THEY ARE WATCHING

One of the beautiful things about Advice-Based Financial Planning is that it's a clear differentiator in a marketplace of product salespeople.   Potential clients and Key Partners can clearly see how what you do is different and you have the opportunity to win business because of it.

You told them that you offer an “Advice-Based Financial Planning relationship that is not contingent on the sale of any product and you can help fully implement their plans.”  Independent and objective advice first and product as needed.  

They love it!  But they are watching…

They are watching and listening for clues that indicate whether your Advice-Based Financial Planning spiel is sincere or just another bait and switch sales tactic.  How you proceed will determine their ultimate conclusion.  

I want to share with you some of the ways a well-intentioned Advice-Based Financial Advisor can unwittingly telegraph that they are just another old-school advisor.

An intense focus on “investable assets.”

In an Advice-Based Financial Planning relationship, you are hired to build an objective financial plan and only after the initial plan projection should you begin talking about implementation, AKA investing money with your firm.  It’s just fine to get a feel from them whether they are more interested in self-management or if they would like to see your proposal at the Asset Alignment meeting.  But if you are focused on investable assets and their interest in rolling the money to you in the first meeting, you are being old-school.  

They should be able to hire you for advice only if they desire to.  If they can’t, you are just an investment salesperson.   FYI-most clients will ultimately ask you to manage their assets initially or in time.  But your focus on it is what betrays your bias.

Jumping right into product discussions.

During your Discovery EXPERIENCE they express a fear of running out of money in retirement and the cost of long-term care.  If you pivot the meeting into a discussion of annuities and LTC insurance, you are old-school.  Once again, it is fine to let them know that there are products that may be useful in the process of implementing their plan, but this is not the time! 

A Discovery EXPERIENCE is supposed to be a gift to them and to see if you can be of service to them in a planning capacity. It is not meant to be a way to pick scabs and drive product sales.  If they ultimately don’t need, want or can’t afford planning and you want to pivot to a product-driven relationship, that’s fine.  But don’t do it until you have delivered on the promise you made regarding the goals of the meeting.

How you discuss your fees.

If they ask you what your fees are and your default answer is to list out your asset management fee structure, you are old-school.  The basic answer to the fee question should be to outline how you calculate your planning fees.  If the relationship you are offering is advice first and product as needed, then your AUM fees are a discussion for a later time. 

If they specifically ask about your AUM fees, it’s fine to share them.  You aren’t trying to hide anything. You are just answering the first and most important question, how much it costs to hire you for advice.

You might be wondering how I would answer the fee question, it might sound something like this: 

“Our Advice-Based Financial Planning fees are specific to each client.  To give you an idea, my minimum planning fee is $3,000 and fees tend to calculate out between $3,000 and $5,000 based on the scale and complexity of the client.”

If they ask further about my AUM fees, I would answer something like this: 

“At our firm, we are committed to helping people build wealth, not just working with those who are already wealthy, so we do not have any account minimums.   Our AUM fees start at 1.25% and blend down from there based on the total household assets we manage.  Our average client pays around 1.1%.”

If asked specifically about AUM fees, I may also add a fee-offset discussion:

“We never assume that we will manage our Advice-Based Financial Planning client’s assets.  If during the planning process we find that it is appropriate for us to do so, we offer a fee offset on future planning fees.  This can reduce or eliminate renewal planning fees and we find that it is a mutually beneficial fee structure.”

We are fighting an uphill battle to retrain years or even decades of industry programming.  Clients are listening to see if you are really different or if you are just like everyone else, just with a better cover story.  They are right to be skeptical.  Our industry has been taking advantage of their naiveté since its inception.

If we're committed to taking the higher ground and truly building an Advice-Based Financial Planning practice, we have to be vigilant to root out old programming in ourselves.  Or it will slip through the cracks and betray us. 

Hearing our own bias is hard.  We often think we are saying one thing and another is coming across to the client.  One of the best ways to detect this bias is to do some practice sessions with someone and get feedback.  Tell them in advance what you are doing and have them listen for “salesy” messaging that is slipping in there. 

Schedule a few Discovery EXPERIENCES (or your initial meeting) with another Advice-Based Financial Advisor, a staff member, or even a trusted Key Partner.  Ask them to screen what you are saying for an undue focus on investable assets, specific product pitches, and an AUM focus during your fee explanation.  Their feedback can be invaluable in helping you more fully align your words with your desire to build an Advice-Based Financial Planning practice. 

I hope this serves you!

-Lucila

We are on a mission to help you build a process-driven practice to confidently deliver Advice-Based Financial Planning.  I want to teach you to turn prospecting into an act of service and get hired for advice by the RIGHT clients in one meeting.  And ultimately help you build a profitable Advice-Based Financial Planning practice that you can be proud of.

If you want help doing any of these things, please reach out to us!  We have a myriad of free and paid resources to help you every step of the way.  You don’t have to reinvent the wheel.  You don’t have to go it alone.  

Email us at [email protected] if you would like to have a free consultation with our new Director of Engagement, Nicole Spinelli, to see how we can be of service to you!