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Become a Gen-Savvy Financial Planner

Cam Marston.jpg2017 FPA Retreat Speaker Cam Marston

Any business situation today—from hiring new employees to bringing on new clients—will likely involve at least two different generations, and sometimes three or four. If you feel out of touch with generations different than your own and are perhaps hesitant to work with them, Cam Marston offers this advice: understand your own generational biases first, then have empathy for others.

Marston, a leading expert on generational change and author of The Gen-Savvy Financial Advisor, is teaching people of various generations—matures, baby boomers, Gen-Xers, and millennials—how to understand each other and work together.

Marston will present at FPA Retreat, April 24–27 outside Atlanta, Ga. Register for Retreat here. Below is an excerpt of a February 2016 Journal 10 Questions interview with Cam Marston. See the original article here.

1.) What are some things financial advisers should know about successfully working with millennial clients?

First, most of them are asset poor right now; they simply don’t have a lot of resources. Second, they are very attuned to their parents. The millennials and their parents have a tight connection. A generalization is that they will listen to one another, which is an opportunity for a warm lead from baby boomer parents. Third, when you introduce yourself, put content on your website, or in any sort of promotional moment you get, you need to focus on the client and how they’ll change and benefit from working with you.

Fourth, millennials are easiest to work with in groups. They tend to like to be in groups of two, and three, and four. When calling on them or holding events, you want to make sure they come in pairs or in threes because they will much more likely show up than an individual who doesn’t know anyone at the event. So schedule opportunities for small groups of millennials to gather and hear your proposal or your information.

2.) What about Gen X clients?

The apex consumer in Generation X today is the Generation X female. And when she is a mother of a young child, her decision-making and referral authority is unparalleled. Our society has given mothers of young children the ability to tell people what to do, what to buy, and where to shop in a way we’ve never seen before. So if I’m an adviser and I’m engaging a Generation X female with young children, I must treat her very, very well, because her ability to refer people to me is enormous.

Secondly, if she is married with young children, she is more often than not the CFO of her household. As much as the husband may act like he is the decision-maker, when the two of them are alone, she will determine whether I get the business or not, and she still has the power to refer. So when I’m dealing with Generation X, I’m keeping a keen eye out for the influence of the Generation X female. And my prediction is the millennial female will be exactly the same with a power of 10.

Know that the Generation-Xer is a “stalker.” Before ever meeting you in a business environment, they will have gone online and done a good bit of research on you. So to prepare for doing business with a Generation-Xer, make sure your online first impression is sparkling and squeaky clean.

3.) What are some things that financial advisers should know about successfully working with baby boomer clients?

A distinction needs to be made between leading and trailing baby boomers.

Leading baby boomers, born 1946 to 1955, are the oldest portion of the baby boomers. Population-wise, they’re a smaller segment of the boomers, but their attitude is unique in that we appeal to the older baby boomers with messages of: you’ve worked hard, you’ve paid your dues, you deserve the fruits of your labor. The systems of the nation, Social Security, etc., were set up to reward you for the hard work you’ve done; let’s help you enjoy that through retirement planning.the-gen-savvy-planner

The younger baby boomers, born 1956 to 1964, are the more populous section of the generation. The great recession of 2008 hit them hard. They are of the age that many of their children should have been getting a toehold in their careers when 2008 came around, but due to the economy those younger boomers had to continue to supplement some of their children’s needs.

Bottom line, those younger boomers wear a brave face, but inside they are horrified at their retirement prospects. They haven’t saved enough. Their defined benefit plans have been frozen, eliminated, or were never offered to them. They’ve not taken advantage of the 401(k) plan—they realize in hindsight—the way they should have.

The adviser needs to go to the trailing baby boomers and give them a message of hope. Not a message of entitlement, or you deserve it, or you’ve worked hard, but a message of hope that is timely and personalized, which is: “There is still time to get you to this goal. We can create a plan that matches your need.”

Schulaka Carly_resizedCarly Schulaka
Editor
Journal of Financial Planning
Denver, CO


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Financial Planning Priorities for New Parents

Everyone in my life is having kids. And, as the fee-only financial planner in my community, I’ve frequently been asked: “How do I set up a 529 college savings account?”

It’s a good question. But, as another adviser used to say, “it’s the wrong question.” While opening a 529 college savings account is usually a good idea, it’s very low on the list of financial planning priorities. Why ins’t a 529 college savings account a big deal?

Without a 529, attending college is still possible via either student loans and/or work-study programs. Moreover, there is even the chance that higher education might be free in the future, or that your client’s child determines that college isn’t right for them. Either way, not having a 529 doesn’t mean a catastrophic life event for you client.

I’m not saying don’t create a 529 account. I’m just saying that a client’s attention, energy and time are extremely limited—especially if they’re a new parent. So, if a client only has so much time in his/her hectic schedule, focus on the financial planning moves that will make the biggest impact.

What Planners Need to Emphasize for New Parents
A Will. While having a conversation with a client about their own mortality may not be easy, our profession knows that this subject is very important. Parents of minor children definitely need a will. In the will, it is critical to designate the names of the godparents in the instance that both clients pass simultaneously in an untimely manner.

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To illustrate the importance of a will, consider a worst-case scenario: Without a 529 account, a client’s child may have to resort to student loans to finance his/her education. Without a will, a client’s child may end up in a state-run orphanage. Of those two scenarios, which single issue is most dramatic—and which issue should receive the highest priority in terms of prevention as you advise new-parent clients?

Life insurance. You likely don’t need me to convince you that life insurance is important for new parents. The point here is that term-life insurance is infinitely more important than funding a 529 college savings plan. Household breadwinners need to designate their spouse as primary beneficiary with godparents (outlined in the will) designated as the contingent beneficiary.

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Illustrating a worse-case scenario to your client is the best way to effectively communicate the value of prioritizing life insurance over college funding: it’s more important that a client’s child has food on the table, clothes on his/her back and shelter over his/her head for ages up to approximately 18, rather than money for college.

Disability Insurance. In the context of financial planning moves for new parents, a disability insurance policy plays a pretty similar role as life insurance: providing money to fund a child’s lifestyle when your client (the parent) is no longer able to do so. For this reason, it’s much more important than a 529 plan, with a disability insurance policy providing money for food, clothes and shelter.

Prioritize Financial Planning Needs for New Clients

So, while having a college savings account is certainly a “nice-to-have,” it’s not a make-or-break financial planning move. A 529 college savings account is simply not that important. What is very important for parents (or prospective parents) are a will, life insurance and disability insurance. Address those three items FIRST, and then work with clients to open up a 529 college savings account.

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Jon Luskin
Fee-only Financial Planner and Fiduciary
Define Financial
San Diego, Calif.

Editor’s note: Find more of Luskin’s blogs about personal financial planning for employees of Deloitte at UncleDmoney.com.


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3 Critical Practice Management Areas That Demand Attention

The industry has changed and it is more important than ever to have a plan, not merely to survive, but indeed to thrive in today’s environment. Creating a simple road map can be the difference between growth and stagnation.

At a minimum, we believe that you should consider these three critical questions, commit your ideas to paper and create an implementation plan with time frames and accountability.

1.) How will you drive retention?
Client retention is the foundation for the long-term viability of your firm. You must consistently deliver the appropriate client experience for each of your client segments.

  • Communication: Do you have a systematized client communication plan? Are you communicating value with the right frequency and maximizing your delivery mediums? Are you offering educational opportunities to help clients better understand their plan and the financial terrain?
  • Appreciation: Do your clients know that you appreciate them? Do you need to go beyond birthdays and holidays and deliver more creative or personalized appreciation?
  • Expectations: Do you really know if you are meeting, falling short, or exceeding client expectations? Do you execute surveys or offer service commitment or expectation meetings to review the value of your deliverables? Do clients understand the totality of your offerings?

2.) How will you drive efficiency?
In an increasingly complex industry with expanding requirements, efficiency and scalability are critical to long-term success.

  • People: Are roles and responsibilities clearly defined and aligned? Are you leveraging your talent?
  • Systems: Are all repeated activities systematized? Do you have standard operating procedures documented in a shared folder for all to access? Is your business scalable?
  • Time and technology: Do you really know where and with whom you are spending your most precious resource—time? Technology can be a time-drain or a time-saver. Is every team member maximizing technological resources?

3.) How will you drive growth?
We could all fill our days by simply dealing with the reactive; however, high-performance financial planners stay committed to growth.

  • Organic growth: Do clients consider YOU their primary advice provider? Have you fully served them? Are you developing multiple generational relationships? Where can you leverage your existing relationships?
  • Introductions: Are you referable? Do your clients proactively provide qualified introductions? How robust are your centers of influence? Are you delivering value to partners who have the propensity to connect you with ideal prospects?
  • Marketing: How strong is your brand identity? Who is your niche audience and how can you attract more ideal prospects through off-line and online marketing avenues? Based on your demographics, what type of marketing (advertising, seminars, mail campaigns or event marketing) makes sense for your practice?
  • Expand the team: For firms that are fully systematized but at capacity, you may consider bringing on new advisers/planners as your most vital growth strategy. Be sure to consider your “ideal” candidate and conduct full due diligence so as not to upset the culture of the firm.

What decisions will you make and what actions will you take to drive retention, efficiency and growth in 2017?

Sarah E. Dale, President of Know No Bounds, LLC

 

Sarah E. Dale
Partner
Performance Insights
Atlanta, Ga.

krista_sm

 

Krista S. Sheets
President
Performance Insights
Atlanta, Ga.


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Goal Setting: How to Make 2017 Your Best Business Year Ever

Investing time to strategically plan their goals for the upcoming year is the single greatest return on investment an adviser can make. If you’re looking to create a breakout year and accomplish your most important goals, read the following to make 2017 your best year ever.

STEP ONE: Review Your Year
This step helps you focus on what you should be doing more of and what you should be quitting completely. Identify your successes and where you came up short. Figure out what worked and what didn’t. Which were good decisions and which were bad?

Answer these questions to properly reflect on your year:

  1. What did you accomplish this past year that you’re most proud of?
  2. What did you do to earn this accomplishment?
  3. What disappointments or regrets did you experience this past year?
  4. As you look back, what was missing from last year?
  5. What are three things you want to stop doing next year?
  6. What are three things you want to keep doing next year?

STEP TWO: Define Areas of Attention in Your Business
There are seven main areas of your financial practice that you want to be in optimal shape to see breakthrough success. Rank each area on a scale of 1-10 to see which are the lowest and need your attention.

  1. New business and client acquisition. Are you talking to enough qualified prospects and turning them into clients?
  2. Marketing and branding. When people get introduced to you or your brand, can they quickly identify how you can help and benefit them?
  3. Do you have all-star employees who are easy to manage?
  4. Client service and experience. Are your current clients receiving the right amount of contact and care so there’s no reason they would ever leave you?
  5. Do you have the systems and processes set up so that the office can run if you’re not there?
  6. Time management and productivity. Are you spending time only on $1,000-per-hour tasks rather than $10-per-hour tasks?
  7. Expertise in planning and investment management. Are you continually increasing your knowledge in order to offer the best advice and recommendations to your clients?

STEP THREE: Create Your Future
Here’s the framework to follow when identifying your goals. Use this framework to develop five to seven goals for the next year:

  1. Write it down. Research shows that written goals are much more likely to be achieved.
  2. Suspend reality. Decide later if a goal is realistic.
  3. Think big. Have goals that are challenging enough to demand your full effort
  4. State in the positive. Focus on what you want to move toward.
  5. Have actionable goals. Write your goal as if it is already achieved. For example, say, “I have hired one new all-star employee that handles all paperwork prep and processing by 6/30/2017.”
  6. Time bound. Make sure there is a date of completion.
  7. Be specific. The more specific the goal, the better.

STEP FOUR: Bulletproof Your Goals
Advisers who achieve their goals are the ones who are motivated and who have a compelling reason why their goals must be achieved. So you can create powerful motivators for each of your goals, which will increase the chances that you’ll achieve them.

Take these steps to create motivators for your goals:

  1. (Again) write down each goal.
  2. Connect emotionally and logically with each goal by determining why the goal is important and what is at stake (both the positive and negative).
  3. Write down the top three to five motivators
  4. Review them regularly.

STEP FIVE: Take The Next Step
The last step—the most important step in the process—is where we start to take action to make our goals a reality.

  1. Don’t over plan. We naturally are attracted to planning. But sometimes it turns into a fancy way to procrastinate. We want to make sure we get started on our goals as soon as possible.
  2. Work backward and break up your big goals. Imagine the goal is already complete. What do you need to do each month in order for you to that moment? This will help identify manageable action steps.
  3. Schedule your goals. Set aside time each week to review your goals, motivators and progress. At the end of each session, identify the next step you need to take to reach this goal.
  4. Celebrate the small wins to motivate yourself.
  5. Start now.

Download this step-by-step worksheet to help you with this process.

dave-zoller

 

Dave Zoller
Financial Adviser
Streamline My Practice
Warrenville, IL

 


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Pushing Past the Upper Limit Problem

Have you ever wondered why you are not consistently having record-setting years? Oftentimes while coaching financial advisers and insurance agents, I have noticed specific behavioral patterns that kick in soon after individuals have experienced success.

the-big-leapGay Hendricks, the author of the book The Big Leap: Conquer Your Hidden Fear and Take Life to the Next Level has coined a term for this that he refers to as “the upper limit problem”—which he defines as the amount of success that you are willing to allow yourself to have.

Here is how it works: We all have an “inner thermostat” that is set on just how much success we are willing to allow ourselves to have before we do something to self-sabotage and get back to our comfort zone. Unfortunately, most people don’t know their thermostat’s setting, much less a process for inching to a higher setting.

How to Reset Your Inner Thermostat and Resolve Your Upper Limit Problem
Hendricks said that in order to get to the next level, you cannot solve the problem that is holding you back; rather you need to resolve the problem by gaining a new level of awareness about it. Let’s take a look at the four main zones that he refers to that explains where people get stuck.

The Zone of Incompetence. One of the most common zones that I’ve seen advisers and agents revert to when they start to experience success is The Zone of Incompetence, which refers to spending time doing activities we are clearly not good at. Take for instance the last time you were having a record month: as the days went on did you find yourself doing activities that your assistant could be doing? If so, it was most likely because you were self-sabotaging your time by not doing activities that could have contributed to your continued level of success.

The Zone of Competence. Let’s say that you are great at doing what should be your assistant’s activities, you’ve done them for years and you find yourself saying things like, “Well, she’s got plenty to do so it’s just easier if I do this one thing for my client instead.” The challenge with this is that it’s never just one thing. If you are finding yourself doing these tasks, you are in The Zone of Competence. You both could be doing these activities but the truth is that if you are already having a successful month you essentially are now giving yourself permission to stop doing your job and tackling items that your assistant really should be completing.

The Zone of Excellence. Successful advisers and agents find themselves in The Zone of Excellence when they are accomplishing activities that they do well and are getting compensated. Unfortunately, this can create a comfort zone which in the long term will hold one back from reaching their peak potential. In addition, you may find yourself falling into a rut doing what you do well but not liking what you are doing. In other words, if you are great at public speaking but are sick of doing seminars you may not be happy and thus need to find things you are good at and like doing. You will burnout otherwise.

The Zone of Genius. At some point, you need to ask yourself the tough question, If you couldn’t fail at your business, what is it that you really would love to be doing differently?” The answer to that question will lead you to The Zone of Genius, in which you are doing what you love to do. As a result, work won’t feel like work. In this zone time doesn’t fly but instead it flows; you are not exhausted, you feel fulfilled. Granted you will still have to work to make a great living but you would also be happy and passionate about your professional life.

Taking the Big Leap
Take a moment to determine what zone you are currently in. If you want to live your life’s purpose, then you must take a big leap of faith and commit to becoming the person you are meant to be by finding the work you love to do. Then express to your target market your unique abilities and genuine willingness to help them so that one day they too could be in a position to afford to do what they love to do. If you can take this leap, you will have done what Hendricks meant by conquering your hidden (or unknown) fear and taking yourself to the next level of work and life.

If you are ready to take your big leap, schedule a complimentary 30-minute coaching session with me by emailing Melissa Denham, director of client servicing at Advisor Solutions.

Dan FinleyDaniel C. Finley
President
Advisor Solutions
St. Paul, Minn.


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Top Blog Posts of 2016

Last year, 2016, was a record-breaking year in the number of visitors and views for the Financial Planning Association’s Practice Management Blog powered by the Journal of Financial Planning.

Here are the top 10 most-viewed blog posts of 2016:

No. 10: “Becoming an Authority: Establishing Your Financial Planning Career.” Emily Fisher, marketing copywriter for Advantage Media, gave planners tips on how to put themselves out there and attract new clients.

No 9: “Top Ten Tips to Implement CRM.” Jennifer Goldman, founder of My Virtual COO, gave planners insight into the best practices in order to maximize their CRM.

No. 8: “Fiduciary Rule for the Modern World.” This post covered the key elements from the press conference that announced the Department of Labor’s Final Rule (fiduciary rule and discussed FPA’s resources for its members.

No. 7: “7 Do’s and Don’ts of Collaborating with Estate Planning Attorneys.” Attorney Gary Altman gave planners insight on what you should look for when it comes to partnering with estate planning attorneys. This post was derived from an answer to a member question on FPA Connect.

No. 6: “9 Things Clients Need to Know about an Adviser.” Regular blog and Journal contributor Kirk Loury gave readers an overview of the things you should be communicating to your clients about yourselves.

No 5: “Advising Clients During Turbulent Times.” Professors Kent Baker (0f American University) and Victor Ricciardi (of Goucher College) gave insight into how to best handle clients who may be distressed during market downturns.

No. 4: “You Cannot Do this Alone.” In this post, Daniel Crosby, behavioral finance expert, published an excerpt of his book, The Laws of WealthThis post discussed the value financial planners bring to clients

No. 3: “8 Components of Social Media Policy.” Claudio Pannunzio, president of i-Impact Group Inc., offered planners the elements that should be included in a successful social media policy, including having a purpose, identifying authorized contributors and having an employee code of conduct.

1216JFP_BestOf2016_Cvr.inddNo. 2: “Framing the Conversation: What to Say in the First 60 Seconds.” Regular blog contributor Daniel Finley, president of Advisor Solutions, gave planners an outline for what to say to potential clients in the first minute.

No. 1: “How to Create Your Ideal Client Profile.” This year’s most-viewed blog post, another by Claudio Pannunzio, discussed how to successfully create an ideal client persona to better attract the clients you want to serve.
If you want to know what we determined as being the best of the Journal of Financial Planning, check out our Best of 2016 issue (picture, right) featuring a “2016 Personal Finance Year in Review,”  by the Journal‘s Academic Editor Barbara O’Neill.

Are you interested in contributing to the FPA Practice Management Blog? Email us with story ideas or content.

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Ana Trujillo
Associate Editor
Journal of Financial Planning
Denver, Colo.


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Staying Reasonable with Website Design

While most advisory firms have offices for client visits, the actual store front is the firm’s website. This is most often the place a prospective client first interacts with the firm and with portals becoming ever more common, it’s always the connecting place for clients. In the digital world we’re in, a stale adviser website raises questions and a contemporary design accelerates engagement.

Website design is a moving and subjective target. However, there are two important concepts that guide when to update an advisory firm’s website: 1) the diminishing return curve; and 2) the range of reasonableness.

Investing for the Biggest Benefits
The diminishing return curve is one of the most powerful decision-making concepts because it defines the value of investing to the benefits received. In the graph below, on the steep part of the curve (the “A” marker), greater benefits are gained for a given dollar invested.

loury_december-jpgThe further up the curve (“B”), fewer benefits are gained, ultimately leading to the curve flattening (“C”) where few benefits are achieved for the dollars paid. Generally, people often make continued investments expecting the same impact achieved with the first dollars; a linear relationship doesn’t exist. This leads to disappointment as assumed benefits fail to materialize.

For example, we see the diminishing return curve in portfolio risk management. The diversification benefit of the second holding in a portfolio is substantial, but the 30th holding has only marginal benefit (i.e. advisers often over-diversify portfolios leading to extra costs).

The flat part of the curve (“C”) is where resources are wasted. Waste occurs in failing to appreciate the “range of reasonableness”. This concept makes an essential marketing point: don’t be substandard, but being better than the best is unnecessary to win.

Generally, the range of reasonableness exists in the graph’s “B” area.

Monitoring for Shifting Curves and Reasonableness
People often have the mistaken belief that the diminishing return curve is static. In marketing the curve is dynamic and shifts with changing tastes.

For websites or marketing, a new curve doesn’t necessarily present itself at the onset of a design or presentation trend, but only after it achieves general appeal. This adoption occurs at very different speeds depending on the industry. In high-design businesses such as architecture, fashion and photography, shifts can occur in a matter of weeks. For wealth advisory, new presentation design standards emerge more slowly.

Knowing When a New Range Emerges
A new design trend that takes hold shifts the range of reasonableness such that what was once reasonable will soon be substandard.

We see this today across advisers’ websites, particularly independent firms that don’t have dedicated marketing resources. For example, a painfully large number of adviser sites still have the old tabbed menu that was within the reasonable range ten years ago but now is terribly stale. The new standard being a single page that tells a firm’s story in a graphical, vertical scroll.

Awareness of what is stale and contemporary doesn’t happen in a vacuum. Advisers’ clients and prospects (and advisers themselves) experience new website designs when visiting pages of companies in other industries. While wealth advisory isn’t judged for high-design achievement, the range of reasonableness does evolve based on other industries’ influence.

A Simple Monitoring Plan
There are five steps an adviser can do to keep a website in the range of reasonableness.

  1. Each quarter, take screen captures of non-financial sites’ home pages (e.g. news, sports, entertainment, shopping); these will be on the design frontier.
  2. Paste these captures in a document.
  3. At the same time as No. 1, visit major investment/wealth advisory sites and take screen captures of these sites’ home pages; paste them in the document too.
  4. If No. 3 shows designs similar to No. 1, the range of reasonableness (“B” on the curve) has shifted.
  5. Present the document to the firm’s web designer to incorporate the new design elements into the firm’s site.

Lost Business to the New Mandate
The competitive mandate is this: as new website designs and functionality become common in financial sites, an adviser’s market becomes accustomed to a new range of reasonableness. The now stale site (below the new range) implies a firm falling behind. First impressions do matter in decision making, and the greatest risk—and one unknowable—is the number of prospects that never contact an advisory firm that has a stale site. Remaining in the range of reasonableness is a small investment that brings valuable business benefits.

Kirk Loury

 

Kirk Loury
President
Wealth Planning Consulting Inc.
Princeton Junction, New Jersey