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You Need to be on the Same Side as Your Clients #fiduciary #fee-only

By January 10, 2014October 10th, 2016Financial Advisors

In my last two posts I set out the goals of this blog and told you why you might want to listen to me.

Hopefully, now that the holidays are behind us I can get to a weekly schedule. There is a lot I want to say, and I guess this is the best place to say it.

As I have written before, I’m not good at networking, I don’t do seminars, I don’t cold call, I don’t do a radio show, I don’t belong to a country club (though I can afford to and might if my wife takes up golf), and I don’t come from a wealthy family, yet my business is very profitable and growing quickly. I think a lot of my growth comes from the fact that I am independent and fee-only.

In creating or improving your advisory business, the first thing you have to decide on is how you will serve your clients. I think the best choice, by far, is to be on the same side as them. That means advising them as a professional, not as a salesperson. I don’t have a broker/dealer relationship and I sell no products to my clients. I am strictly fee-only, and as I have written before, that is not the same thing as fee-based. It’s the right thing for the clients and its the better business decision for you.

You may not be in a position to move to fee-only right away and I understand there are reasons for being stuck with an employer. I have been there. But you can work at a broker/dealer and still follow a fiduciary process, and in some instances, act as a fiduciary. As you go along that path, I can’t help think that you will eventually crave true independence, if you don’t already, and will do what it takes to get there.

If you don’t act as a fiduciary now, and if you have always worked for a bank, brokerage firm or insurance company, you might need to change your mindset. Too many smart people who could be great advisors get sucked into the sales culture of their employers and start to look at each client or prospective client relationship in terms of “what can I sell to them?” instead of “how can I help them?” It’s an easy trap to fall into because it is the ultimate conflict of interests.

I know a lot of people are scared of shedding their broker/dealer and insurance affiliations because they are afraid of taking a big haircut in compensation and will lose out on the big paydays. Get over it. You give up the big paydays and in return you get great long-lasting client relationships, a steady stream of prospective clients, and steadily improving revenues and income. It’s worth it.

Each of the last five years I have had between 35 and 60 serious prospective clients contact me and ask me about my firm. By serious, I mean I have had at least multiple verbal or email conversations with them, and/or I have met with them. Obviously, many of them don’t fit with my style or don’t become clients for different reasons, but a fair amount do.

I average 12 new ongoing wealth management clients per year. In those relationships we start with a financial plan and then I manage their investment accounts. In addition, I generally do 8-12 financial planning engagements each year where I develop a financial plan, but the clients either don’t have assets for me to manage or are not yet ready to hand over the reins. They manage their own accounts according to the dictates of their financial plan.

I know some advisors don’t want to work with clients like that, but in a world of Bernie Madoffs I can understand being reluctant to give someone else the power over your accounts. Often it just takes some time for people to get comfortable, but sometimes they never do. It’s ok. I actually like financial planning.

Why do people come to me? Sure, I have good experience and credentials and I get some referrals from centers of influence and clients, but that isn’t what attracts most people initially.

It’s because they want someone who is independent and who is not going to try to sell them something. That’s it. Really. They all say the same thing. They aren’t sure what they should do, they need advice, and everyone else they talk to wants to sell them something. They don’t want to buy anything unless they know its in their best interests because they have all bought products in the past that they have come to regret.

So they want to talk to somebody who actually can’t sell them anything and who is legally obligated to act in their best interests. People crave advice, not products.

Since they know I can’t and won’t sell them anything, when prospective clients come in, we have a real conversation. There are no agendas or preconceived notions on my part. We exchange hellos and we get them water or coffee and they sit down and I ask them one simple question – what brings you here?

Then I let them talk. Then I let them talk some more. Then when they finish and take a breath, I ask them an open-ended follow up question. Then another and another. They aren’t afraid to talk because they aren’t worried about what I am trying to sell them. They want to be heard and they want some advice. It’s a great start to a relationship.

At the end of the first meeting, when no advice has yet been given, and no decisions have yet been made, and they aren’t even clients yet, they all leave the same way. When they get up from their chairs, invariably, the one who was the driver behind coming to the meeting says they feel better already. It happened at my meeting last night. All I had to do was listen.

Then if we decide to work together, since I am not burdened by my employer’s sales agreements, I can provide objective advice and help them in whatever way best suits their needs. Its a great way to work.

In my next post, I will discuss being independent and fee-only and what that all means. I think there are a lot of misconceptions and a lot of my broker friends have a hard time wrapping their heads around it.





Michael Garry

Author Michael Garry

Michael Garry is a CERTIFIED FINANCIAL PLANNERâ„¢ practitioner and a NAPFA-registered Financial Advisor. He is a member of the National Association of Personal Financial Advisors (NAPFA) and the Financial Planning Association (FPA).

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