On Becoming a Trusted Financial Advisor

“You can get everything in life you want if you just help enough people get what they want” – Zig Ziglar, “Secrets of Closing the Sale”, 1984

What type of trusted financial advisor should you be? There is a lot of discussion in our industry around this topic. Russ Allan Prince an expert on the private wealth industry, president of the market research and consulting firm, Prince & Associates, has conducted a considerable amount of research on this topic. Among other things he found that most people want their broker to be a “wealth advisor”.

One of his studies found that investors will give more of their assets and will refer four times more people to the advisor who takes a more holistic approach to his/her practice versus the “product peddler” who takes a more narrow view of a client’s financial picture. The advisor who asks about the client’s hopes and dreams for the future and develops a strong working relationship with that client will reap the rewards on a number of fronts. The Prince survey showed that once you make this holistic connection with your member/clients and prospective member/clients you will discover member assets that you did not know existed. As a result, your member becomes more successful in their financial life, you reap the financial and psychic rewards and the credit union retains a happy member who brings in additional assets, takes advantage of other credit union products and services and refers friends and acquaintances to you and the credit union. Sound far fetched? Read the quote above again.

Let’s look more closely at the Prince survey. 4,106 brokers participated in the survey. The brokers fell into three distinct styles of managing their practice:

Wealth Manager – comprehensive holistic approach to managing their clients’ financial lives including the assets as well as the liabilities of their clients; a planning orientation to solving financial problems.

Product Specialist – in this model the broker focuses on a product niche i.e. managed accounts, fixed income, etc.

Investment Generalist – brokers provide a wide range of products to solve client financial problems. They do not use a comprehensive financial planning approach.

65.5% of the brokers surveyed fell into the investment generalist category. The next largest segment is the product specialist, 22%. The smallest group was the wealth manager (12.3%). The survey found that the brokers who took a more holistic approach to their business enjoyed the greatest increase in year over year revenue for their financial planning practice. Why? The “wealth manager” takes a comprehensive planning approach to their financial proactive and creates integrated, customized solutions for their clients. They leverage client relationships, cross-selling and providing products and services not tied to the markets. The more products and services you can offer, the less affected you will be when there is a market downturn because you will have an array of products to offer such as insurance or estate planning. In addition, the deeper your relationship with your clients, the more opportunities will develop to help those clients.

By comparison, the investment generalist and the product specialist typically do not fare as well as the wealth manager year in and year out. Typically a product they specialize in will fall out of favor due to market or regulatory conditions and their production revenue falls accordingly. In addition, they have not deepened their client relationships so consequently they do not uncover the opportunities to help their clients in other ways as does the wealth manager.

How do we become a wealth manager? Certainly having the resources necessary to help your clients is critical whether it is financial planning software, estate planning resources, or a CFP designation (or other education opportunities), it takes a commitment to expand your comfort zone and your practice. It also takes a commitment to get to know your clients. Are you asking the right questions? When was the last time you asked your clients or prospective clients the following questions?

  1. If you could relive one vacation, which one would it be? Why?
  2. Who influenced you most about your views on money?
  3. What are three checks you would like to write in retirement?
  4. On a scale of 0 to 10 how much confidence do you have in your investment plan?
  5. What’s going on in your life right now that could impact your financial future?

Our members typically will not volunteer the answers to these questions unless we become a trusted financial advisor and deepen our relationships by asking the right questions and getting the answers that will allow us to solve our members’ financial problems. Only then will we become true “wealth managers” to our member clients.

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