In our current environment you cannot simply sell the consumer a financial product and "Let the Buyer Beware!" It is a sure pathway to compliance nightmares and a lawsuit that can swiftly wipe you out.
The solution is to create a Client Relationship before you propose and close a sale of any financial products. I am not suggesting that you must have a CRM – Client Relationship Management software program – although that might be an important tool in your arsenal of Client Acquisition techniques.
First you need to have a Client.
That means the prospect must realize that he, she or they have financial shortcomings that require professional attention. They must agree that there is a substantial need that is calling for your advisory services. Yes, you should charge a fee for this advice - but it is not absolutely essential. You can give away your advice and services if you choose to do so. But, undeniably the client will have greater respect for advice for which they have paid a fee.
Does this mean you must become a Registered Investment Advisor and file with the SEC (nationally or state) and be subject to all those regulations and requirements? The answer is "No!" provided that you do this correctly.
The SEC was charged under the Investment Advisor Act of 1940 with regulating the sale and service of securities. It does not regulate estate planning. It does not tell you how to sell Critical Illness coverage or Long Term Care policies. The SEC also does not control how you guide a family in the development of their budget, the refinancing of their home, or in determining how much cash will be required to send Johnny to college. As long as you do not give the client advice regarding securities, you may offer these services. Furthermore, you can charge for this advice.
Of course, you must be careful that your discussion of estate planning does not cross over into the practice of law. You must also be careful that you don’t run afoul of insurance consultant regulations in your state when charging a fee for survivor income planning. Your fee should be for the Needs Analysis – not for the selection or sale of products. But you can easily navigate around these obstacles.
How Do You Get This Client?
Easy – you ask. It is really that simple. But asking properly is a bit more involved, since you must do it very carefully. You must be prepared. You must be more effective than all of the TV ads and billboards that are urging your prospective client to spend money foolishly. How do they motivate buyers to take action? First they create a desire for the solution. Then they make the consumer believe that they are offering a solution, product or service that will fill that need. They do not even need to tell them that their solution is inexpensive. One of the most successful advertisements in marketing history was a billboard that showed an unusually shaped bottle of whiskey. The ad (for Maker’s Mark) simply said Tastes Expensive and Is!
It is perfectly acceptable to tell your prospect, "My advice is pretty expensive, but I will very likely save you thousands of dollars in taxes or lost earnings." Everybody knows, deep inside, that quality is usually costly at the outset, but beneficial over the long term.
You should have a comprehensive and some sample modular plans and a fee schedule, of course. It is much easier to show then it is to tell!
How Extensive are Their Needs?
Your prospect may need a modular plan of some type. They may need a comprehensive financial plan. Certainly your prospect will have various types of advisor or strategic decisions to be addressed, in addition to a need for financial products. How do you prepare yourself for these alternate paths? Do you have sample plans to display?
Back to Square One – Make Them a Client
You need to make a strong presentation to the prospect that gives them an opportunity to accept that they need your strategic financial help. They must recognize that with all the financial choices facing them, in the midst of their busy personal, family and business lives, they are in need of assistance. They need help! They need guidance! They need you!
Such a presentation is not a matter for mere verbal disclosures. It is certainly not a "yellow pad" event. There would be no way to confirm and verify what you had committed to perform, and what the client’s expectations were. This is just the first step in a process. If there is no client relationship, then the rest of the process doesn’t matter very much. If the prospect has been converted into a client, then sooner or later they will follow through on the implementation of their financial concerns – through the purchase of products or services.
Make the first step correctly, and every thing else can "fall into place" for you and for your clients.
Hopefully, this will take place sooner than later. Hopefully, it will occur in a very efficient sequence. Hopefully you will receive many referrals. But the transition from prospect to client must take place first.
But You Didn’t Study this!
All of the above was not in your coursework if you studied the Chartered Financial Consultant course or the Certified Financial Planner curriculum. You acquired knowledge and you passed tests, but you didn’t learn Marketing 101 – completing the Client Engagement.
What Business Are You In?
We know that addressing the economic needs of your prospects and clients is a process. Learning to operate a process is quite different from learning things, acquiring facts and figures. One is learning, the other is doing. Maybe what you need is to take a "Doing" course instead of the traditional "Facts" approach. It might be very good for your pocketbook. And finally such a course is available.
The Financial Planning Process™ is an intensive curriculum that is not based on just the acquisition of knowledge and test-taking. It both educates and trains the practitioner how to operate the process – to move prospects through the planning and implementation phases to obtaining referrals. Soon you can be off of the Prospecting Roller Coaster and be making more frequent trips to the deposit window of your bank. Think of it as a financial apprenticeship where you learn to use new tools - and you take your new toolkit home with you – so that you are immediately using the new skills.
Check it Out
The first step I would suggest is to contact Jim Lifter, MBA, RFC® who is the Education Director for the new program. Jim can send you a course brochure, and you will be amazed at the difference between the Financial Planning Process™ and the courses you took in college or your post-graduate financial studies. This is not your typical lecture, study and exam approach. The students actually produce both modular and comprehensive plans. Think back on all the courses you took in college. How many of them made you any money last week?
You can send Jim an email at: Jim@IARFC.org or call 800 532 9060 ext. 18 and ask for a course brochure. You can evaluate whether or not you want to change the way you have been trying to approach prospects that definitely need your services. Jim was the editor of the highly regarded Prospect or Perish course, workbook and study guide.
Follow-Through NOW
The economy is uncertain. The costs of doing business are going back up, and your personal budget needs aren’t reducing. It may be time for a new approach. For most readers it isn’t practical to solve your career problem by working harder and longer. You’re probably already doing that. What you need to do is work smarter. Let Jim tell you about how to use the Financial Planning Process™ to change the dynamic of your practice. Increase your NCR!
Ed Morrow, CLU, ChFC, CFP®, RFC® is now the Chairman and CEO of the International Association of Registered Financial Consultants. He lectures around the world, including, Taiwan, China, India, the Caribbean and Europe on various aspects of financial planning and practice management. His addresses to national and international organizations such as MDRT, NAIFA, FPA, SFSP, and IARFC have been widely reprinted.
The IARFC recently introduced in the United States a new course, Financial Planning Process™, which includes Morrow's textbooks and systems for making the transition from Agent to Advisor. For more Information: editor@IARFC.org or 800 532 9060 |
