One is the happiest number

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.