Category Archives: Getting New 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

How To Differentiate Your Financial Advisory Practice – Interview with Marion Asnes #FearlessFinancialAdvisorPodcast

A marketing focused interview with Marion Asnes on how financial advisors can differentiate their firms. Marion Asnes is the President of Idea Refinery a strategic marketing and communications consultancy for financial service firms. Previously she was the Chief Marketing Officer at Envestnet and Editor of Financial Planning Magazine.

Learn more about Marion Asnes

In This Interview We Discuss…

0:32 – How to differentiate a financial advisory practice managing $100-$500m

02:20 – Know how to grow by segmenting your clients

05:29 – Example – Corporate executives as your niche clients

7:35 – How to handle legacy clients that don’t fit your niche

09:30 – How to build your reputation in the community

12:30 – The power of running events

19:40 – How much marketing do I have to do to get results?

22:22 – How to better communicate with your clients

25:40 – Has it harder to be a good financial advisor today?

30:55 – What advice would Marion Asnes give to his 30 year old self?

Marion AsnesLearn more about Marion Asnes

Marion Asnes on Twitter

Interview MP3


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.

Do Knowledgeable Investors Need A Financial Advisor? [A Mathematical Approach]

BrainA never-ending challenge for the financial advisory industry is quantifying the value it produces for its clients. We know advisors help people set goals, choose investments and sleep well at night but what about the dollars and cents impact? As clients get smarter they’ll be able to construct their own passive, well-diversified and regularly rebalanced portfolio. They’ll become Knowledgeable.

As Michael Kitces mentioned a few months back “a well-diversified passive strategic portfolio is on its way to being totally commoditized”. Instead of catering to the average investor, advisors will have to work for the client of tomorrow. The Knowledgeable investor.

So the question is, what is the quantifiable value of a financial advisor for the Knowledgeable investor?

First, let’s define the knowledgeable investor. In my eyes the knowledgeable investor understands the following, which an average investor may not…

  • They understand they should have a financial plan. It may not be complicated or consider all the variables but they should have something.
  • A passive diversified portfolio is likely to meet their investment needs over the long term. Most active investment strategies don’t beat the index over sustained (10 year plus) periods.
  • They should rebalance regularly.
  • They should minimize fees (fund fees, transaction fees etc).
  • Investor psychology (i.e. overconfidence, loss aversion, mental accounting etc.) can lead to actions that limit investment returns.
  • Getting started with investing today means they will benefit more from compounding.

Importantly, the knowledgeable investor may understand the points above but never act on them and this gives an advisor the opportunity to force good behavior.

Quantifiable Benefits of a Financial Advisor

 1.    A Financial Plan

Knowledgeable investors understand they should have a plan and probably have something in their head but it is not a formalized IPS, a strict budget or a retirement number. It’s more like “max out my 401k and hope for the best”. This puts them ahead of most people but may not be enough for them to live the life they want. Even for those who have used retirement calculators or read the books the variables can be overwhelming. A financial advisor will give a knowledgeable investor a specific actionable plan. In my opinion this is the most valuable contribution an advisor can make to a person’s future.

 So what is the quantifiable benefit of a financial plan? Likely several years even a decade or more of retirement. That means you can spend less time working and more time with your loved ones. Put a price on that!

 2.    Managing Investor Behavior

The DALBAR studies (which compared dollar weighted investor returns with index returns) popularized the idea that the average investor jumps in and out of investments, buying high and selling low resulting in poor performance. Their conclusion was that “The average equity investor underperformed the S&P 500 by 4.32% for the past 20 years on an annualized basis.”

Further investigation led by Harry Sit and Michael Edesess showed these numbers were exaggerated and possibly even completely false. The DALBAR methodology failed to account for the fact that poor equity market performance during the 2000’s accounted for poor dollar weighted investment performance not investors jumping in and out of the market. Furthermore, earlier this year another DALBAR study showed that 55% of the reason investors fail to meet the index is because they didn’t have the capital to invest and buy at the lows. Therefore we must conclude that the importance financial advisors have in managing behavior has been overstated.

Despite the apparent failing of the DALBAR studies others have attempted to quantify average investor behavior. Russell Investments recently showed that if you had invested in the Russell 3000 index in 1984 and done nothing you would have performed 2.2% better than the average investor (using ICI’s monthly fund flow data to mimic the average investor). I had difficulty getting all the methodological details of this study so I’ll take it with a grain of salt.

What we can say is that the importance of managing investor behavior has probably been exaggerated but it is still significant. If an advisor can save an investor 1-2% a year through managing behavior this more than covers their advisory fee.

But what happens if you are a knowledgeable investor who needs little behavioral management? Then you’ll end up paying for something you do not need.

That’s the question knowledgeable investors have to ask themselves. Without an advisor how good will my behavior be throughout my investing lifespan? If you have serious doubts about your behavior an advisor could well be smart investment.

 3.    Fund Selection and Rebalancing

Another area where having an advisor could have a quantifiable benefit on the bottom line is in fund selection and rebalancing. Russell Investments have shown that a regular (monthly, quarterly annually) rebalancing policy can juice your returns from 0.51-0.93% annually.

However, knowledgeable investors are now well versed in passive fund selection and the importance of rebalancing. Any knowledgeable investor who has done a modicum of research knows Vanguard is highly recommended when it comes to minimizing fees and with their Life Strategy Funds you don’t have to worry about the rebalancing.

Frankly the knowledgeable investor doesn’t choose an advisor to help pick funds and rebalance unless they believe in active investing.

 4.    Tax Planning

A further quantifiable benefit of working with an advisor is the tax planning. Unfortunately, it’s difficult to find any statistics on the tax savings people accumulate from working with a financial advisor. Anecdotally it’s not uncommon to hear of advisors saving their clients 10’s of thousands of dollars. If these savings are invested, grow and compound the benefit of working with an advisor could be worth a lot more than managing behavior or selecting the right funds.

What investors have to ask themselves is whether their tax situation is complicated enough to realize significant savings. A regular W2 employee with a fixed salary is unlikely to benefit as much as business owner, with stock options and investment real estate. If I were to hazard a guess I’d estimate someone with a tax situation that is more complicated than a regularly salaried employee could save several percentage points on an annualized basis over their lifetime through working with an advisor.

 Dollar and Cents Return

So let’s put this into an example. Let’s assume you are a knowledgeable investor who is considering working with a financial advisor. Is it worth it? Well based on the details above the answer would be an emphatic yes….

Advisor Makes You Advisor Costs You
Proper Financial Plan – You end up saving an extra 5% a year Annual Advisory Fee – 1.5%
Managing Behavior – 1.5%
Fund Selection and Rebalancing – 0%
Tax Planning – 2%

Using the numbers above if we assume you have a $100,000 salary and have $250,000 in savings/investments.

Financial Plan  = +$5,000

Managing Behavior = +$1,500

Fund Selection and Rebalancing = +$0

Tax Planning = +$2,000

Advisory Fee = -$3,750

Net Benefit per Year = $4,750

 A knowledgeable investor working with a competent financial advisor is likely see a positive ROI over the long term so long as the expense is not too high.

I find it unlikely that for 20 years even knowledgeable investors can create a viable financial plan, which they can stick to, while simultaneously managing their behavior, keeping up with changes in the industry and optimizing their tax situation. It’s just a very difficult thing to do over a long period of time. Not impossible but very difficult.

The greatest achievers in any field have always needed coaches, advisors and people to keep them accountable. When it comes to investing doing it alone is as tough as it comes.

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How to write a testimonial that wins new clients

Risk Profiling TestimonialsThis week I wrote an article for the Institute of Financial Planning’s Training and Development newsletter. I got a few emails from financial planners thanking me for the advice. Read more here.