Growing Your Planning Practice In A Post-Bubble World

By

New Orleans

How to grow their practice in “a post-bubble world” and what their vision is for their practice five years from now were among the challenges that Lewis J. Walker posed to financial planners here.

Speaking at a session during the Financial Planning Associations Success Forum, Walker, who is president of Walker Capital Management Corp. in Norcross, Ga., said “the drip-torture bear market of 2000-2002″ has eaten into the confidence of both investors and advisors. But, he noted, the resulting dissatisfaction among both groups “is a powerful catalyst for change.”

One of the changes Walker sees coming is that “commission-oriented brokers and advisors have a powerful opportunity to accelerate a transition to an integrated, value-added and fee-based planning-oriented model.”

And for those advisors who are already fee-based or fee-only, Walker predicted a broadening of their business model “to provide an expanded array of networked concierge or financial life planning services.”

Taking a closer look at the post-bubble world of today, Walker encouraged planners that they “can capitalize on the new reality of diminished expectations and lack of trust.”

But a simple transition to fee-based advice is not going to do it, he said. The reason is that “now everyone sells advice,” he said.

“Has advice become a generic product?” he asked.

And because fee-based products and services are no longer unique but have become increasingly commoditized, he said, planners must ask themselves what sets them apart from their competitors, what are they selling and what is “the product.”

The answers to these questions, Walker said, are that “your unique ability sets you apart” and that the product is “your unique ability as reflected by your process.”

The challenge for planners, then, he said, is “how to define and explain their unique process and value proposition” in order to set themselves apart from the competition and give prospective clients a powerful reason to engage their planning services.

Walker briefly outlined his trademarked strategic process called The Investment Coach Program, which he tells clients is “designed to enhance the probability of your achieving your financial goals and objectives.”

The program focuses on two major areas: first, family security and estate planning and, second, investment planning.

With new clients, Walker said “the first place he goes” is a discussion and fact-finding to identify major concerns, which could include areas such as working capital and cash reserves, insurance coverage, and exposure to estate taxes, among others.

“The second place” he goes is to the “opportunities to be focused on, secured and taken advantage of.” One of the first areas of focus here, he said, is “a very useful concept” of having clients create or reinforce a personal “freedom fund, a repository of growth-oriented personal capital, not in a retirement plan, that is equal to or greater than one years gross salary.”

The benefit of this, he said, is that it “gives clients a goal.”

Other areas of focus here are lifestyle goals, educational goals for children, retirement goals and time frames, Walker said.

Once these opportunities are clarified, Walker then takes clients through the process, or as he puts it, “what we will do for you.”

Some of the areas included in this phase of the process include:

Organizing financial data into various financial statement formats to provide a basis for planning.

Reviewing the clients estate planning structure.

Completing a capital needs analysis relative to the adequacy of life insurance coverage.

Creating an investment policy and asset allocation plan consistent with the clients goals and objectives.

Being available to the client “as a financial advisor to answer questions regarding personal financial planning matters as they arise, and to review and update your plan and progress.” What this step does, according to Walker, is “set up the long-term consulting process.”

The fourth step in the program is to explain to clients that it “is not a one-time event but an ongoing process.” He tells them that their plan “will emerge over time as a series of written, action-oriented recommendations and resolutions evolving from analysis and personal meetings and telephone conversations.”

Walker said, “Clients want you to work with them over time as a value-added advisor.” This, he added, is one of the reasons he does not do “the one-time leather-bound financial plan anymoreits too static.”

Walker tells clients that his fee for comprehensive financial planning is based on so much per hour for analysis, research and personal consulting time. This fee is for one year only, payable quarterly, and he tells clients that from year two on “we do not envision an ongoing planning fee.”

Instead, he tells them: “Should you engage us to provide ongoing fee-based asset management, we will be compensated as your advisor as part of a single annualized comprehensive fee.”


Reproduced from National Underwriter Life & Health/Financial Services Edition, October 14, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.