Financially Speaking | Fall 2019
The Secret to Earning Lifelong Clients
Finance professionals must invest in achieving their clients’ goals if they want to be their most valued—not just their most trusted—advisors.
Mark J. Gilbert, CPA/PFS, MBA
President, Reason Financial Advisors
Best Practices in Financial Planning
“The reports of my death are greatly exaggerated.” This quote attributed to a healthy Mark
Twain in 1897—nearly 13 years before he died in 1910—was never spoken. Instead, Twain
had written a note to an inquiring reporter which concluded, “The report of my death was
an exaggeration.” Nevertheless, the misquote is quite fitting in our profession.
I think of it whenever I read or hear about a successful, independent, small financial planning
practice. You see, an industry-famous report on trends in the financial advisor business was
published in 1997 that predicted the demise of small and mid-sized firms. Big brokerage
firms progressively rolling out robo-advisor services to capitalize on technology trends were
going to accelerate the irrelevance of small firms. Yet, here we are more than two decades
later, and advisors, vendors, and especially clients can attest to the value provided by small
and mid-sized personal financial planning practices.
I suspect this is the case with most small businesses run by CPAs and other advisory
professionals. Why haven’t large, ensemble-type firms, with seemingly endless financial
resources and the ability to price their fees more competitively, driven all smaller providers
out of business? Because it comes down to the value provided by the small survivors.
Financial, tax, and investment planning services are highly personal, emotionally sensitive
activities to clients. Not just because of the significance of money and wealth in society,
but because of their impact on clients’ goals for themselves and their families. Clients look
for more than just the lowest price or the most efficient delivery method when choosing to
work with a financial or tax professional—they look for value.
Here are some ideas I’d like you to explore on your path to becoming your clients’ most
valued financial advisor.
The phrase “client-centered” means something different to each of us, but above all, I think
it means doing the right thing for the client. In my business, there has been a lot of talk
about following a fiduciary standard of care and making decisions that are always in the
client’s best interests. Whether or not such a standard ever becomes a regulatory
requirement, I think it’s safe to say that it’s a best practice. Clients expect this of their
advisors. And in this social media age, where buyers of services have an instant platform
upon which to report how well their providers treat them, the risks of failing to deliver
services in a transparent method where clients are pleased with the way you work with
them are just too great.
The good news here is that smaller providers often have more flexibility than large firms in
being able to act in this client-centered manner, providing more time per call or meeting
with each client in order to reinforce the value of the relationship.
STRESS YOUR UNIQUE SERVICES
All of us provide some services that can be easily replicated by other
providers or even technology. Using low-cost investment products
like exchange-traded funds and index mutual funds in client
investment portfolios is commonplace among financial advisors. So,
not surprisingly, this aspect of the work is almost never ranked among
the top three or four things that clients value in their relationships.
Instead, good advisors focus on understanding and achieving the
client’s real goals—allaying their fears, providing for their families,
helping them to achieve peace of mind. The key to developing a
client-advisor relationship that lasts is becoming invaluable to a
client in areas like these, rather than the areas where many
providers can offer their services.
I think this is exemplified by the fact that in my firm, we’ve had hardly
any client inquiries about portfolios during the bouts of high volatility
in the stock market this year. We have worked hard to manage
client expectations regarding portfolio returns. We’ve tried to set
performance goals not in terms of how well the S&P 500 or Dow
Jones Industrial average does, but instead according to their personal
financial plan, which is more meaningful since it accounts for their own
goals like retirement, education funding, or passing wealth to their
children and grandchildren. This approach resonates with clients.
Similarly, the technical expertise needed to prepare tax returns,
even complex ones, or to set up a business owner’s accounting
system, is of secondary importance to the client. I believe tax and
accounting clients mostly are looking for a CPA who can explain
what the numbers really mean and make solid recommendations
for improving their financial situations through lower tax liabilities,
greater revenues, or improved cash flows.
OFFER NEW SOLUTIONS TO OLD PROBLEMS
How much has changed in the last 10 years in how we live our lives?
If your mind quickly goes to technology, know that your clients have
come to expect and appreciate innovative approaches in their
relationships with their advisors as well. Improved communication
using mobile apps, video conferencing, and online account access
is something we can all take advantage of in our practices.
Among human approaches, developing relationships with other
service providers in order to offer a more cohesive solution to a
client’s problems is also worth exploring. For example, my firm is now
partnering with an independent insurance agency to provide
no-commission annuity, life insurance, and disability insurance
products to clients who will benefit from these products. The agency
representatives possess the proper licenses in order to properly
analyze a client’s insurance needs and sell the appropriate insurance
product. However, my firm continues to maintain the overall client
relationship. Previously, as a fee-only advisor, I generally referred the
business opportunity out to insurance professionals whom I trusted,
but I did not maintain the same level of control over the relationship.
The ability to develop this type of working relationship between
professional services providers did not even exist until just a few
years ago. I believe it has the potential to meaningfully change the
way advisors handle insurance opportunities.
The most important takeaway from my comments here is that we
as financial, tax, and accounting professionals must always be
thinking about our clients’ real goals and not just the good
investment returns or income tax refunds we are trusted to provide.
When clients get the sense that is happening, we become not only
their trusted advisors but their valued advisors.