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What do you Measure in your Financial Advice Business?

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At the end of the day for most advisers, there’s one measure that stands head and shoulders above the rest in terms of importance – profitability.

Until recently, many firms actually didn’t view profitability as their key metric; their main focus was on income. This was usually backwards looking, i.e. examining income in the last 12 months, or sometimes also looking out at the next 12 months. Many firms have now switched this focus to looking further forwards – based on their increasing trail commission and fee incomes, what is income forecasted to be next year / in 5 years time / in 10 years time? This now gives 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. Now this is what you (or other shareholders) are really interested in!

However 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. Which ones might it make sense for you to start tracking?

 

Client metrics

There is a range of metrics that can be used to measure the success of your client activities. These include;

  • 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

Again, there is a range of measures that you can use to ensure your staff are performing to their maximum potential;

  • 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

Yes, most marketing activities can actually be measured! Here are a few that will help inform your marketing activities;

  • Contact 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 lead is one of the best inputs into decision making around future marketing activities. If it worked before, it might be worth repeating!
  • Website analytics: Google analytics will give you a wealth of data in relation to your online marketing activities. For more detailed information in relation to how Google Analytics can help financial advisers, check out our previous article here. 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, +1’s, 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. However the list is also potentially endless! 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.

There are many metrics that people use that are not listed above. Which ones do you find particularly useful? All your comments are welcome below.

Photo courtesy of http://www.flickr.com/photos/glitch_nitch/

Increase the Value of your Financial Advice Business

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I’m often asked how an adviser can increase the value of their business beyond the discounted value of your future income stream. This is particularly relevant for advisers who are looking to exit, and want to achieve the greatest sale price possible for their business.

It’s an area that I’ve written about before, but you might want to consider in a bit more detail a few of the factors that could drive up that sale price in your favour.

 

The Shape of your Revenue Model

One of the key factors in driving up the value of a business is the shape of revenue in the business. Is the business mainly living off high upfront commission payments with smaller future payments due, or has the business moved to flatter commissions on protection business and trail commission / fees as opposed to upfront commission on investment and pensions business?

Obviously the latter will be far more attractive to a potential purchaser. There are many advisers actively making this shift or looking to make the shift at the moment, either on their own or with the guidance of some of the product providers.

The size of this future income stream is important, but equally so is the persistency of it. A buyer will look to see your firm’s ability to both build up and then retain clients, to ensure that this income stream will continue into the future to their benefit.

 

Your Brand Value

Is there equity (value) in your brand? Having a brand that is well known, respected, considered better than a competitor’s brand is strategically really important. It is also famous for being very difficult to measure! But there are ways that you can influence this really important factor, to help you achieve a better sale price for your business.

How well known is your brand? How much time and effort to you put into building the awareness and credibility of your brand among your target audience? Is your brand positioned where you want it to be, and equally importantly where a potential purchaser will see as attractive?

Does your brand then actually deliver? Can you prove this through any quantitative measures (brand awareness measures, customer satisfaction results) or through qualitative feedback such as testimonials from clients about their experiences of working with your business?

Being able to demonstrate this brand equity could very positively impact the value of your business at sale time.

 

Your Sales & Advice Proposition

Has your business been built successfully (but solely) around your great relationship building and client acquisition skills? While this has undoubtedly been really valuable for you, what value does it hold for a potential buyer if you are planning on walking off into the sunset?

Alternatively, some advisers have built on these skills, for the benefit of other members of their sales team by developing processes and supports to acquire and deliver advice to clients. These processes and supports ensure that if you are out of the equation, your business should continue to develop sales and deliver excellent advice-based solutions to clients. Now that is really valuable to a buyer!

 

Clear & Valuable Target Markets

A buyer of your business will place a lot of value on your business offering “something different” to them. This might be particular expertise, skills or indeed access to a corner of the market that they have failed to access themselves.

Can you offer a potential purchaser access to a new segment of the market? This might be based on a product offering (for example the corporate pensions market), a geographical area where they currently don’t have a presence or a sector of the economy (a particular business sector or group of professionals). For this to be credible, you need to be able to demonstrate a genuine focus on the area, a differentiated approach that you utilise with this segment and demonstrable results in successfully gaining traction in the target segment.

After all, if your target market is “anyone”, what are you then actually bringing to a potential purchaser in terms of new opportunities?

 

Operational Excellence

A worry for someone buying a business is the skeletons in the closet. Are they suddenly going to be faced with a load of legacy problems – poor advice that will come home to roost, poor documentation that could leave them exposed, lots of clients who are completely disengaged from your business and who really have little loyalty towards it.

These factors will seriously undermine your price. Indeed they will often completely undermine the sale of your business at all, as a buyer just won’t want to take on these challenges. That is except possibly at a real knockdown price.

The challenge for you is to deal with these issues now and address them so that you are handing over as healthy a business as possible. And getting the best price as a result!

 

These are some of the factors to consider when looking to “fatten up” your business for sale. For any of you looking to buy or sell, do these match your experiences and what other factors do you consider? All comments as ever are welcome!

How does a Financial Broker rank higher on Google searches?

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Many financial brokers see an effective Search Engine Optimisation (SEO) strategy as the Holy Grail. Consumers search for a financial broker. You appear at the top of the Google search results. The consumer clicks on your website, likes what they see and picks up the phone to you. Oh, if life was only that simple!

The first point you need to realise with SEO is that you are actually pitching the quality of your website to Google rather than the consumers. At the end of the day, Google’s success as a search engine is dependent on them delivering the best results for the search term that is input. If you search for a product or service and the results don’t deliver what you’re looking for, eventually you’ll start to use a different search engine. So Google constantly move the goalposts, by developing new algorithms to ensure the most relevant results are delivered.

Long gone are the days where you simply loaded your pages with the keywords that you wanted to be associated with (pensions, investments, protection etc.). In fact in the early days of search your content didn’t need to make any sense, it just needed to feature the keywords lots of times. These day are thankfully long gone!

So how do you climb the Google rankings today?

 

Set your pages up correctly

This is not the be all and end all any more, but still important. You need to ensure that as pages are added to your website, that they are structured properly. This is usually made easy now by in-built SEO packages but some of the main features to ensure are

  • Your URLs (web page addresses) must be relevant
  • You must use the correct Headings structure
  • You need to give the page a relevant title and description for search results

 

It’s all about content

Content is the juice behind an effective SEO strategy. Original, relevant, fresh content regularly published through a blog / news section on your website is central to successful SEO. Remember that Google want to point searchers to the most relevant websites. Relevancy is achieved by demonstrating expertise and authority in the keyword area, on an ongoing basis through the production of a consistent stream of quality content. Establish yourself as a voice to be listened to and a thought leader in the keyword area, and Google will reward you by lifting you up the search rankings!

 

Social media activity is key

Once you produce great content, the next step is to get it out in front of as many eyes as possible. So lead people to your content, using all the routes available to you. These are primarily via email marketing and also via your social media channels.

Google reward you for this when your network then endorse your content by “liking” it, commenting or better still, by sharing the content with their own network. Google are paying increasing heed to content being shared by 3rd parties, as they view this as an endorsement of the quality and authority of the content.

 

Don’t ignore Google+

Most people don’t want to hear this as the last thing they want is yet another social media channel to manage. However Google+ is not going away, it is slowly but surely gaining in relevance as a channel. One of the main reasons for this is the weight that Google gives to activity on Google+. Sharing content on Google+ and gaining endorsement from a wide number of followers will really help your performance in search results.

 

Establish your Google+ Authorship

Google have introduced a new feature on Google+ called Authorship. It enables you to establish yourself as the confirmed author of your content. To do this, I reckon the best way for most financial advisers is to talk to their web developer who will be able to set this up for you.

The benefits of actually doing it are twofold. First of all, it helps your performance in search results as it is another positive indicator of your credibility as a relevant voice and secondly, it improves how your search results are displayed. Rather than a simple results line, it will display your photo and name too. This in turn may well help your chances of your link being clicked – compare the difference in the 2 links below.

Search results

 

So, as you can see, improving your ranking in search results is no longer simply about stuffing your content with keywords. Google is full of smart people and we also need to be smart to gain their approval!

I hope some of these points help you in improving your search results. If you’ve any comments or questions, please feel free to leave them below.

Why updating your website blog is worth the effort

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A frequent question I’m asked by financial brokers when they are updating their website is; “Do I really need a blog section?” They know what lies ahead of them… the pressure to regularly post new content fills them with dread!

Well first of all, it shouldn’t! It’s not as difficult as it seems, once you are organised! But that is a topic for another day – the purpose of this piece is to set out why it is actually worth the effort.

 

Fresh content is key for SEO

Google keep changing the rules in relation to Search Engine Optimisation (SEO) and for a very good reason. They want to ensure that their search engine stays well ahead of their competition and to achieve this, they need to ensure that the most relevant results are displayed when a user searches for something.

There is a whole load of factors that make websites relevant, and as a result these sites appear high up in the search results. These factors include (among a number of other factors) the likes of;

  • The structure of the web pages, titles, names etc.
  • Links to the site
  • The amount and recency of content on a website
  • The external references to the content – what others are saying about it.

The last two points are the relevant ones for us here. Posting fresh content to your website is key and the easiest place to do this is through your blog as there are any number of topics that you can write about. Once you write the content, then the aim is to share it with the world via social media and hopefully get people commenting on it – all of this will help your SEO efforts.

 

It helps your own knowledge

This might sound a bit strange but bear with me… Committing to completing a blog (say once a month even) is a challenge. You have to identify topics and then write about them. To do so, you’ll often look for ideas, inspiration or new angles and you’ll do this by researching the topic on the web. This inevitably opens you up to reading new content and gaining a deeper understanding of the topics.

This is a huge benefit of regular writing. If you are regularly researching, you start to find really useful reference points that help to keep your knowledge bang up to date in relation to your areas of expertise.

 

It gives you a voice

Completing your blog gives you an outlet to demonstrate your expertise to the world! It gives you an opportunity to identify a topic of potential interest to your audience, write knowledgeably about it, post it to your blog and then share it out through your various channels (email, newsletters, social media).

While the chances are that at that very point in time, your audience may have no immediate requirement for the product or area of expertise in question (even though this does happen sometimes!), what you’re trying to do is to plant a seed so that when the topic comes on their radar, you become a natural choice for advice on the matter. In any event, regularly posting and sharing content keeps you on your clients and prospects’ radars in relation to all financial advice matters. And let’s face it, that’s a challenge for all financial advisers today – how to provide ongoing value and justify ongoing remuneration. Well this is one part of doing that.

 

It helps you identify “hot topics”

Regular updates to your company blog help you here in two ways. First of all, also as a result of your research before writing, you’ll begin to identify emerging themes about which you can begin to lead your audience.

Secondly as you post content to your site, your website analytics give you some tremendous insights into the particular subjects of interest. You can zero in on the types of topics that are driving traffic, where this traffic is coming from and how engaged reader are by the subjects. You start to get a sense of what your audiences want to hear about from you and this of course should then find it’s way through to your client proposition.

 

It demonstrates that you’re up to date

As potential clients research financial adviser websites, one of the biggest turn-offs is out of date content and websites that are obviously not kept up to date. What does this say about the adviser? Are they up to date in their knowledge? Will their service reflect the lack of care taken with the website?

On the other hand, a consistently updated blog demonstrates the opposite. It shows you have an opinion, the latest knowledge and your finger on the pulse. They’re more likely to pick up the phone to you!

So make it a goal in 2014 to keep your blog updated. It will pay dividends in many ways!

5 elements of a winning client proposition in 2014

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I’ve been lucky to spend the last couple of years working with a broad range of financial brokers and planners, and as a result have been fortunate to gain great insights into some really great advice firms operating in the Irish market.

A question I’m sometimes asked is; “What’s different about the winners?” Now there’s no easy answer to that, but there is one theme running through the successful firms and that is a clear client proposition. These firms tend to be clear about their target markets, their ideal clients, what they offer (and don’t offer), what makes them special and how they get paid. And very importantly, they are also very good at articulating this to clients.

The whole area of client propositions is very broad though and can encompass many different elements. So here are 5 activities that I believe will help advice firms to really differentiate themselves from the rest in 2014.

 

No more chats!

Spend some time over Christmas developing a presentation for delivery at your first meeting with prospective clients. If you get a new iPad for Christmas, even better still! Use that to deliver the presentation. Meeting a prospective client and having a chat is fine and maybe not hugely damaging. But it’s hard to make it memorable. However if you have a well-crafted (and short) presentation, that you walk through in an engaging manner, and that includes some provoking questions for your client to ponder later, you’ve a much better chance of leaving a positive impression and getting that prospect coming back for more.

 

Spend time on income and expenditure

One of the unfortunate traits of some of the less successful firms out there is their rush to “get to the money”. While their intentions are noble, in that they want to sort out the investments for their clients, in fact what happens is that the client gets forgotten as the focus is on the money. And once you forget the client, your future with the client is inextricably linked to the performance of the money. Which is difficult if markets go against the client.

The successful firms out there tend to focus more on the client and one way they demonstrate this is through helping clients really examine their income and their spending. And then going through a rigorous process to help them balance the personal books better! They don’t do this in a superficial way, but in a way that is really valued by clients, most of who are very poor at doing this themselves!

 

Build future cashflow planning into your proposition

My prediction for 2014 is that there will be a steep increase in the use of future cashflow planning by financial advisers. Why? Because more and more clients will become aware of the value of it by those financial planners already offering it, and those clients will demand it.

Future cashflow planning completely changes the conversation. It lifts the conversation out of the past and the present and focuses both the adviser and the client on the future objectives of the client. And it gets them really working together on trying to achieve those objectives.

However the real benefit of it to me is the reliance on the annual review happening every year to track progress. Clients demand their reviews – do your clients?

 

Develop powerful review meetings

Again, another observation… Lots of financial brokers and planners have recognised the importance of a compelling client proposition and are furiously working on developing a compelling one at the point of sale with the client. However relatively few are working on developing a compelling review proposition, to deliver to their client year in and year out. And most of these brokers are attempting to justify a trail commission basis!

If you want to receive an ongoing payment from your client every year into the future, you’ll need to develop a review proposition that the client values and that they demand actually happens every year. This is achievable – there are many clients out there who experience a truly valuable review service and these clients happily pay ongoing fees as they recognise the value they are receiving in the review meetings.

Do your clients demand their reviews with you? Do they feel the meetings are worth more than the ever-growing trail commission that you are receiving? If not, you’re at real risk of losing these clients in the future, just as they become very valuable to you.

 

Think engagement

It is so important to engage your clients on an ongoing basis, outside of your sales and review meetings. You need to stay in their minds through gently adding value throughout the year, so that when an unexpected financial challenge or opportunity arises for them, you are their first port of call.

Yes it’s hard work and takes a lot of time. If you don’t have the time or the inclination to do it, pay someone else to do it for you. If you don’t, someone else will begin to engage your clients and leapfrog you as a financial expert worth talking to.

If you make these changes to your client proposition, I can pretty much guarantee that they will have a material impact on your business. You’ll value your own proposition more and as a result, your confidence will increase, enabling you to communicate your value better. And your clients will love it!

Very best wishes in developing your proposition in 2014! If you have any comments in relation to my suggestions, please leave them below.

Why don’t my new clients realise how good I am?

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I was working with a financial adviser recently (let’s call him Jim for the purpose of this article) who asked me that exact question. He was incredibly frustrated. While acknowledging that he’s not perfect (show me someone who is!), Jim articulated to me that he gives excellent advice to clients, that he works really hard on their behalf and that he is very competitive in his charging structures. And I fully believe that he was painting a realistic picture. The problem is that Jim’s new clients don’t seem to realise the value that he’s bringing to them. They appear a bit under-whelmed at the end of the initial advice process.

To help Jim, we worked through his sales process and I gave him a few pointers as to how I felt he could engage his new clients better. Jim was happy for me to share some of the points we discussed, which I’ve done below with a few more besides to help you better demonstrate and communicate your value to clients at the outset of your relationship with them. On another day, I’ll set out how you continue this going forward to really cement your relationship with your clients.

 

Have a well thought out process and explain it to the client.

Jim showed me his agenda for his first meeting with a new client. It all made a lot of sense. However when pushed by me to role play the meeting, we discovered that the agenda was actually just a bit of a crutch and the meeting bore very little resemblance to the agenda.

When we unpicked this, it became clear that Jim had been using the agenda for years, partly in the belief that it demonstrated professionalism. It definitely can do, if you follow it. If you don’t follow it or even worse if it doesn’t really make sense, then it will achieve very little.

As you may know from previous posts, I’m a firm believer in spending a lot of time developing out your sales process and then building an engaging presentation to communicate It to clients. This builds trust, it demonstrates professionalism and should set out a roadmap that you and the client will actually follow.

 

Two ears and one mouth

Yep, we all know this one but it is surprising how often it gets forgotten. Jim was dying to get “stuck in” on the client’s behalf. So he was diving into the factfind as quickly as possible to learn all he could so that he could then advise. I firmly believe that this is a mistake. Now is the time to get the client talking. Why are they in front of you? What do they want to achieve? I’m not talking about growing their assets by 6% p.a. or building up a fund of €x. Instead what are their life ambitions, their real goals? What do they want to be able to do in the future?

When they paint these pictures for you, then you can start putting numbers against them. And help them identify what they have to do to achieve them. It might seem a bit “touchy-feely” at the start but trust me, it will feel very real to the client, as these are the dreams they are thinking about every day.

So it’s time to sit back and listen. There’s plenty of time for the factfind after this!

 

Don’t forget the everyday stuff

No matter what you call yourself; a financial broker, a planner an adviser – at the end of the day you are trying to improve the financial future of your clients. Jim does this in a very thorough fashion. He completed a very rigorous factfind, he analyses his clients’ risk appetite and tolerance and puts a huge amount of effort and innovative thinking into his recommendations. He adds real value in the product solutions that he recommends. And puts no time into the more mundane area of everyday budgeting and cashflow management…

I work with a financial adviser myself on my own affairs. He provides me with excellent advice; identifying objectives, risk advice, financial planning, cashflow planning & product choice. Ask my wife Louise (that is her real name!) why is he so good, and she will talk of the attention he has paid to our everyday income and expenditure. In her eyes the real stuff, the factors that we can control.

This can get lost in the rush to “get to the money”, helping the client to grow their wealth through the big decisions of investment strategy and product choice.

Apart from the other valuable support we get, focusing on the small stuff results in Louise making sure we never miss our review meetings with our adviser. This is also a very important factor in being happy to pay his fee every year.

 

Cutting down trees

Jim then showed me his reports. Well written, no typos and good grammar throughout. The problem is no-one will ever read them. They are just too long. As a result the clients don’t realise the thought that went into them, they assume there’s just a load of padding.

Get the key points up front in the report for the client. Try to get it on one page, certainly a maximum of two. All the discretionary reading should sit behind this in appendices. Some clients will read them, some won’t. But at least now they’ll all read the important stuff. 

Twenty page documents do not justify higher fees.

Work out what’s important

Usually a financial plan will result in multiple recommendations. This is where the client can get in a spin. Help them out of it, show them what is important in the short, medium and long term. What are the “must do” items and what can wait? Help them to prioritise their spending, their time and their attention, as they will struggle to do this themselves. They will value your experience and help in this regard.

This is of course by no means an exhaustive list of how to demonstrate value, instead they are just a few thoughts on how you can connect better with your clients at the outset of your relationship with them. Any views are welcome below!