Last Updated on 24, March 2014
Financial advisers and Financial Planners are distinct occupations.
Most financial advisers earn a living by selling products. The “sales cycle” that an adviser employs is usually group into three stages namely: (1) Prospecting or leads generation, (2) Presentation and (3) Closing.
Typically an adviser needs to put an estimated 80% of his time in the first two stages. He would source for leads through various ways such as: cold-calls, open canvassing and direct mailing marketing. Once an appointment is made to meet the prospect, he would proceed with the Presentation of the product he wishes to sell. The Presentation stage may consist of multiple meetings because the first meeting usually involves some superficial discussion before the prospect is willing to listen to the Presentation. If all turn out well, the Closing will be made. Financial advisers dependent on commissions will only be paid if there is a Closing.
A professional financial planner mainly earns from fees paid by clients directly. The process is best described as follows: (1) Client Acquisition (2) Defining the scope of work and formalization through Letter of Engagement and (3) Commencement of work and finally 4) Delivery.
Client Acquisition takes about 20% of the effort while stages from 2 to 4 takes up the remaining 80%. Once the Letter of Engagement is signed by the client and the planner, both parties are contractually bound to it. The client is legally obligated to pay for the agreed fee and the planner is similarly obligated to deliver the work to be done.
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