This blog entry is meant for financial advisers to read only.
In year 2006, I attended a workshop on financial planning. It was one of the workshop in the AFA Congress. The AFA Congress is an annual event attended by independent financial advisers. The speaker was a well known financial practitioner. His opening words were “Your commission is your obstacle”
Till this day, I remembered his words. I know one out of two visitors who are reading my blog are financial practitioners themselves. If your sales has been bad for the past few months, asked yourself is it due to you relying too much on selling products? If you are wondering what can you do besides earning through product sales, I suggest you relook at your entire business model and realizes that you relying on commissions via product sales will ruin you financially eventually.
In order to be a problem solver for your clients and in order to market yourself as a financial doctor, you must remove your dependence over commissions. To get commission – you must have product sale. To get product sale the client must have the money and willing to buy the product. As you all know, very often the client has no money or not willing to buy the product because most of the time it is actually unnecessary to purchase the product anyway. To be a financial problem solver and a financial doctor, you must not depend on product sales to earn a living.
Your business model must change to one of a financial planning for fees and you willing to look for new markets who are willing to pay you a fee to solve problems. To do this you must remove some obstacles first:
- Have you been churning and miselling products? If yes, I suggest you do the industry a favor by quitting altogether as the industry has no place for you. You will never be a problem solver but a problem creator.
- Is your company willing to allow you to be a problem solver? If you are an employee and the answer is no to that question, you have no choice but to leave the company because as an employee you must play by the rules set by the employer. Sometime working environment play a part as well. If your company requires you to sit at the counter so as to close as many sales as possible, your working environment prohibits you from doing proper financial planning.
- If you are a self-employed personnel, is your Principal willing to support your idea of fee charging basis? This is important because some of your prospects will call your Principal and asked whether is it “normal” for their representatives to charge fee. If your Principal say “no” to your Prospect, you will lose your prospect and in fact could even get a complain letter. Therefore your Principal must be supportive of you.
- Just as your Manager has to approve recommendations when you sell a product, your company must be able to appoint a senior person to vet and approve your written financial plan and ensure it conforms to the industry’s best practice. If your company does not have such a Manager or your approving Manager is one of those hard-core product-sale type and cannot understand simple written English, you have no choice but to look for another Principal.
- To be a problem solver, you must be allowed to refer your clients to other professionals in the industry. Sometime it may even be referring to your clients to other competitors. If this is going to be problematic, it is time you leave for a true independent practice.
- Are you a detailed person? A problem solver needs to be detailed. Calculations and the ability to read the “fine prints” are part and parcel of a financial planner.
- Administrative support: This is not trivial. If your client is going to pay you for a fee, they must pay to your Principal/Employer. You must not ask them to pay you directly. If they pay you directly, you are representing yourself. This will go against the rule of a single Principal basis in which all regulated personal must be representative of a single Principal. Besides, there is an implication if the client pay you directly – you are fully liable of all advice given. Your Principal will be completely not liable. If your Principal/Employer is not able to accept monies from your client for financial planning purpose, that means you cannot charge your client a fee.
- Competency. Are you competent to be a problem solver? Many practitioners have attended many professional courses and passed numerous exams. If you practice what you learn in those exams, you can do it. Your company could have brain washed you into unlearning these. If you are willing to unlearn the rubbish and relearn what you have learn in those professional course, you will excel. Some practitioners asked me how to write a high quality financial planning worthy of charging fee when their Principal provides no “template” to follow. There is no need for “templates.” Those professional courses will teach everything. Professional courses are like ChFC and CFP.
- No company is perfect and if you found one, you must not join it as you will make it imperfect. This being said, there are firms that are obvious obstacles to your success. Nevertheless, at the end of the day it is you who shall determine where you want your career to be.
If anyone wishes to know more about the industry, I’ll be please to chit-chat with you. No obligation, no fee but the only thing I would like is an extension of my friendship.
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