Growing Your Financial Advisory Practice | Insights for Financial Advisors, Planners and Investment Managers

Once you have a client in your office, what do you do with them? You want to convince them to engage you as their primary advisor and use your services if possible, but you also want to identify and weed out bad clients.

In the fourth episode of my five-part series with John Page, RFP, CFP, RFC of Wealth Enhancement Academy, and Chairman and Chief Adjudicator of the PlanPlus Global Financial Planning Awards, we’ll be discussing the details of that critical first interview. What questions should you ask and what are the best ways to engage with potential clients? Tune in to find out.

Topics Discussed in This Episode:

Links:

Email John Page at: JPage (at) mywea.net

Quotes by John:

“One of the interesting things I’ve found is that if you’re talking with somebody, let’s say, over the age 55, you’re often going to get the answer, ‘running out of money in retirement.’”

“There’s an incredible amount of trust that can build up, really in just a few minutes, by those questions.”

“Before I move into the next phase, I must emphasize the importance of sticking with goals and objectives until you sense that you’ve got them all.” 

Now that we’ve covered transitioning to an advice-centric practice, articulating your value to clients, and pricing your services, we’re going to talk about that all-too-important first meeting with a potential client.

We hinted in the last episode that it’s almost impossible to recover from mistakes in the first client meeting, and now we’re going to show you a fail-safe process for learning everything you need to know about prospective clients to decide whether your business is a good fit for them. We’ll also show you how to engage those ideal clients.

Setting yourself up for success: Before the first meeting

Before you ever meet, your prospects should know a little about you, so they have an idea about whether you can provide what they’re looking for. John suggests sending them some information about yourself in an email or linking them to your website.

Prospects especially need to know if you’re a fee-based financial advisor. You should let them know right off the bat, so you can weed out clients who won’t pay no matter what and avoid any unpleasant surprises in the meeting.

To record or not to record?

People want to feel that you really want to know about them and care about what they share with you. In order to do this, keep a record of the meeting and share it with them so that you both remember what was discussed. There are a few ways you can do this:

Tip: However you do it, make sure to let the client know you are recording what they say and promise to give them a copy of the records. By doing so, you’ll be demonstrating transparency and trustworthiness.

Determining the purpose of the first meeting

The first thing that needs to be clear to both you and your prospects is the purpose of this meeting. According to John, the objectives of an initial meeting should be threefold:

Tip: Make sure the client understands this purpose right from the beginning of the meeting.

The four questions you need to ask to discover the prospect’s values

John always starts his meetings by asking questions that reveal his clients’ values. Why?

Instead of digging into their assets, insurance policies, and taxes right away, you’re engaging with them as people first. As he puts it, “There’s an incredible amount of trust that can build up, really in just a few minutes, by [these] questions.”

The questions are so powerful, in fact, that they can even help you start to identify whether the prospect is a good fit for your service (more on that in a bit).

Tip: When meeting with a couple, make sure both partners have a chance to answer each question individually. This way, you can get a sense of how their values align and begin to understand their dynamic as a couple. John likes to ask them who will speak first… and then he asks the other partner to speak first, instead. This usually gets a laugh and helps both partners feel at ease.

Without further ado, here are the four questions that will help you understand a person’s values:

As John puts it, “One of the interesting things I’ve found is that if you’re talking with somebody, let’s say, over the age 55, you’re often going to get the answer, ‘running out of money in retirement.’” This is true even when they have a large amount of wealth and are very unlikely to ever run out.

Tip: Watch the person’s expression to know if you’re getting an honest answer; the look on their face should reveal when they are truly sharing a deep fear. If you don’t sense that, try asking for a bit more information.

It’s not unusual for a meeting like this to be an emotional experience for the prospect, and this is the question that usually hits the hardest because it’s unearthing a genuine fear the person has. Be prepared to listen empathetically because the person will be sharing with you one of their greatest anxieties, and that may be very difficult for them.

4.  “What’s on your bucket list?”

If your prospect isn’t familiar with the idea of a bucket list, you might phrase this question as: “Tell me what experience you haven’t had that you want to make sure that you have.”

You should ask this question whether your client is 27 or 97 as it provides insight into their goals and ends this line of questions on a positive note.

John remembers one memorable experience where he was meeting with two sisters within a few days of one another. When he asked this question, they both told him they had always wanted to go on an Alaskan cruise, but hadn’t done it yet because they had no one to go with. Each had no idea her sister had the same dream… Talk about demonstrating the value of this question!

Tip: Your most repeated phrase in this first meeting should be “Tell me a little more about that.” The client should definitely speak more than you at this point; if you ask people to tell you more about a certain topic, they are generally quite willing to share their thoughts and give you valuable information that will allow you to help them.

Signs that you’re not meant to be

As you can probably imagine, people are generally very cooperative when answering these questions. John even says he can see prospects start to change and trust him as they share their answers.

However, if you can tell that you’re not beginning to build that trust at this point, you and the client probably aren’t a great fit.

Digging into objectives

Next, tell the prospects that after learning a bit about their values, you’d like to ask them a few questions about their financial objectives. At this point, you can let the couple know that they can answer these questions together rather than individually.

Here are the questions John asks at this stage:

Most people have an age in mind at which they want to be free to stop working because they’re not worried about income anymore, or to continue simply because they want to (and not because they have to). John refers to this age as the financial independence number. It gives you an idea of their timeline for achieving their goals.

If your prospects struggle with answering this question, you can adjust and ask how much money it takes to maintain their current lifestyle.

Give them examples to show what you mean by this. For example, one common goal is buying a property or renovating a home.

If they have children, this question may take some time. It will depend on the number of children the couple has, the stage of life the children are in, and their financial situation. People will often use this opportunity to share their difficulties with raising their children, and that’s a good thing. Listen carefully because they’re providing you with valuable insights into their goals and challenges.

Often they’ll indicate that they want to help their own aging parents. Find out about their parents’ situation, and your client’s obligation to them, in the same way that you ask about their children.

At this point, summarize the conversation for them, restating their values and objectives to ensure you’ve got everything. Make sure you don’t move on from these questions until you really feel you understand their situation. John is firm on this: “Before I move into the next phase, I must emphasize the importance of sticking with goals and objectives until you sense that you’ve got them all.”

Tip: If they indicate several potentially conflicting goals and responsibilities, find out their priorities by asking them “Which goal is most important?” For example, would they rather retire early or help their kids through school? You may be surprised by their answers.

The hard facts: Learning about their financial situation

Your next step is asking the prospects for an overview of their overall financial situation; some clients will start sharing information freely while others may require more prompting from you with detailed questions. John often tells clients that he needs to know “what you own and what you owe.”

You know the drill here ‒ ask about all of their assets and liabilities so you come away with a good idea of their current net worth. Make sure you have these questions handy so you don’t miss any information.

Engaging the client (or not)

Once you know the person’s values, objectives, and financial situation, end the meeting by telling them you’d like some time to pull all their information together to determine whether you will be able to provide value to them and whether you should work together.

John calls this the Initial Assessment and Evaluation ‒ a report focusing on the financial independence area that will show the clients whether they have enough money to achieve their goals, and how you may be able to help them. The promise of this information will hook your prospects and set up the expectation for a second meeting that they will truly look forward to.

Tip: Show them an anonymized example of such a report so they have a good idea of what you are offering.

What if you’ve determined that the client isn’t right for you? According to John, instead of offering the report, “make a very graceful exit.”

John’s #1 takeaway

If you’ve been listening to our conversation with John thus far, you know that he’s all about the repeatable process. (If not, you can go back now and find Episode 1: How to successfully transition from a product-centric into an advice-centric practice.)

His advice when it comes to your first meeting with a client is no different. Chances are you’re already doing something very similar in each initial client meeting. Examining your process, streamlining it, and writing it down so you can repeat it ensures that you are more efficient with your time and you don’t miss anything important.

Have questions for John? You can reach out to him via email.

Finally, you won’t want to miss the last episode of our series featuring John Page, Episode 5: Predictably Growing your Practice with Systems, Tools, and Referrals.

We’ll miss having John on the show, but never fear: we’ll be introducing you to many other amazing experts in the industry, so make sure you subscribe to the show on iTunes or Stitcher so you don’t miss their insights and strategies.

You can also sign up for our newsletter below so you are notified about every new episode.

When you meet with a potential client, do you try to convince them of the value that they’ll receive from your financial advice? If so, do you find that you have difficulty in articulating that value?

In the second episode of my five-part interview series with John Page, Chairman and Chief Adjudicator of the PlanPlus Global Financial Planning Awards, we’ll be talking about the process of properly articulating the value of good financial planning. Tune in to hear John’s insights about communicating the value of financial advice to clients.

Topics Discussed in this Episode:

Quotes by John:

“There’s no question that good financial planning will provide huge peace of mind to people.”

“The way you convince someone is, in my way of thinking, you make a presentation to them which is all around the whole idea of what you would do for them.”

“The key is, you have to try to do it right the first time.”

Show notes:

Good financial planning can be transformative ‒ but you don’t need us to tell you that.

The trick, though, is demonstrating that value to prospects. Luckily, John Page has perfected that process and was willing to share it with us on the latest episode of the Growing your Financial Advisor Practice Podcast.

The value of great financial advice

There are 3 main ways in which financial planners provide value to their clients:

John recalls a client whose brother-in-law wanted $200,000 to start a new business. Cleverly, John’s client told his brother-in-law that he couldn’t make any big financial decisions without speaking to his advisor first; he said that was just part of the deal with John.

It fell on John to break the news to the brother-in-law that it wasn’t smart to invest in the idea, and to explain why. This gave his client an easy way out and prevented him from being pressured into taking a huge risk with his money. The same goes for clients whose children often ask them for money.

Tip: Get your clients to check in with you anytime they’re thinking of making a big financial decision. That way, you can help run interference for them to help prevent unnecessary risk or even stop them from being taken advantage of.

How to demonstrate your value to prospective clients

The above benefits are all well and good, but they’re difficult to quantify. So how can you convince prospective clients to work with you?

According to John, “The way you convince someone is, in my way of thinking, you make a presentation to them which is all around the whole idea of what you would do for them.” He always has on hand a few sample financial plans. Every time he’s meeting with a prospective client for the first time, he picks the one that is closest to a particular prospect’s situation and walks them through it.

Using sample plans to articulate your value

If you have a good sample plan, your clients will easily see how it connects to their situation and how you can help them add value. You can even begin to quantify your value as you go through the plan.

John does this by including an action plan with his sample where he lists specific next steps that should be taken to fill any needs and to add value. He can then approximate how much that advice is actually worth to the client.

For example, you can demonstrate in the sample how someone paying off a non-deductible debt with interest could change that into a tax-deductible loan. That would allow you to show the exact value of the resulting tax deduction to the client ‒ the exact amount of money that stays in their pocket.

Tip: As you go through the sample plan with a client, show them concrete places where you can begin to add value, and quantify that value for them.

Using industry studies to back up your value

Now that you’ve articulated your value to clients through sample financial plans with concrete recommendations, you can also back up the less tangible values of peace of mind, saving time, and avoiding mistakes using leading industry studies.

Tip: If you aren’t aware of these studies, put in the time to read the two listed below. It’s crucial for you to understand them well, even if you never bring them up in a client meeting ‒ if you don’t even grasp your own value, how on earth can your clients?

The two major studies below were prepared by leading experts in the field over a number of years. Mentioning key evidence from these studies can be very powerful if included at the right moment:

Vanguard’s Putting a value on your value: Quantifying Vanguard Advisor's Alpha estimates advisors’ net return for clients, through guidance and planning, at about 3%.

Tip: Don’t start with the studies. They are quite complex and heavy, so John suggests leaving them for a second meeting, after your client has already seen the context-specific value in your sample action plan.

Three common mistakes to avoid when articulating value to clients

There are three big traps financial advisors can fall into when trying to articulate their value to a client:

Since you’re just meeting the person and haven’t built up any trust yet, one mistake can completely ruin the relationship, and the prospect will decide to go elsewhere. As John puts it, “The key is you have to try to do it right the first time” because you can’t come back from a mistake in the very first meeting.

KEY TAKEAWAY: This is not the time to experiment. A proven process is absolutely crucial because there’s so little room for error.

To help you take the guesswork out of it, we’ll be going into this a lot more in depth in Episode 4: Conducting your First Client Meeting in a Way to Maximize Conversions and to Weed out Bad Clients. We’ll also show you how to avoid the clients that you don’t want, but who want to work with you because of your added value and great process.

Next time, we’ll talk fees and pricing in Episode 3: Pricing and Structuring your Service Offering to Make it Irresistible to Prospects.

Make sure you subscribe to the podcast on iTunes so you don’t miss the rest of our interview series with John, and sign up below to get notified every time a new episode goes live.

Setting a price for your services can seem like a pretty basic aspect of getting started in your own financial advisory practice, but it can also be intimidating. How do you decide what to charge? How will your clients react to your prices?

In the third episode of my five-part interview series with John Page, Chairman and Chief Adjudicator of the PlanPlus Global Financial Planning Awards, we’ll be talking about the ins and outs of pricing. Listen to the episode to find out more about how to set your own prices and what mistakes to avoid when doing so.

Topics Discussed in This Episode:

Quotes by John:

“Everybody wants to have their problems solved. That’s really the root of it. So your solution is going to solve somebody’s problems.”

“The most common mistake that I see is not charging for the plan.”

“It’s very hard to build the value of the service that you offer unless you’re able to articulate it, unless you have something to show to people.”

Show notes:

- Email John Page at: JPage (at) mywea.net

- Menu of Services

- Quotation for Professional Services - Comprehensive Planning

At the heart of it, you need to have a pricing structure that fits what clients are looking for. As John puts in, “Everybody wants to have their problems solved. That’s really the root of it. So your solution is going to solve somebody’s problems.”

But what exactly does that look like? We’ll start by showing you how to break your service down into parts, and then explain how you can successfully price your service offering to make it irresistible to any prospect.

Why provide a menu of services?

While financial planning menus are not common in the industry, and clients may be surprised to see that you have one, John recommends them because they help to demonstrate the value of what you provide.

According to him, “It’s very hard to build the value of the service that you offer unless you’re able to articulate it, unless you have something to show to people.”

People are familiar with the concept of a menu in other industries and can easily visualize what one looks like. If you can show them exactly what goes into financial planning, they’ll understand the value of the overall work and be willing to pay for that value.

Some planners treat the financial plan as the menu itself. However, John cautions against this.

The problem with that approach is that a financial plan is not just one fixed thing or object. It’s more of a process to solve clients’ financial problems. As John says, “If you think about it, nobody wants a financial plan. What they want is the benefits that a plan can provide to them.”

The benefit is in the process you’re providing to clients to help them achieve their financial goals. Lumping all the possible components of that process into one “plan” simply doesn’t encompass everything you may do for them.

Tip: Break your plan down into component parts to help articulate to clients the potential services you may do for them, and to show them that it’s a process that depends on their exact context and needs.

What should a financial planning menu look like?

A standard financial planning menu may include components that fall into the following sections:

Within each section, think about the components that go into that service. For example, under investment services, you might include things like analysing risk tolerance and determining asset allocation.

If you missed it, go back to Episode 1: How to Successfully Transition from Product-centric into an Advice-centric Practice for more on reviewing your own process so that you’re able to articulate it to clients.

To help you out, John is sharing a sample menu of services that can get you started.

Taking on clients with modular needs

Now that you’ve broken down your services, you may be wondering if it’s a good idea to take on clients who want your service for only one aspect of financial planning, like investment advice or insurance.

John’s suggestion is no. He calls these individual services “modular needs” and says that clients may think they only have one such need when really, they would benefit from a whole plan. The reality is that everyone needs some kind of financial plan.

The key is that you can’t possibly extricate one modular need from the rest of a plan. You don’t always have to go in depth into every single area, but you can’t very well help with one part without looking at the overall picture.

Tip: With any financial service or need, there are usually three areas you have to look at, no matter what. They are: disability, death, and retirement.

Existing pricing models

Ok, let’s get down to actually pricing your financial planning service.

Here are just some of the ways financial advisors price their services:

We want to show you a different pricing model, one that’s based on a very simple formula and actually matches the service you’re providing, every time. It will also prevent you from making the biggest pricing mistake planners can make.

The #1 mistake financial advisors make when pricing their services

John says, “The most common mistake that I see is not charging for planning.” He’s talking about advisors who just charge for assets under management and not for the planning.

Why is this such a big mistake? There are two major reasons:

Think about two clients who each have a million dollars in assets, but one of them has the following:

You can imagine that any one of these would add a lot of complexity and work for you. Just imagine trying to figure out how all those insurance policies interact with one another! The types of assets matter a lot more than their amount when it comes to the work you’re putting in.

2.  Even worse, charging for assets under management and including planning as a kind of free bonus to clients devalues the service. This often happens because advisors don’t see their own work as valuable.

If you’re not charging for your planning work, you’re not presenting it as something that has value. If you don’t show clients that it has value, they won’t see it as valuable, either.

Establishing pricing so that it always fits the service you’re providing

The basic formula John uses to explain costs to clients is this: Time + Complexity.

This formula makes it clear that everyone’s costs might be different depending on their needs. It solves the above example of two clients with the same amount of assets but varied levels of complexity.

Putting a price on time and complexity

So how can you come up with a fair price based on that formula?

John suggests thinking about how long it takes to do each component on the menu. That’s easy to do if you just keep track of how long it takes you to do a specific task.

Think about the following two questions to help you come up with a price range for any individual component:

Tip: If you’re just starting out and don’t have a lot of experience yet, look at what someone else is doing to get a good estimate.

John’s practice actually came up with a calculator that you can check out to see how to calculate the cost of an sample client.

Monthly vs annual fees

John suggests that you collect fees on a monthly, rather than an annual, basis. Here’s why:

Tip: Don’t send an invoice every month; instead, have your client sign an agreement so you can make automatic monthly withdrawals. That way the client doesn’t even have to think about it.

Most importantly, a monthly fee also reflects the ongoing nature of financial planning. A client’s financial situation changes constantly, not just once a year, and must be monitored. A monthly fee demonstrates that you’ve got your client’s back all year round, not just when it comes time for their annual portfolio review.

Tip: In addition to a monthly fee, charge a one-time starting fee once they see the initial plan and really understand the value you’re providing. This reflects the large amount of work you’re putting in up front to create a plan that will allow them to achieve their objectives.

John does caution that you need to be clear what a monthly fee does, and does not, mean. Let’s say you’re charging $200 monthly ‒ that doesn’t mean your client should expect you to do $200 worth of services each and every month. Planning work naturally ebbs and flows, with quite a bit of work once or twice a year and a lot less effort for a few months after that. Just because the fee is spread out equally doesn’t mean the work necessarily is, and your client needs to understand that.

So what should you be charging?

John suggests that $80 to $100 monthly is typically a good starting rate. You should certainly never go below $50 per month, and that would be for a very, very simple case.

At the top end? John has found that $1000 monthly is usually the most that a planner will charge.

Whatever you’re charging a client, it’s crucial to highlight the value you’re providing them for that cost. As we discussed in Episode 2: How to Properly Articulate the Value of Financial Advice, showing clients a sample plan and highlighting specific action items to help them meet their goals can work wonders.

Remember, if you don’t value your own services, neither will your clients. If you can understand your own worth and articulate it to clients, they will be willing to pay because they see the value in it.

Making sure your pricing adds value to clients

Let’s say you’re charging a $200 monthly planning fee for an average client and you have 100 clients. Have you just added $240,000 of additional revenue per year?

Well, not exactly.

You can’t just stack planning on top of the asset management you might already be doing. You’ll likely start to charge less to manage assets as part of your financial plan.

Keep in mind that the industry is under a lot of scrutiny and pressure to lower management fees, and commissions have been banned in some jurisdictions. Therefore, charging for planning might be particularly valuable these days.

Especially, if you align your pricing with something else: value.

Your job is to develop a service and process that solves people’s financial problems and helps them meet their goals. Remember that just managing assets doesn’t have nearly as much value as good financial planning.

Tip: Yes, asset management has value, but a well thought-out plan and subsequent monitoring has way more value to your clients, so charge them accordingly.

KEY TAKEAWAY: Keep it simple

All of this might sound a bit complicated the first time you hear it, but remember that at the core, you’re just doing two things:

You just need to articulate the value for yourself and your clients (remember those sample plans from Episode 2?) and charge according to that value.

Here are some final words of encouragement from John: “You are a problem solver. You are an objective-getter. You help people reach their financial goals in a very, very tangible way.”

If you want more words of wisdom from John, you can shoot him an email.

With that, get out there and solve people’s problems!

Coming up next, look out for Episode 4: Conducting your First Client Meeting in a Way to Maximize Conversions and to Weed out Bad Clients. We’ll share with you the crucial parts of a great first meeting that will help you get more of the clients you want, and less of the ones you don’t.

If you haven’t already subscribed to the podcast on iTunes, go ahead and do that now to make sure you don’t miss any more expert tips on growing your financial advisor practice. As well, sign up below to get an email notification every time a new episode drops.

When you want to create a strong financial advisory practice, it helps to have advice from those who are experienced in the field. Today’s guest, John Page of PlanPlus Global Financial Planning Awards, has plenty of experience to share from his years of experience in insurance and financial advising. Tune into the episode to hear some important insights from John about building your financial advisory practice and about the differences between a product-focused strategy and an advice-focused strategy.

Topics Discussed in this Episode:

Quotes by John:

“In order to give advice, you have to ask a lot of questions, and you have to really try to determine what the needs are.”

“If somebody is extremely risk-averse, and you recommend all equity investments, you’ve violated their values.”

“They need to know what the value is before you tell them what the fee is.”

If you’re a financial advisor looking for tips, strategies, and insights that will help you strengthen your relationships with your clients and grow your practice, this is the podcast for you. I'm Pawel Brzeminski, the Founder and CEO of Snap Projections. In this podcast, I’ll be interviewing experts in the industry whose experience and insights can help you improve your own financial advisory practice. New episodes will drop every two weeks.

To get the podcast started, I’ll be doing a special series of interviews with John Page of Wealth Enhancement Academy, and Chairman and Chief Adjudicator of the PlanPlus Global Financial Planning Awards. Over the course of five episodes, we’ll be delving into the broad topic of transitioning from a product-centric practice into an advice-centric practice.

Tune into to this episode to hear a sneak peak of my first interview with John Page. Subscribe on iTunes to make sure that you don’t miss the rest of the series, and make sure to share this podcast with a friend!