When people ask me what I do, I say, “I help my clients make informed financial decisions”. This tag line, or elevator pitch, is more enlightening to the listener than telling them what I am, which is a financial planner.
The strategic issues for my business over the past 18 months have not been around finding clients to help with their financial decisions, but rather making sure I am working with the right clients.
As a licensed adviser in Hong Kong and Australia, based in Hong Kong, I have a foot in two very different camps. Australia’s Future of Financial Advice reforms became mandatory in 1 July 2013. They introduced a statutory fiduciary duty for financial advisers to act in the best interests of their clients; they banned conflicted remuneration structures including commissions and they require advisers send their clients annual fee disclosure statements clearly documenting all ongoing fees they pay.
The last two requirements are pretty black and white.
Hong Kong, by contrast, has many shades of grey around the same issues but is moving increasingly towards more defined financial advisory service standards and certainly greater fee transparency.
As an Australian certified financial planner, I’m also bound by a code of ethics which cannot be applied discriminately according to where a client lives or invests, it is applied to all my clients.
A two-way street
Weighing all of that up, it is very clear that the right client for me is a client who is fully informed about the fees I charge and is willing to pay them. That means I need to deliver a service that justifies the client’s choice of my service-linked and/or assets under management-linked fees.
This transparency leads to a very open and honest discussion about what the client requires; what I can deliver; and whether the relationship is sustainable for both of us.
These conversations can be tough for both parties and need to be handled with patience, coolness and care.
My advisory services essentially follow the classic six-step financial planning process so budgeting, cash-flow planning, tax-advisory, investment portfolio construction and maintenance, insurance services and estate planning issues are all dealt with.
Directing performance
In many cases I may refer work out so I am a bit like being a conductor of an orchestra on the client’s behalf. I prefer to work with clients for whom I prepare a full financial plan as that ensures my advice across all areas, given the breadth of my knowledge of the client’s situation and requirements, is more likely to be appropriate. But some clients do not want a full plan, just ad hoc advice on a particular situation and this means treading carefully to ensure I have got the right end of the stick.
Most clients place funds under management with me and this has the advantage of not just creating recurring fee income but of wedding the client more closely to me for delivering ongoing advisory services that enhance their position over time.
I have some clients I’ve worked with for nearly 20 years now and they will not make any financial decision without consulting me. These are satisfying, and sometimes very demanding, relationships.
Explaining the value of my tangible and intangible advice takes confidence built from a strong skill set, client empathy and clear communication of the benefits to the client.
It also requires integration of the following business strategies:
- Working from referrals as the client is already predisposed to working with me.
- Qualifying prospects at a complimentary first meeting with a prerequisite for the client to provide enough advance information so I know what to focus on. If the client is not right for me (I cannot see where I can add value) I provide helpful tips while pointing them elsewhere.
- Providing written confirmation of my service offer, my fees and my expectations of the client.
- Keeping track of client work and its benefits to support regular discussion about the value of the service – often this is more for my benefit than the clients as once they have worked with you a while they recognise the value.
- Maintaining a strong professional network to refer work in and out.
- Understanding the direct and indirect costs of my business and pitching fees to be competitive and fair to the client and worthwhile for me.
Two things drive my business – enjoying my professional engagement with clients and the community, and meeting my lifestyle goals. It does not require a huge number of clients to meet my goals but it requires focus, diligence and discipline to ensure I help the right clients make informed financial decisions.
