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6 Years Post Independence, Rethinking the Value of Financial Planning

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In every business, the most important elements are its people, its processes and its products. As a side note, the efficiency with which the business operates is also a major determinant of its success. After passing my sixth year as an independent RIA, I find myself with more ideas than time to implement them. In fact, I first need to decide which ideas deserve to live and which do not.

One thing of which I am sure is this: clients that engage me in financial planning and asset management are far less likely to depart and are far more likely to refer. As a result, I have been giving thought to accepting only clients that are seeking both services. Why? I find clients can easily see the value in planning once they engage in it. If a client has engaged me for asset management only, how will they judge our relationship? I think it can be assumed that returns will be the most important determinant, and anything that doesn’t meet their expectations will be grounds for divorce, so to speak. This is not true across the board, but when I think about clients I have lost, they have one thing in common: They were asset management only! 

I have to admit there is a bit of fear involved with this decision for obvious reasons. Let’s say I have a prospect with a million-dollar portfolio who isn’t the least bit interested in planning. Would I take them on as a client? To help assure it would be a long-term relationship, I’d need to take a few extra steps in the beginning. First, we would need to set realistic expectations and I would need to do my best to assure that they’re not going to pack up and leave after a short period of time. This did happen one time and what I don’t want to do is waste my time or theirs. Hence, if I can be reasonably sure it’s going to last, then I would surely accept them. Actually, I have some clients on an asset-management-only basis now who are great relationships. However, I need to avoid short-term, got-to-have-it-now types, who expect too much too soon. 

With this in mind, I am in the process of developing some adjuncts to my initial questionnaires. The additions will delve deeper into their past advisory relationships, what they liked, what they disliked and why they left (assuming they didn’t get fired, which I would really need to know). In addition, I will add questions that focus on how they will evaluate me and their return expectations and over what period of time.

There are a couple of additional items. For example, I came across a personality test I had taken a few years back. Perhaps I’ll use some verbiage from it to expand my bio. After all, the more they know about me, the better the decision they can make. Who knows, I may even start giving personality tests to prospective clients. I thought about this several years ago, but never followed up on it. I’m not even sure prospective clients would agree to this. But nothing ventured, nothing gained.

As I said, I have more ideas than time to ponder them. Any thoughts?