We are almost one-third of the way into the second quarter, and this year has already proven challenging. First, most of us have dropped the ball on our New Year's resolutions. In fact, the statistics tell us that 23 percent of people quit their resolutions in the first week, and only 36 percent make it past the first month. Unfortunately, that means many of our clients are probably facing headwinds in reaching the financial goals they were so eager to achieve at the turn of 2023.
Then there’s the economic market again proving to be erratic and unpredictable. We are living in uncertain times, and unfortunately, many more unknowns are on the horizon.
- Increasing interest rate environment - The Federal Reserve raised interest rates in March, and economists expect another increase in May. How might this work in your clients favor? How might it not?
- Inflation - The average U.S. household is now paying $450 more per month in expenses due to inflation. If inflation continues to increase, how will rising prices affect your clients' retirement plans?
- Market fluctuations - Will the market likely continue to be volatile, and how does that affect your clients' investments?
- Crypto exchange and SVB Bank collapse - What are clients to make of these occurrences?
- Housing prices - The real estate market is a benchmark we can look at to predict the economy's stability. So what are current housing prices trying to tell us?
- Mass layoffs - Will your clients be affected? What is the impact?
How this will all play out is yet to be seen. As financial advisors, it is not our job to pretend to know the answer. Instead, it is our responsibility to cut through the noise and help clients understand how all of this may or may not impact their plans and their day to day lives.
I don’t mean to be a Debbie Downer. Keep reading. There is opportunity amongst the uncertainty. Your clients need YOU more than ever.
What does this all mean for CLIENTS?
Let’s start with what our clients don’t want. In the information age, where we can access answers at the click of a button, the last thing they want is to be inundated with more noise. Instead, they are craving an advisor (a leader) who helps interpret what all this information means for them, their families, their businesses, their lives and their dreams. They need help deciphering how these mostly uncontrollable factors delay or, in some cases, improve the attainment of their financial goals. Essentially, our clients want to know if they are going to be OK. By helping your clients make sense of the world around them, you will position yourself as the change leader your customers crave.
What does this all mean for YOU?
Financial uncertainty is causing your clients to look at you differently, and consequently, this need is changing our business. Clients need a leader, someone who can manage the moment and help restore order.
Yet, in an industry where we have typically been compensated by the products we sell, it is often time-consuming and unprofitable to address all the financial decisions that can impact a person’s life. And the rub of it is most of us got into this business to help people; so, it is not in our nature to turn people away.
We do our best to navigate the needs of our current clients, while searching for new clients to buy new products so that we can get compensated. So it’s no wonder that 71 percent of advisors said they experience moderate or high negative stress in this industry!
In response, many advisors are reworking their business models and charging ongoing fees for financial planning advice and guidance.
You are your client's most valuable asset.
At the end of the day, your client is looking to you for direction. Think of yourself as the flight attendant who maintains order amid economic turbulence. Here's the scary part - it is time to start charging for your worth.
I challenge you to consider adding a service model where you charge annually for your ongoing guidance and real-time advice to your clients. After working with thousands of advisors to make this shift - I KNOW this is a challenging feat. So here are the steps that have worked for many advisors before you:
- Embrace a CEO Mindset.
- Develop a paid and complimentary model.
- Get really good at presenting these models to new clients.
- Practice how you will present your change in business model to your existing clients who haven’t explicitly paid you before. (This is actually a WIN, WIN (more to come in future articles)
- Become so convinced of your value that you have no trouble asking for the financial planning fee in year 2 and beyond.
Times are a-changin' -- we should, too.
The moment is now to modernize the financial advising industry and embrace our expertise. There has never been a better time to implement an ongoing fee-based cost model and serve your clients in such a meaningful way.
If this article has got your wheels turning, let me know! In future articles, I will be delving deeper into the five steps to implement an annual guidance charge.
If you already operate in this way, KUDOS to you! What made you move in this direction?
And if you disagree with my assessment, let me know that too. Differing opinions make the world go round; let’s chat about it.
Jaclyn (Jackie) Bradley, MSOD, a member of WIFS’ Philadelphia Tri-County Pennsylvania Chapter, is a co-founder of Mindshift Financial Coaching, a company built to help financial advisors break the vicious cycle of anxiety and make more money in the process. She has played a version of every role in an advisory practice, which means that she fully understands the complex range of problems that financial advisors inevitably encounter as their businesses expand.
Originally posted on WIFS website on April 28, 2023
