Category Archives: Getting More Clients

Is There Money To Be Made Serving Younger Clients? #FearlessFinancialAdvisorPodcast

A topic near and dear to our hearts. How to profitably serve millennial clients. In this video I am speaking with Alan Moore MS, CFP®, Co-founder at XY Planning Network. XY Planning Network is the leading organization of fee-only financial advisors who specialize in working with Gen X and Gen Y clients. They offer comprehensive resources to help financial planners run better and more successful businesses.

In This Interview We Discuss…

0:23 – What is XY Planning Network?

01:32 – Is there a market to serve younger clients?

03:41 – Is there money to be made serving younger clients?

06:25 – What fee structure works best for younger clients?

07:42 – How to attract younger clients

10:25 – Does investment management matter to younger clients?

13:45 – CFP Curriculum

14:53 – What is the best way to serve younger clients?

17:13 – Is it too much work serving younger clients?

18:14 – Trust and client acquisition costs

23:21 – What advice would you give to your younger self?


Alan Moore XYLearn more about Alan Moore

Interview MP3

[Introducing Pocket Risk 2] Why Risk Tolerance Questionnaires Should Not Be Used For Prospecting

In recent years there has been a plethora of risk tolerance tools releasing features to help advisors acquire more clients. The theory goes by assessing a client’s risk tolerance we can know what investments best suit their psychology, a portfolio they will “stick with”.

However, this contradicts the true purpose of a financial advisor, which is to help clients achieve their long-term financial goals. Simply investing along the lines of someone’s psychology could result in a plan that has too little risk or too much.

The Customer Acquisition Challenge

Advisors like these customer acquisition features because they believe it will bring in more clients. But the real customer acquisition cure for advisors is not better technology but more trust and awareness. See research and commentary here and here.

The primary purpose of a risk questionnaire is to educate an advisor about a client’s risk tolerance, risk capacity and risk needs (goals). With this information an advisor can build a plan likely to hit the goal, without the client bailing out midway. A client’s psychology should not be ignored but it should definitely not be the main driver of a plan.

Jumping from risk tolerance to investment portfolios without adequate consideration for goals and risk capacity is a recipe for short-term satisfaction and long-term dissatisfaction.

Introducing Pocket Risk 2

Every week, advisors ask us to build more and more “customer acquisition” features. It’s tempting since, we want to make money but it doesn’t feel like the right thing in the long run. The right thing is a tool to educate advisors and clients that promotes good behavior. Since behavior is the primary determinant of investor returns.

We have released a new risk questionnaire that assesses goals, risk tolerance and risk capacity so advisors can collect the information they need to build a plan that works in the long-run.

Our new feature set is about enhancing the financial planning differentiation advisors have today against robo-advisors rather than trying to compete in commoditized investment management technology. The advisory customer acquisition challenge will be won in personalized financial planning, where robo-advisors cannot easily compete.

Click here to take the risk questionnaire

 risk tolerance questionnaire

Actions For CFPs® To Build Trust With Clients

CFPThe Certified Financial Planner Board Of Standards’ first principle in its Code of Ethics is integrity. The code states – “Integrity demands honesty and candor which must not be subordinated to personal gain and advantage. Certificants are placed in positions of trust by clients, and the ultimate source of that trust is the certificant’s personal integrity.”

The problem with integrity and trust is that they are nearly impossible to see and measure. As Harry Beckwith noted in “Selling The Invisible”, when you sell an intangible product clients often make choices based on tiny impressions that have little to do with your service.

However, there are visible ways to build trust with prospects and clients. Below are the nine components of convincing people you are trustworthy.

1. Authenticity – Authenticity is communicating in your natural fashion, without corporate speak.

Action Step  – Go thorough all major pieces of material your clients see and edit them to sound like a human being. That includes your website, newsletter and reports. Do not use jargon, keep things simple.

2. Believability – Believability is the client’s perception of your business matching up with your words. If you are a great advisor you should have testimonials, stories and examples of where you have helped people in a similar situation. Public testimonials are prohibited by the regulators but you can use an existing client as a reference.

Action Step  – Ask an existing happy client to act as a reference for prospects.

3. Credibility – Credibility is the quality of being trusted and believed in. This is primarily communicated by credentials such as your CFP®. But it also done by how you look (i.e. how you dress, your office, your experience).

Action Step – Make it clear you are a CFP® on all major communications. Talk about your past experience on your website and get professional pictures taken. Pictures of your office are also a plus. Finally, look the part! Would you trust yourself with a multi-million dollar account?

4. Familiarity  Harry Beckwith makes it clear in his book that “familiarity” is a major factor in client decision making. Familiarity breeds trust because if someone has heard from/about you various times you appear to be a grounded organisation, here to stay. Not fly by night.

Action Step  – Create a monthly newsletter for prospects and clients. Build a list of people who follow your work.

5. Feasibility Of Relationship – You need to be easy to do business with otherwise people will not bother.

Action Step – 1) Publicize your fees and minimums. 2) If you offer a free consultation publicize it and let people know what happens during the meeting. 3) Let people know what is involved in becoming a client.

6. Safety – Make people feel safe doing business with you.

Action Step – Make it clear in your communications that you work with a reputable custodian and/or broker. Talk about your security procedures to protect client information, as well as your disaster recovery plan.

7. Comfort – Once someone becomes a client, they want to feel comfortable doing business with you. If you visit clients at home, let them know. If you can offer great advice without digging into all elements of their life, let them know. People want to feel comfortable.

Action Step – Develop one idea to make your clients feel more comfortable. How can you make the financial planning experience more enjoyable?

8. Superiority – Superiority is appearing greater than the competition. Traditionally, this is done by AUM or number of clients. But you can use credentials, experience or specialization (e.g. only working millennials).

Action Step – List three ways you are superior to your competition and use these to distinguish you from the competition. Include them in your communications. If you are a small firm for example, you can talk about your personalized service.

9. Value – Value is explaining why your service is worth more than the price. This should be relatively easy, especially if use data from the Dalbar studies.

Action Step – Write a short paragraph explaining why your service is good value for money. Use these words with prospects and on your website.


Building trust is not a nebulous process. A clearly defined series of steps as outlined above will demonstrate you are trustworthy and encourage people to work with you. When you appear trustworthy, you will get more clients.

How To Make Robo-Advisors Irrelevant

Blue Ocean StrategyIt’s difficult to pick up an industry publication, attend a conference or speak to a fellow advisor without discussing the threat of robo-advisors. There is no doubt they will change our industry forever but what is the solution for the financial advisor?

Over the last week I’ve been reading Blue Ocean Strategy: How To Create Uncontested Market Space And Make The Competition Irrelevant. The book offers a framework to deal with competition. A series of steps that go beyond differentiation or cost cutting, the typical response to competitive threats. The main arc of the book is that to defeat your competition you must make them irrelevant typically by appealing to a new customer segment.

Through a process called value innovation it is possible to create a business that is cheaper (either for you to produce or the consumer to buy) and better.  The classic example is Cirque Du Soleil who created a brand new market with their artistic and theatrical circus performances a world away from tents, lions, ringmasters and deadpan humor.

So how can we apply value innovation to financial advice? The first step is to understand the criteria under which people buy financial advice and who are the competitors.  Here is my list….

Criteria for Buying Financial Advice

Price / Fees – How much does it cost?

Performance – Will I make money?

Ease – Is the process easy to buy and manage?

Trust / Relationship – Can I trust the service/person and build a relationship?

Time – How long does it take to start and finish?

Goals – Will I have a set of goals and a plan I can believe in?

Education – Will I be more financially astute?

Personalization – How personalized is the service?

Competitors Offering Financial Advice

Financial Advisors  – In all their shapes and sizes

Robo-Advisors – Wealthfront, Betterment, etc

Family and Friends

Do It Yourself

Plotting The Competitors 

Using my judgment I’ve plotted the relative performance of different competitors in each area. For example, robo-advisors are cheap compared to the average financial advisor but they do not offer much in terms of personalization.

Comparing Sources of Financial Advice

The point of the exercise is not to be 10 in everything. That is nearly impossible.  The point is to find uncontested market space. So what opportunities exist for financial advisors given the current situation? The evidence would seem to suggest that advisors should not manage money directly.

As you can see from the chart above, the average financial advisor is great at goal setting, education, personalization but score poorly in fees and investment performance. Obviously there are advisors that perform well for their clients but the general perception is that fees erode performance. A solution to combat the threat of robo-advisors is not to manage money at all. Either outsource it to a robo-advisor, an inexpensive 3rd party money manager or become a coach and encourage clients to do their own buying and selling.

There is no advantage in offering a broadly diversified passive portfolio. As Michael Kitces says “Building a well-diversified passive strategic portfolio is on its way to being totally commoditized“. A less revolutionary approach to ridding yourself of money management has been advocated by people such as Deborah Fox of Fox Financial Planning Network, who suggests that a two tier service level could be the best approach for advisors. For some, even this is drastic.

The Blue Ocean Strategy offers other suggestions for advisors. For example, selling your skills to a new industry e.g. Employer retirement plans, institutions or getting into business planning. There is also the option to cut across client groups e.g. (Having a price point between robos and existing advisors and simply providing online advice).

 What would I do if I were a new financial advisor?

I like to think what would I do if I were a brand new financial advisor (admittedly an easier situation than converting an existing business). I suspect I would probably partner with a robo-advisor to do the investment management, provide online financial advice (so I could be nationwide) and focus on a particular sort of client base (e.g. entrepreneurs, doctors, lawyers, people 50-55).

There is a gap in the market between robos and traditional advice. Vanguard and Personal Capital have attempted to enter it with their hybrid model and I believe they will be successful. Therefore an advisor will need a specialism (e.g. doctors, military personnel etc) where Vanguard can’t compete because of their scale. You can charge more than Vanguard (whose fees start at $300 a year) and anchor your pricing next to something that has nothing to do with financial advice but people pay a lot more for e.g cable tv.

You are probably thinking this doesn’t sound like a very scalable business. I disagree by attracting clients who have never bought financial advice I believe it would be possible to create a profitable sustainable business (though it may very well be smaller than what you have today). Walmart is not the only food retailer (just look at Whole Foods) and therefore Wealthfront or Vanguard don’t have to be the only people selling financial advice.

In the long run (10+ years) I can’t help but see financial advice being broken into three categories. Swiss style white glove service for multi millionaires, primarily online hybrid services, and do it yourself robo-advisors. I believe the best bet for advisors is to offer a hybrid service. It’s the only relatively uncontested market place that exists.

5 Technology Tools We Use To Grow Pocket Risk

Technology ToolsLate last year I wrote a popular list of 58 technology tools for financial advisors. It was shared over a hundred times on various social networks becoming our most visited post last year.

However, a great tool is merely the beginning. How do you use these tools to grow your business? A business coach once wrote that the key to growing your business is to make it irresistible to your market and make sure they know about it. Below I share 5 technology tools we use that help us achieve that goal.

1. Business Metrics Dashboard [Purpose: Are we building something irresistible?]

The most important tool we use is our internally created business metrics dashboard, which includes numbers and written notes. This helps us know whether we are creating something irresistible to our market. Here are the main elements.

Active Customers – How many of our customers have recently logged in and used the product.

Monthly Recurring Revenue – How much revenue are we generating on a monthly basis.

Churn – Have we lost any customers and why did they leave?

CLTV – What is the average value of a customer? This is determined by the average price someone pays for Pocket Risk and how long they remain with us (on average).

Cost To Acquire A Customer – How much are we spending on marketing (including marketing salaries) to acquire a customer?

Cashflow/Free Cashflow – Measuring the cash that is coming in and out of the business.

I review these metrics every Monday morning. Given the array of systems most businesses use it can be tricky to track all of these metrics easily but it is essential to measuring the health of the business.

I recommend every business owner have a similar dashboard. You can use Excel, Google Docs or create an internal webpage. Just remember that traditional accounting metrics do not provide good leading indicators on the health of your business. If you can’t get all of these metrics into a dashboard then at least get four or five. Whatever you do, don’t limit yourself to tools you can buy. Build your own tools.

2. ROI Calculator [Purpose: Are building something that’s irresistible and profitable?]

Once again, I built my own tool (with Excel) that measures the ROI on any major expenses. For example, if we spend x on marketing I know I need to acquire y customers for it to be profitable. Or if I ask one of our employees to spend 10 hours on a project, I know that that we need z number of new customers, retained customers or future saved working hours for it to be worthwhile.

Now it’s not always possible to predict the ROI of your investments but we make sure every major dollar spent or hour consumed has an expected ROI. This way we can measure if it is has been successful. Having this calculator limits us from making emotional decisions or succumbing to psychological biases that lead to unprofitable outcomes.

When we build new features or embark on projects at Pocket Risk we always ask whether this will make our product irresistible to customers at a profitable return. That return may take months or years but it has to be thought out. Having the calculator ensures we have the same internal yardstick for success.

3. Google Docs [Purpose: Helps us build something irresistible quicker]

As an international company with team members in London and San Francisco efficient internal communication is essential to our business. We use Google Docs to share things like marketing plans and training documents.

At first I thought everyone would be using tools like Google Docs to share information until I visited a financial planning firm and realized people still send Excel files back and forth unnecessarily. If you have a file called “Report Update v3 Final – David edit.xls” then you could probably benefit from using Google Docs.  It’s a simple way to ensure your team is on the same page.

4. Screenflow [Purpose: Helps us build something irresistible quicker] 

Have you ever found yourself writing a long email trying to explain something to a colleague, client or contact? Thankfully those days are in the past. I use Screenflow (Mac based) but you can also use Screencast to record your screen and voice for sharing with a simple link.  This has dramatically reduced our frustration and increased our efficiency. Some things are difficult to explain in text and you can’t always get someone on the phone.

5. Google Analytics [Purpose: Measures the efficacy of our marketing]

Every business should be measuring the number of qualified leads they are creating and the conversion from first contact to happy customer/client. Pocket Risk is a web-based business so we use tools like Google Analytics to measure web traffic.

A financial advisor’s business would probably have to track this in Excel or with a CRM system like Salesforce or Redtail. However if you use your website to capture leads (which you should), you can also benefit from Google Analytics. Michael Kitces has a recent post about this on his blog describing how financial advisors can get the most out of Google Analytics.


What you will notice, from the list above is that we don’t hesitate to create our own tools that do a better job than what we can buy. We just have to ensure the creation of our own tools (and ongoing maintenance) justify the investment.

Additionally you will see every tool has a purpose and is a part of our mission to create something irresistible to our customers.

BONUS – Excel Shortcuts [Purpose: Helps us build something irresistible quicker] – Take a look at the link below to see how you can work a lot faster with Excel. Just imagine your life without copy and paste? Now imagine what other shortcuts you could be missing out on –

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