Category Archives: Getting More Clients

3 Ways Financial Advisors Can Win Generation X & Y Clients

Generation YLet’s get personal. I was previously an employee at Facebook and just like many other Silicon Valley employees I was offered equity in the business as part of my compensation. When the company IPO’d I suddenly had money to invest, along with many of my colleagues. I and many of my colleagues would qualify as great generation Y clients.

At the time there were endless conversations about what to do with this money. One of the first was whether to get a financial advisor, use a web-based investment service like Wealthfront or invest it ourselves.

Advisors were treated with deep suspicion. Numerous employees had already been contacted by big-name private wealth management firms via LinkedIn which left them feeling like a prize to be won rather than a client to be cared for. You can see this mentality in this New York Times article. Most people didn’t know the difference between a RIA, Broker-Dealer, Fee-only or Commission based advisor. So what do well educated people do when they are stuck? They ask a friend and read a book!

The most commonly referred book is Burton Malkiel’s “Random Walk Down Wall Street”. After reading this book everyone becomes deeply suspicious of active investing and fees. This naturally leads them to Modern Portfolio Theory, Vanguard and that unforgettable quote by John Bogle – “In investing, you get what you don’t pay for”.

I’ve critiqued Modern Portfolio Theory before, so I won’t go into it now but suffice to say, if advisors are going to succeed with Generation X & Y clients they need to short-circuit this fallacy that successful investing is simply about diversification and low fees. I’ll tell you what I think successful investing is about a little bit later.

So what about the web-based investment firms like Wealthfront? Don’t they bring the promise of an advisor with very low fees? To some extent yes but many in Generation X & Y are still of the opinion they can do the same thing in an Excel Spreadsheet minus the benefits of tax loss harvesting (although Michael Kitces has debunked these benefits somewhat).

So what’s an advisor to do? Here are three ways advisors can win Generation X & Y clients.

1. Short Circuit The Fallacy That Successful Investing Is Just About Diversification and Low Fees

Successful investing is about many things before diversification and fees. It involves planning and setting goals. It involves discipline. Spending less than you earn and staying the course. It involves education. Improving your financial IQ. When the next crash comes I like to wonder how many people will yank their money from the web-based investment managers because they had no plan, no discipline and no education. Here lies the unique selling point of advisors to Generation X & Y clients, their ability to act as a coach. To teach, to instruct, to challenge, to refuse. After all, investing is a means to an end right? And good advisors help make that clear.

2. Don’t Just Protect My Money, Make Me Money

When I speak to people in Generation Y they are very much in the accumulation phase. Once they know the basics of investing they want to learn how to make money not just park it into a mutual fund and stay the course. Increasingly they are turning to people like Todd Tresidder also known as the Financial Mentor to learn more about making money. I believe one of the most overlooked skills in our industry is the entrepreneurial skill of advisors. They have often set up their own businesses and become a success in their own right. Yet I see few advisors teaching entrepreneurial skills to their clients. An advisor who can help me increase my income not just protect a nest egg I have already built would be truly invaluable and unique.

3. Branding and Presentation

When I was growing up my mother said that I should always shine my shoes before I leave the house. I would be judged by their presentation. That was my mother’s generation, today we judge people by the quality of their website. It may seem small but it’s not. A bad brand and website turns people off and yet when I speak to advisors (every day) they often start our conversations by apologizing for the quality of their website. If it’s been on your to do list for a long time, get it done.

If there is one more thing I would add to the list it is marketing (which will be the subject of a much longer post to come soon). To conclude I sincerely believe advisors can capture Generation X & Y clients but they will have to significantly change the way they do business. The value of advisor to my generation is not in managing money it is in the coaching.

Image Credit – LinkedIn

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ProVise: “The 3 Things Advisors Must Focus On To Be Successful” – Barron’s Top Advisor [INTERVIEW]

Ray FerraraI recently interviewed Ray Ferrara of ProVise Management Group LLC.  He is the President and CEO of a Barron’s ranked financial planning and investment firm based in Florida.

John: Can you give us some quick background on ProVise?

Ray: Sure, first and foremost ProVise is a financial planning firm. We do investment management but we view that as a subset of financial planning. We have 11 planners and work with about 780 families. In total we manage about $900 million. All of our team are well qualified professionals many of which have the CFP (Certified Financial Planner) designation.

John:  How did you become a financial advisor? What brought you to this industry?

Ray:  I have to go way back to tell that story. I graduated in 1970 with a degree in Zoology and went to work selling computers for IBM. A friend of mine was working in the investment business and persuaded me to get involved on a part time basis. By September 1971 it became my full time occupation where I worked for an investment firm. Eventually, I went on to start ProVise in 1986 and I haven’t looked back!

John: Barron’s recently ranked your firm as a top advisor. What distinguishes your firm from others?

Ray: Going back to what I said earlier I would emphasize we are a financial planning firm first and investment management is a subset of that. We form close relationships with our clients helping them bail out their children, deal with health issues and estate planning. Year over year we only loose about 3% of our client base and that includes those who pass away.

John: What would you say to those advisors who believe investment management is not a subset of financial planning?

Ray: I would gently and politely tell them that there is nothing wrong with specializing in investment management but that is not the same as financial planning.

John: What software, tools and techniques do you use to ensure you remain successful?

Ray: Technology is crucial to our business. It’s important that technology platforms are user friendly for clients and advisors. We use Portfolio Center for portfolio management and we use Junxure for our CRM. We also believe social media can play an important part in our business and are slowly doing more in that area.

John: Your firm has been very successful but what challenges do you face on a day-to-day basis?

Ray: You can be a financial planning genius and still fail if you cannot properly run your own business so that is important. Additionally there is always work trying to keep up with the regulators. That’s crucial. Finally as our company grows and scales its been important for us to hire the right people who share our values.

John: What software and tools do you think are missing in the industry?

Ray: Probably what is missing is a technology standard so all software can speak to each other.

John: Lastly, What do you think advisors need to focus on in the future to be successful? 

Ray: There are three things advisors need to focus on moving forward.

1) They must disclose conflict of interests.

2) They must maintain their level of education through something like the CFP designation, which has a continuing education element.

3) The must subscribe to a code of ethics that puts the client ahead of themselves and thus give a fiduciary standard of care. Advisors who do not do all three will fall behind those who do.

John: Thanks Ray, it’s been great speaking to you.

The Sedoric Group: “More Than Money Managers” – Barron’s Ranked Top Financial Advisor 5 Years Running [Interview]

Sedoric Group

I recently interviewed Tom Sedoric of The Sedoric Group/Wells Fargo Advisors.  He has been ranked the #1 Financial Advisor in New Hampshire and rated one of the best advisors in the country five years running.

John: Give us some quick background on The Sedoric Group/Wells Fargo Advisors?

Tom: Sure, we are firm based in New Hampshire that manages about $320m for 200 families. Most of our client base is what is called the mass affluent. We are a team of four soon to be five people who act like a virtual family office co-ordinating information between various professions such as lawyers, accountants etc. We are a fiduciary and run our business on an acronym we call ART (accountability, responsibility and transparency) which is part of our core values. 

We also consider ourselves risk managers. Not just about what happens in the stock market but changes in tax legislation, issues with intergenerational wealth, policy changes in Washington D.C. etc. So our responsibility goes beyond managing money.

John:  How did you become a financial advisor? What brought you to this industry?

Tom:  After graduating and short stint as a ski bum I began a successful career at Xerox . What I liked most was working directly with clients. Looking back at my ski bum days I noticed I was the only person around me who subscribed to the Wall Street Journal. It was something I picked up from my father when I bought my first stock aged 19. Rather than climb the management rungs at Xerox I realized I wanted to work in this industry so I could help and deal directly with clients.

John: Barron’s recently ranked your firm as a top advisor. What distinguishes your firm from others?

Tom: We are great listeners. We spend time with our clients understanding their needs and goals. For example, we spend a lot of time thinking about distributions/withdrawals once a person retires. Even if we have a client who is 50 and plans to retire in 15 years we start considering their best options. In our mind asset location can be just as important as asset allocation so we make sure assets are in the right place.

John: What software, tools and techniques do you use to ensure you remain successful?

Tom:  Wells Fargo provides us with very good resources. For example we use Envision to manage our financial planning process. 

John: Your firm has been very successful but what challenges do you face on a day-to-day basis?

Tom: I think people are generally emotionally fatigued after 5 years of financial turmoil. Our biggest job is managing expectations. We are living in a parallel universe when the central bank is pumping $85bn into the economic system every month. We understand why they are doing it, but it can’t last forever.

John: What software and tools do you think are missing in the industry?

Tom: An integrated tool that allows clients to get a 30,000 feet view of where they are, where they want to be and how close they are to their goals. There is software that does this but not in a summarized fashion.

John: Lastly, What do you think advisors need to focus on in the future to be successful? 

TomSurround yourself with people who are smarter than you. You will learn and grow considerably faster.

Banyan Partners: How To Grow From $30 Million To $4 Billion AUM In 8 Years [Interview]

David Costigan ImageKicking off our interview series with successful financial advisors I recently interviewed David Costigan of Banyan Partners. David is the Managing Director of Wealth Management at the firm, which has offices across the US. Below is a summary of our conversation.

 John: Give us some quick background on Banyan Partners?

David: Sure, Banyan Partners got going in 2006 and was founded by Peter Raimondi who was recently profiled in Financial Advisor magazine. We work exclusively with HNW individuals to craft custom wealth solutions. We don’t just put a bunch of client information in a blender and spit out a result. We work closely with them to ensure our approach meets their needs and objectives.

John:  How did you become a financial advisor? What brought you to this industry?

David: In the early 90’s I was running a trucking business but eventually went to graduate school and got my CFP (Certificate of Financial Planning). I ended up as a broker at Merrill Lynch but that didn’t quite suit my personality. I wanted to shift my focus from financial products to long-term client relationships. I settled at The Colony Group working for Peter Raimondi for 10 years before following him on to Banyan Partners.

John:  So having a strong mentor was important to your professional success?

David: Having a mentor was paramount to my success.

John: Registered Rep/Wealth Management recently ranked your firm as a top advisor. What distinguishes your firm from others?

David: There is no need re-invent the wheel. We just stick to some key principles. We do what we say we will do. We remain constantly focused on client needs and we bring in partners to help give specialist advice to our clients, such as estate planning. We know our scope and we stick to it.

John: What software, tools and techniques do you use to ensure you remain successful?

David: We use Advent for our trading as well the usual tools you would expect like Bloomberg. We are in the middle of merging a few firms so our software my change over the short term.

John: Your firm has been very successful but what challenges do you face on a day-to-day basis?

David: Client psychology. With everything that is going on in Washington D.C. we are living in uncertain times. We are constantly communicating with our clients to ensure they are well informed.

John: What software and tools do you think are missing in the industry?

David: Healthcare software programs that can predict the cost on portfolios once someone enters retirement.

John: Lastly, What do you think advisors need to focus on in the future to be successful? 

 David: Every advisory firm should have a strong philosophy and the discipline to stick to it.

Why potential clients undervalue the work of financial advisors

1 Penny CoinDo you know why potential clients consider you too expensive?

As the dust continues to settle post-RDR consumers are adapting to a fee-only landscape. Though your existing clients are comfortable with this model, refugees from the land of commissioned sales don’t feel the same way. Even for those who have never had a financial advisor the costs often seem high. Why is this?

Price anchoring

Consumers find it difficult to value your service because they have a poor mental price anchor. When deciding whether something is expensive or cheap we use past experience and a “comparable” to determine fair value. Without a price anchor it is extremely difficult to value anything.

Most people have never bought financial advice and they probably don’t have too many friends who have bought it either so they often look at the fees an accountant or lawyer would charge to judge fair value.

Unfortunately, you probably have a completely different charging model to a firm of solicitors. How many businesses do you know that charge people on assets under management? Not many. To get potential clients to happily pay your fees (and value your work) you need to break the link between your business and their faulty price anchor.

Two ways to fight faulty price anchoring

Compare your business with something more expensive – The obvious thing here is the time, cost and knowledge required for the person to do their own financial planning. With all your years of experience it would take even the most dedicated student many more years to reach your level of knowledge.

Don’t just say I’ve been doing this for X years so I am very experienced. Calculate it to the Pound. You don’t need to throw this figure in their face, but it is good to have in your back pocket. At the very least you should know how many hours your service saves them from doing it themselves (if they even could).

Don’t do business like an accountant or a lawyer – On a psychological level if your potential client’s experience of doing business with you is different than with another business then they wont’ compare prices. Just like you wouldn’t compare the prices of McDonald’s and a fancy restaurant.