Prospects can sense the difference between the two
The tremendous benefit that accrues from status as a financial advisor is that you have no agenda, no product to sell and no objective other than to do what’s right for the prospect and the prospect can sense that. Because prospects do sense the difference between a financial salesperson and financial advisor (no matter what term you use to describe yourself), financial advisors gather more assets per client and have longer term, far more lucrative client relationships.
And, at the end of their career, financial advisors have a practice to sell because their client relationships have value.
Few people make the transition from salesperson to advisor. Consider these figures: There are approximately one million people in the U.S. with a securities or insurance license. But only about 78,000 people–8% of the one million–have either a CFP or ChFC credential.
That’s not to say that only people with one of these credentials are practicing financial advisors (or that some with these credentials are product salespeople and not advisors). But those who are serious about their status pursue a designation because they know that credentials quickly communicate financial expertise to the public.
So, the first step in the transition from salesperson to advisor is to get educated–whether by enrolling in one of the recognized designation programs or through self-study. You cannot advise if you don’t have adequate knowledge. Does this take a consistent effort to study each week over an 18-month period? Yes. Do most people make the effort? No.
Do the people who make the effort get rewarded? Yes–the CFP Board reports that financial planners with the CFP designation earn 50% more than non-CFP financial planners. So, if you struggle to earn more, knowing more is the first step to your goal.
Specialty Knowledge Attracts More Business
The CFP and ChFC credentials are indications of a fundamental and general knowledge base. Depending on your business, you should get specialty credentials. For example, if you do have a product specialty, such as long term care insurance, then get one of the long term care credentials like certification in long term care (CLTC) or long term care professional (LTCP).
If you specialize in working with seniors, then you want to get the certified retirement financial advisor (CRFA) credential or chartered advisor for senior living (CASL). If you focus on estate planning, then consider the Accredited Estate Planner designation.
Credentials not only provide knowledge that allows you to deliver value, they also have marketing value. The more you specialize, the more attractive you become to potential clients.
Continual Learning is Mandatory
Once you earn a credential or reach your goal, you’re not done. You need to invest about 200 hours annually in continuing education. I know that most credentials require 40 or so hours a year of continuing education, but this is insufficient. Not only do you forget what you know (and must spend time staying current), you need to add to your knowledge base continually.
Since your prospects and clients are getting more knowledgeable in financial matters, the value you add will diminish if they keep growing and you don’t.