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Practice Management > Building Your Business

One is the happiest number

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Do your clients ever tell you how frustrating it is to go grocery shopping anymore? You know, Market A has the best produce but only Safeway will do for deli meats and then there’s the corner bakery for that great wheat bread. But as for their favorite coffee, well that’s clear across town – that’s four stops just for a week’s worth of eating.

And what do groceries have to do with financial planning for seniors, you ask? Well, have you noticed that some of those same clients’ portfolios sort of look like their grocery runs: spread out over four different managers? There’s often a better way to shop and – when it comes to developing a solid financial plan – a better way to do business: Position yourself as your clients’ only advisor.

Understanding the problem
While the grocery metaphor above may be somewhat crude, it does illustrate an important point: When a client has his assets spread over several different advisors, his financial plan lacks efficiency both for him and for any advisor doing work on a little piece of the pie.

For an advisor, “The first thing I’d be concerned about is does the left hand know what the right hand is doing?” asks Marty Baird, founder of Advisor Marketing in Annapolis, Md. “[A client] could have four separate advisors taking an extremely conservative or aggressive approach and those can be in conflict. And that can be the client’s fault – not the advisor’s. If they all get different pictures from the client, sometimes the advisors don’t know how and where their numerous funds are weighted.”

For clients, maintaining funds under multiple managers is difficult to keep track of – they may have different statements coming in from separate shops and it’s up to them, in concept, to be able to manage a coordinated approach to track how they’re doing.

According to Matthew Rettick, founder and CEO of Cornerstone Retirement Group in Nashville, Tenn., clients much prefer the KISS Theory: Keep it short and simple. “As a client, it’s just hard to keep track of how you’re doing,” Rettick says. “They want it to be more consolidated and, as men often die first, the surviving wife doesn’t want things all over the place.”

Clients should also understand your role as a financial planner is much more than just the person who sends monthly statements. As a planner, your role is about understanding a very global picture of your clients’ objectives for each piece of their portfolio.

According to Mark Brown of Brown & Tedstrom in Denver, “Clients want to know how an account fits into the rest of their life. Can you tie together [all the different funds and] how all the pieces work compared to just ?What is their return this year?’” he says. “You try to get the conversation off of performance and have one instead about achieving results.”

When you tie those ideas back to their overall goals, Brown maintains, you’re having a broader conversation. “Then you have a total relationship – tax planning, education planning, insurance – if you’re the one phone call because you know everything [about the client's entire reach of financial planning], that becomes a very difficult relationship for them to replace.”

Building to suit
To be sure, some of the ability to capture your clients’ assets has to do with how you structure the architecture of your practice to begin with. According to Dean Zayed, president of Prizm Financial Advisors Inc. in Wheaton, Ill., if you’re serious about your business and you want to capture all of your clients’ assets, you need to set up your practice to be able to answer all their needs.

“You’ve got to have all the training and licensure in place – [be it] securities, insurance or annuities, whether you’re an investment advisor or fee-based,” Zayed says. “If you’re going to set up shop, the more services you can add, the more likely you are to capture assets.”

Or, at a very minimum, arrange your practice in a way that can handle the aspects of the business in which you have expertise and leave the architecture of your firm open enough to be able to integrate experts from other financial services areas.

“If you set up your practice with an open architecture,” Brown says, “you can be a manager of managers and don’t have to be limited by a proprietary system.” With Brown & Tedstrom, a firm specializing in high-net-worth investors, Brown looks at the underlying managers and makes sure his firm offers access to “the best of the breed.”

Little hiccups
Encouraging clients to consolidate their accounts, however, doesn’t mean that advice works in or applies to every circumstance. One thing to be sensitive to are those accounts a client may have an emotional tie to.

“Say I’ve got someone who worked at Ford for 30 years,” Rettick says. “They’re just not going to part with that stock.”

A second area to be wary of is the kind of investor who is leery of consolidating too many accounts under one roof because, for example, his father told him to “never put your money with just one advisor.” While you can go about disproving such an idea, sometimes people stick with that type of logic in the most stubborn of ways.

Indeed, some clients are always going to be happier having multiple advisors across multiple platforms. Understanding that – and how that type of client might fit into your type of practice – is vital to your and the client’s happiness. And, according to Zayed, if that’s the way the client is, you might not want to invest your time in bringing him under your management.

“Making that decision comes down to your first meeting and really getting an understanding of what they expect from the process,” Zayed notes.

Of course, if you have a client who seems entrenched in that kind of thinking and you’re still game to win him over, keep in mind that your emphasis has to be on getting him to understand that you’re not doing this for your financial gain. “You need to be able to explain and educate them as to why it’s in their best interest,” Baird says, “and that – over the long term – making a change sooner rather than later can actually end up saving them money.”

Be prepared
So you’re in. You believe in the idea of one-shop stopping. You want to become your clients’ SuperTarget (where they can get it all) as opposed to them shopping around town at five different stores for their financial services. Excellent. Just don’t go off half-cocked. Becoming the one agent for your clients isn’t just about convincing them to come to you; it’s also about having your practice ready and able to serve them.

From the top, understand that becoming a client’s one advisor is signing up to be their mentor.

“There are things I think we should recommend that show we’re a true financial coach that we won’t make a dollar from but they should have in place: a will and trust, a living will, a durable power of attorney,” Rettick says. “It shows my client that I’m concerned about their total financial well-being and their total estate … To be their only advisor, you have to counsel them on a number of things that might not make you money but will help them move into the latter stages of their life.”

Second, prepare the marketing and communications materials to help reinforce your long-term approach as “the one advisor.” According to Baird, advisors need to have marketing materials and Web site information that supports that position so it gets communicated to potential clients as part of a very well-thought-out plan.

“To have marketing materials that get at ?Here are things to know if you have investments in more than four different places,’ for example,” Baird says, “having the Marcom materials to support the message is very important. And people will often give you a chance – they’ll start by giving you $500,000 of a $5 million portfolio and then you need to prove yourself with that amount under management.”

If you can deliver the service and present a winning personality, they may consider moving more funds under your control.

Last but not least, make sure the pool is full before you leap. According to Zayed, having your practice’s infrastructure in place is a crucial component of delivering positive results.

“To truly be that one-man shop,” Zayed notes, “you need to build it technology-wise, staff-wise and personnel-wise. You may think you can capture those assets but you’ve really got to have your infrastructure in place to perform once you’ve got those funds under your management. If you invest in those things, it will pay off in the long run.”

And if the long run is your objective, you just might start considering how to shuffle the deck to begin positioning yourself as your clients’ sole advisor and begin the move into the future.


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