July 3, 2012
What is the most important issue facing the financial planning profession today? What is the primary difference between highly successful and less successful advisors who may be just as capable?
Interestingly, both questions have the same answer. The most important issue facing the planning profession today, and the most important thing that determines how successful your business life and practice will be, is your ability to easily and confidently communicate the value of the services you offer.
Now here’s the punchline: when I travel and speak around the country, at chapter meetings and national conferences, I find that very few advisors understand how important their work really is to the lives of their clients. There is, in my humble opinion, an enormous gap between the value that financial planners deliver and their perception of the value they deliver.
On some level, this is unsurprising. I suspect that many of you feel blessed to be in a profession that helps people and offers great psychic rewards – and significant financial rewards. Advisors have actually told me that they feel like, because the work they do is so rewarding, it cannot possibly be valuable. (Yes, this is illogical, but – trust me – somewhere in the back of your mind, you’re making the same argument to yourself.) More generally, I think those who perform a service always have trouble evaluating its value in the client’s life. It feels like your daily activities are normal work, and so you expect the results of what you do to feel normal, too.
So, with this article, I’d like to help you think through the value of what you do for the people you take on as clients. Let’s start with the ordinary conveniences that you offer your clients; we’ll progress to the services that can transform their sense of well-being and fulfillment – forever.
1) You help your clients to track – and streamline – their financial affairs.
I think it is hard for a planner to realize what it’s like to be a naturally disorganized or financially naive person, so let me draw you a picture. The typical person I talk with outside the planning profession had a will drawn up … some time ago. He’s not sure exactly when. He has a mild curiosity, now that you bring it up, to remember what it says, but who knows where it is these days? There’s an insurance policy in a drawer somewhere, and it may be term or it may be a cash value contract; all he knows for sure is he writes a check to the insurance company every year, and, if you give him a few minutes, he might be able to find last year’s check register and tell you how much he paid. The auto insurance policy he happens to own is way more expensive than the lowest rate he could find in the market, and his homeowner’s policy hasn’t been updated since the Clinton Administration. Refinance? He’s either paying 8% or 6%. Or maybe 7%. What are the rates like today? But at least the portfolio is diversified. He owns six different small cap value funds, all managed (he tells you proudly) by different fund companies.
You might be tempted to laugh.
But people who don’t do financial services for a living find all these things incredibly complicated and confusing, and they prefer to focus their attention on work, home, family – the things they feel are really important. They know they’re leaving money on the table. What they don’t know is what to do about it.
When you sit these clients down, put everything in one place, and show them how it all works, you are taking away the anxiety that comes with normal disorganization and replacing it with a sense of peace. At last, you help them feel, the paperwork is attended to and decisions are being made with a degree of competence.
Plus, you can probably save them money on some of the things they were overpaying for.
All of this is incredibly valuable to their confidence and their sense of well-being.
And it is the least of what you offer your clients.
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