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How can an advisor add value to client engagements, foster deeper client relationships that lead to greater profits and generate more referrals and opportunities for cross-selling? 

Sally Munford, an advisor with i*financial, a San Antonio, Tex.-based planning firm, offered answers to these questions, and many more, during a Wednesday focus session of the Million Dollar Round Table, held in Anaheim, Calif., June 9-13.

Munford said that essential to client attention is scheduling an annual review, regardless of whether changes need to be made. This is a client entitlement and should be structured around a “Client Bill of Rights” that ensures a client-based focus and complete integrity. 

As part of the annual review, Munford said all clients fill out a risk profile, which not only assesses their attitudes regarding risk and reward, but also their capacity to take risk because of such issues as positive net worth, adequate life insurance, or positive cash flow and an acceptable level of liquid savings. 

“After this assessment, I create an investment policy statement for all clients that reflects how they expect their investments to be managed going forward, as well as their time frame for needing the assets,” said Munford. “This document is a valuable tool for avoiding misunderstandings.”

Munford also pointed to the importance of taking detailed notes during such meetings and transcribing them afterward. These details, often very specific, include children’s school activities, their hobbies, and their travel plans. 

In this way, according to Munford, clients feel they truly are being heard when they hear their personal data fed back during subsequent meetings. It also puts everyone on the same page with regard to the facts and serves as reminders of items not fully completed in the prior year. 

Munford then said that the next topic she covers is the fleshing out the clients’ goals, be they are as simple as doing home repairs or as complex as starting a new business. Such dialoguing permits understanding client attitudes and convictions driving their finances. 

Along these lines Munford described having just started a new icon-based technique for helping clients visualize their progress toward financial soundness. These icons represent the following areas: debt service as a percentage of income, savings rate, accumulated retirement assets, insurance coverage, estate planning documents, articulated goals, college savings, and business planning. 

“All clients receive a rating in these areas based on a soundness key,” said Munford. “The number of icons next to each topic signifies progress made toward the optimum level. For example, Stage 5 represents no debt or 100% funding of college for children. Many clients thus understand their financial footing as never before.” 

Munford said that before starting an in-depth discussion of client accounts, she reviews her company’s “Guidelines for Working Together.” She said that many clients have the one-sided perspective that all responsibility for growing and maintaining the client/advisor relationship rests with the latter. 

Yet, there are client responsibilities that include providing relevant financial information, changes to their financial situation, establishing financial goals, and, in the final analysis, trusting the advisor’s expertise to guide them. 

Next in the review is a detailed analysis of client accounts. Munford said she segues into a full discussion of client accounts with a brief commentary on the financial markets and their uncertainty, and a focus on those things that can be controlled as opposed to those that can’t. In this approach, she said she discusses some of the funds she has chosen for her managed money model that add flexibility to a client’s accounts.

Munford reported that she and her partner review the “aggregate” of the non-college portfolios to determine whether it is in line with their particular investment policy. Further, she and her partner want to see how this aggregate performs relative to the market as a whole and, more importantly, to an index that approximates the same asset allocation as their portfolio. 

They also focus on volatility as measured on a three-year basis against that of this index. Finally, they show the clients their actual fund expense ratio. 

“After the aggregate, we deal with each account sequentially to examine some of the same factors,” said Munford. “In each case, we either make recommendations to reallocate or stay put.  We also review the college accounts in the same way, factoring in the ages of the children and the length of time to college. 

“In the case of qualified accounts, we emphasize the need to add contingent beneficiaries with appropriate language for monies to be left to minor beneficiaries,” Munford added.

Next up for review is risk management of client life insurance products, perusing the type of insurance, face amount, and, for term insurance, the level premium period and when the policy was purchased. Munford said she also integrates client group term insurance when possible as well as policies that her company may not have sold. 

Following this is a discussion whether the insurance portfolio needs specific attention. Considered in turn are primary, appointed and contingent beneficiaries and whether they are current.

Munford then talked about the need to prod clients to get details of all of their disability insurance coverage to include individual and group products; and recommend supplemental policies where appropriate.

Following risk management in the review is a discussion of health care costs as well as the actual costs of different types of long-term care. This produces a grid of what Medicare does and does not pay for regarding long-term care. The combination of these two pieces of information tees up any subsequent discussion of client need to purchase long-term care insurance

“Understandably, this is usually a “long-term sale” in terms of how long it takes to convince a client to take action,” said Munford. “However, providing this information up-front can increase the chances that clients will take a serious look at the problem.” 

Munford’s stated next step in the review covers retirement planning, which includes the risks to clients’ retirement income and three different strategies for obtaining income during retirement and offering in-depth retirement projection using company software. 

Penultimate in the review are estate-planning issues with attention to the benefits of a properly drafted will and other estate planning documents that are professionally drafted and reviewed periodically as their situation and the tax laws change. Munford makes sure that clients have the names and contact information of two highly qualified attorneys.

Last, but not least in the review process, are requests for referrals, informing the clients of expectations regarding prospect qualifications.  

For the yearly review, Munford’s company created what she calls a “Quick Glance” for clients. This is a one-page sheet that lists all insurance and securities products held both at Munford’s firm and other firms with all gathered pertinent information to take home as an abbreviated information page for their records. 

The last part of Munford’s presentation covered her firm’s approaches to gain client attention, provide client education, and establish client well-being. Some of these approaches include ways to keep in touch with clients throughout the year, such as tailored events for different populations of clients or clipping articles that feature them, or sending books or articles relevant to their current life situation.

One of the ways Munford said she likes to add value is to foster the networking of her clients by bringing people together — introducing people to others who may need their services or, perhaps, the products they produce. 

For “client education,” Munford’s broker-dealer creates a monthly market update, which is fully compliance-approved for distribution and is e-mailed. During times of excessive market volatility or unusual events, her broker-dealer creates other market updates, as needed. 

Additionally, Munford said her company has an online financial newsletter, which goes out to the client list with e-mail addresses. Also invaluable for client contact and education is the company’s website, fully compliance approved, where clients can log in to get their own account number, a financial calculation area, and links to articles they may find of interest.

Munford also said that her firm had created a brochure, “How to Choose a Financial Consultant: Tough Questions to Ask.” 

Munford’s practice also produces events tailored to client education. Following the end of a quarter, the company has a market recap breakfast. Invitations go out by e-mail to clients (guests welcome) as well as the company’s centers of influence. There is an active question-and-answer format.

“Every year, we hold specialty seminars for certain client populations, which are given by local employees of government entities,” said Munford. “Feedback has been very positive.”

“Also the company’s clients and their guests have been invited to informational seminars at local restaurants on such topics as long-term care,” she added. “The company has also held brown-bag lunches in its conference room to talk about retirement issues.”

Although her firm is not publicly traded, it distributes its own “annual report,” featuring among other items company staff and their respective roles at i*financial, their contact extension, and their e-mail addresses;  a letter that gives background of the past year, both on a national level and from the company’s perspective, and informs them how important they are; and a section detailing products and services. 

In the interest of transparency, a page gives company details. Additional pages include accomplishments from the prior year and lists events planned for the next year.

The last way used by Munford to provide alpha to clients is one she titles “Just for Fun.” She said she feels that clients really like to just be entertained. Thus she holds an annual no-business agenda appreciation party at her home for clients to network and get to know each other.

“We believe that the best way to grow business is to provide a value-added “wow” experience for our clientele,” Munford said in closing. “Clients so engaged become enthusiastic advocates for the firm and are the ones who provide quality referrals.”

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