staff satisfaction: Similar to client satisfaction, this is important too! Are your staff happy and committed to the long term health of your business or are they just waiting for an opportunity to jump ship? Staff satisfaction measures can help you uncover these insights.

 

Marketing Metrics

  • Data quality: This might be as simple initially as tracking the number of client email addresses you have secured. Email offers you a no cost method of getting marketing messages out to your clients.
  • Numbers and source of leads: Tracking the numbers and source of new leads is one of the best inputs into decision making around future marketing activities. If activities worked before, they might be worth repeating!


Website analytics

  • Google analytics will give you a wealth of data in relation to your online marketing activities. Google analytics can tell you;
    • The number of people finding your website
    • Where website visitors came from – Search terms, social media, directly accessing your website.
    • The content that attracts people to your site…. and also drives them away!
  • Social media interactions: Likes, Comments, Retweets! These terms are “Double Dutch” to some people, highly valued endorsements of your content to others!

 

There are of course many other measures available to be used within your business, these are just a few that are available to you. For most advisers, the starting point is to identify a few metrics that you feel will make a real difference to your business, and then track them diligently.

How to beat the financial advice robots

We’ve all read the articles… the robo-advisers are coming to Ireland. And if the experience of other countries is anything to go by, they are likely to disrupt the traditional advice models. But to what extent?

So for starters, what is robo-advice? It is using technology to carry out the advice process within an overall investment management proposition. It’s related to the advice part, not the management online of an investment portfolio, as that capability has of course been around for years. It’s suggested that there is a swathe of the population that may be disenchanted with the traditional advice model and want to be more in control of the process themselves, via the use of technology.

The robo-adviser model works by the investor completing a series of questions on a website, similar to those that you ask at a meeting with a client – their investment objectives, age, time frames, assets, risk profile. The website then instantly runs a programme that produces an appropriately diversified portfolio for the investor, made up of passive funds and ETF’s. Once the portfolio is implemented, the other activities carried out by an adviser (rebalancing, annual reports etc.) are also carried out by the robo-adviser.

So are robo-advisers a real threat for financial planners and financial brokers or can they be ignored? My own sense is that they will be attractive to a relatively small segment of the population (at least for now), people who are tech savvy and confident about going solo in relation to their investment decisions. However I believe that most people still want to sit down face to face with an expert when they are making significant financial decisions.

But you can’t just ignore robo-advisers, as you might find yourself defending your business model as clients are considering what is right for them.

Factors you might be defending against

  • Cost: Websites can typically work for a lower price than humans. But the value that you can provide to your clients in the form of proper lifetime financial planning, with forecasted future cashflows etc. cannot be replicated by a machine.
  • Convenience: Investors can get advice without leaving their desks, at a time completely of their own choosing. But how important is this really to people?
  • Dissatisfaction with existing adviser: Some investors are dissatisfied with advice they’ve got in the past. If you gave the advice, then you may have a problem. However if the client got the previous advice elsewhere, you have the opportunity to demonstrate the rigour of your own financial planning approach.
  • Attractive to younger investors: These models are potentially more attractive to younger investors who are happy carrying out many others aspects of their lives online. Again your challenge (and opportunity) is to demonstrate how your financial planning approach can deliver value in ways that the robo-advisers simply cannot.
  • Attractive to smaller investors: As financial brokers struggle to deliver their proposition profitably to investors with smaller funds, this may not pose the same problem for robo-advisers. Are these clients actually in your target market anyway?

 

But there are also very powerful reasons why I believe that face to face advice will always prevail…

Why financial brokers will always win

  • Tasks can be templated, but people cannot: We’re just not that straightforward as a species! Research tells us time and time again that the full personalisation of advice is a key requirement of investors. This can only happen through detailed questioning and discussions with clients.
  • It’s all about the discussion: We only have to look at the risk profiling process. I think many financial brokers agree that none of the systems available are perfect, that the discussion between adviser and client is equally important to bottom-out the client’s real risk profile.
  • When markets tumble: Who do you call for reassurance and advice when markets tumble? I call my financial broker, unless he’s got to me first! No such luxury with robo-advisers.
  • A major change in your life: Who will help you make sense of the impacts on your portfolio of major changes in your life – a death, a sudden and serious illness, loss of job etc. All of these need a friendly face to keep you on track. Robo-advisers don’t offer that.
  • It’s not all about portfolio growth: Financial brokers give so much valuable advice around the edges of a portfolio – they will consider the impact of taxes, inheritance planning and protection needs. All very valuable and not on offer from robo-advisers.
  • You can’t ignore emotions: Investing can make you feel exhilarated, angry, reassured, doubting! Financial brokers play a very important counselling role, one that robo-advisers will never play.

I for one can’t imagine being willing to pass on the value that I get from my financial broker. Yes the fees may be slightly higher than those available online, however I think they’re worth every cent in terms of the reassurance that I get, the opportunity to “run things by” him and the sense of having someone in my corner. I won’t be moving!