Are you currently your own worst enemy?

It’s annual revision time and under the new legislation, you have to ask your client to sign an opt-in form that will allow you to continue to earn your annual fee for the next two years. And if he/she does not sign, you cannot take the fee. The reality is, though, that your client’s decision will not be based on his/her expectation of your service going forward, but on his/her experience of your service to date.

If this legislation is indeed enacted, you are very possibly already in that period of scrutiny. What have you done to ensure that your clients continue to allow you to earn an income?

Building lasting relationships

It is simple, when you met the client, you built a rapport, established a relationship, did a full needs analysis, and provided him/her with a comprehensive record of advice considering all aspects of his/her financial picture, from a risk analysis to an estate plan.

You considered him/her as a person and not just the money, taking note of both financial and personal goals, the names of adult children and what retirement may look like.

Furthermore, since then, you have kept in touch in a number of relevant, non-intrusive ways and thoroughly reviewed the plan on an annual basis, bringing in specialists where applicable and you have set the scene for intergenerational wealth planning.

Or maybe you sold a product and haven’t spoken since. South Africa’s financial planning industry has come a long way in the last decade but not all financial advisers are entirely focused on the client. Some are still driven by commission and take short cuts in order to earn a living. The business model where an adviser is given a desk and a phone is too often unchanged and certain advisers, although under supervision, look for quick money by cancelling and replacing life products that pay upfront.

A solid foundation

Every financial planner needs to build a business with assets under management, because this will provide a base of income as well as intrinsic value when it comes to selling or some other succession plan. Businesses rely on clients in this case and client loyalty, and if entrenched relationships do not exist, the business will struggle to survive.

Relationships are built on trust and trust is earned over time. However, relationships are not as easy to establish as they used to be. Clients have options and are self-empowering, scouring the internet for information and interviewing multiple advisors. Depending on the generation, there are differing levels of loyalty or no loyalty at all and it is clear that financial planners have to work a lot harder for their money than they may have had to 10 years ago.

It takes time to build a business, and if that business is reliant on six steps and the long-term commitment of clients, it can be frustrating at times, testing the patience of the planner that does not have a base from which to work. What typically happens is that financial planners focus on risk business and then slowly move into investments, which is a natural progression if the remuneration model is skewed.

Run a client centric business

The most successful financial planners run client centric businesses. They take their clients through their process and set expectations and then they deliver on their commitments, year in and year out. They understand their own value proposition and seek clients with whom they relate and to whom they can provide a service that is needed and appreciated.

Within the context of proper financial planning, clients pay for advice. You are an adviser and advice is what you sell. Advisers and companies have their targets, but if you focus on the client and what he/she wants, you will be remunerated and you will build a sustainable business.