Financial Planners and Advisors: Developing Strategic Alliances for Success

It is the best of times, it is the worst of times. Rapid changes in the world of the financial services industry have brought about the need for rapid responses. The tried and true methods of doing business in the financial services industry have been tried by fire within the last decade, and what is proving to be true is that the only constant in business, economics, and life, is-change. (It is interesting to this writer that the word "economics" springs from a Greek root word that literally means "household management".)

Much of this rapid change is being driven on by technology. Technology, especially with regards to the financial services industry in the format of "information technology", is changing the capabilities that the average person-your prospective client-has; and along with them, it's changing you, too. You are expected to know more, to be more, for each and every individual prospect and established client. Indeed, the major corporations are quite aware of this fact. From breed-apart investment advisors Merril Lynch to insurance giant MetLife, the big financial services corporations are strongly encouraging, even demanding, that their Financial Advisors eventually become licensed as CFPs (Certified Financial Planners). If you are reading this and you are a registered financial advisor now, you should begin thinking like a CFP. The distinctions between the two functionary titles are already blurring, and the trend is toward eliminating that distinction altogether, eventually.

The technology that is driving a greater part of the changes taking place in financial services in our times is had by your competition and your clients. What this means for you and your client relationships is that you will have better-informed clients. They will be able to appreciate you more (and therefore give you more referrals!) and understand better when you are doing great work for them, and steering their ship to coming into the port they want it to come into. However, it also means that they can feel the right to be more demanding of you-and you need to have the right supply of know-how to meet their rigorous demands. The shadow side of this double-edged sword is that you can also have clients who are more misinformed than ever before and about more financial topics, having been led astray by some ChartSmart download that they believe they understand but in fact don't begin to comprehend. They will need you to be a true captain at the helm-and you will need to come out a true hero sooner or later, or else lose their business and that of anyone they will talk with concerning your "inferior" practice. And your competitors have the technology available to them that you do, too. Your prospect or client might check them out and, finding them every bit and byte more "knowledgeable" than you, switch their business over to them.

So. To keep your edge, you competitive advantage, you have to make technology your friend. You need to have a strategic relationship, an alliance, with technology itself. By doing this, you will be able to give your clients the personal touch, that value-adding servicing that they need and desire so much in this information-flooded age. But, in this day and age, forging this relationship is much easier said than done. What is happening in the financial services world now is what began happening in the science world about thirty years ago. Just as a scientist has to do, a CFP now has to set herself apart as a specialist.

Time was that the financial world rewarded great generals-after all, as a CFP you have studied over 100 different financial topics and you have proven to the Board that you have a good working knowledge of every one of them. And your practical purpose as a CFP remains unchanged: you are there to guide a client into creating a complete financial program that covers every financial aspect of his life, from taxes to kids' college funding to prosperity in investments to property matters, and all points in between. But, the fact is that the data that are out there on the Net and on DVDs and everything else are just too far-reaching for any one person to know everything about. Defining the secret to success may be, in the end, elusive; but the secret to failure is clear and simple: trying to be all things to all people. Nobody in any profession, no matter how intelligent or skilled he is, can accomplish this. For a long time, CFPs were expected to be jacks of all trades and didn't need to be masters of any. In the common mind, these are still a CFP's stipulations; but this concept is no longer reflective of reality.

How can you, the CFP, serve these two masters? You are expected to be-trained to be-a great general; and yet at once you must be a specialist, someone who is the great maestro in a certain area of finances-just say, for example, investing in derivatives.

You will have to formulate great alliances. You will need great relationships with other financial professionals who also, in turn, have to be specialists to engender their continued success.

You will make these top-notch specialists part of your staff. However, you don't need to have them even in the same office building as you occupy; you can, in other words, be a one-person practice (you don't need to have an empire; a hegemony will suffice!). No matter the setup of the network, these members of your staff (literal or metaphorical) will be your supporting cast, and your greatest asset. They will constitute your edge-the very aspect of your practice that makes you "a breed apart".

Who should comprise your staff of allies? A general guidepost dictates that your allies should include: an accountant ( preferably one who has his PFS certification) for tax planning; an attorney (preferably one who also has a ChFC certification) for estate planning; a CFA (chartered financial analyst) to help your clients with risk management and to keep them abreast of any significant changes taking place in the economic world; a CFS (certified fund specialist) to help those clients of yours to whom you recommend checking out mutual fund investments; a CIC (chartered investment counselor) especially to help out any of your clients who happen to have quite large amounts of money that they wish to invest; a CIMA (certified investment management analyst) to help your clients with portfolio balancing; a CMT (chartered market technician) to help your clients with such matters as hedge fund investing, ETFs, and the like; and a CLU (chartered life underwriter), in other words an insurance agent (to handle all insurance matters, not just life insurance). There is one more person you will want to have on your staff of allies, too: an IT specialist, who is there to keep your "wired" and to keep you abreast of all the latest software and programs that have been made available for you to learn about. You can be one of your own mentioned specialists-perhaps you have a real knack for insurance, or investments, or the analysis of the economy; but whatever your specialty is, become the absolute master of it, and then be the maestro of the orchestra (this is where you get to wear your General Hat) and send the rest of the financial planning details out to your allies. If they are not literally part of your staff, then the deal is that you send them business, they send you business. The entire process weaves a profitable web.

How do you go about building this staff, or this collection of strategic allies? You need to advertise the fact that you are seeking strategic alliances. Put your name in the papers and on the Net. Look up prospective allies in the local directory. When someone gets hold of you or vice versa, set up an appointment with them as you would with a prospect and take them to lunch or dinner. Prospecting for allies is thoroughgoing. "Interview" your prospective allies and see if they are in harmony with your philosophy of doing business and financial matters. Once you find someone that you think is compatible with your vision, network through them for your next staff member(s). Additionally, keep up your relationship: don't stop getting together for lunch, for workouts, for gatherings at each other's homes, and the like. In other words, be personal with them, not just professional-just like the way you need to be with your clients.

One thing you will really want to do in your practice, and want your allies to be in accord with, is to charge fees instead of commissions. Commission-based "selling" seems to the informed prospect or client as just that-selling. Nobody likes to be sold. People like to buy. If the people sense that they are free to buy your superior services, then they will not think twice about paying your fees. Commission-based "selling" is going the way of being the General. That is, out of style and out the door. People want to feel like they are being served, not like they are being asked to buy a product because it will generate a commission for the salesman who is leering at their wallets. When people have the means of doing so, they never mind paying for servants or for things like room service. Since you and your staff of allies will want to be doing business with people who have money enough to need planning for, you can assume that they will want to and be able to pay for you to service them. You are not a salesman-you are a servant. If you serve them, they will come.
Who should comprise your staff of allies? A general guidepost dictates that your allies should include: an accountant ( preferably one who has his PFS certification) for tax planning; an attorney (preferably one who also has a ChFC certification) for estate planning; a CFA (chartered financial analyst) to help your clients with risk management and to keep them abreast of any significant changes taking place in the economic world; a CFS (certified fund specialist) to help those clients of yours to whom you recommend checking out mutual fund investments; a CIC (chartered investment counselor) especially to help out any of your clients who happen to have quite large amounts of money that they wish to invest; a CIMA (certified investment management analyst) to help your clients with portfolio balancing; a CMT (chartered market technician) to help your clients with such matters as hedge fund investing, ETFs, and the like; and a CLU (chartered life underwriter), in other words an insurance agent (to handle all insurance matters, not just life insurance). There is one more person you will want to have on your staff of allies, too: an IT specialist, who is there to keep your "wired" and to keep you abreast of all the latest software and programs that have been made available for you to learn about. You can be one of your own mentioned specialists-perhaps you have a real knack for insurance, or investments, or the analysis of the economy; but whatever your specialty is, become the absolute master of it, and then be the maestro of the orchestra (this is where you get to wear your General Hat) and send the rest of the financial planning details out to your allies. If they are not literally part of your staff, then the deal is that you send them business, they send you business. The entire process weaves a profitable web.

How do you go about building this staff, or this collection of strategic allies? You need to advertise the fact that you are seeking strategic alliances. Put your name in the papers and on the Net. Look up prospective allies in the local directory. When someone gets hold of you or vice versa, set up an appointment with them as you would with a prospect and take them to lunch or dinner. Prospecting for allies is thoroughgoing. "Interview" your prospective allies and see if they are in harmony with your philosophy of doing business and financial matters. Once you find someone that you think is compatible with your vision, network through them for your next staff member(s). Additionally, keep up your relationship: don't stop getting together for lunch, for workouts, for gatherings at each other's homes, and the like. In other words, be personal with them, not just professional-just like the way you need to be with your clients.

One thing you will really want to do in your practice, and want your allies to be in accord with, is to charge fees instead of commissions. Commission-based "selling" seems to the informed prospect or client as just that-selling. Nobody likes to be sold. People like to buy. If the people sense that they are free to buy your superior services, then they will not think twice about paying your fees. Commission-based "selling" is going the way of being the General. That is, out of style and out the door. People want to feel like they are being served, not like they are being asked to buy a product because it will generate a commission for the salesman who is leering at their wallets. When people have the means of doing so, they never mind paying for servants or for things like room service. Since you and your staff of allies will want to be doing business with people who have money enough to need planning for, you can assume that they will want to and be able to pay for you to service them. You are not a salesman-you are a servant. If you serve them, they will come.