There are many aspects involved in running a successful financial planning practice, including the things clients can see and the things that lie beneath the surface. Milana Pokrajac and Jason Spits outline the top tips for a more effective front and back office.

Marketing and business development

Listen and they will talk

We often hear our friends and colleagues brag about their doctors, plumbers, builders and hairdressers, mostly because these professionals are good at client engagement.

Referrals are still the most effective way financial planners acquire new business, but the tricky part is getting them to recommend their adviser to someone they know.

This is where soft skills come in; getting the client to walk away happy and providing them with a positive experience will prompt them to talk about it later on, said Anne Fuchs, founder of Pinnacle Practice.

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“Advisers need to stop selling and listen, ask – listen and ask – and understand why the client is there,” Fuchs said.

“We’ve got all this emphasis for collecting numbers, but the client journey has very little space allocation in terms of data collection,” she added.

“Rather than asking clients questions about what they like, we should ask what they would like to see as part of the service offering.”

Create a virtual community

Social media is a great platform advisers can use to communicate with their existing clients, have their voice heard on many issues and market themselves to potential clients.

However, they must know how to use it properly.

“You don’t want to be that person standing at the front of the shop yelling ‘bread is on sale’,” says Olivia Maragna, founder of Aspire Retire Financial Services.

“The biggest thing I always say about social media is you need to have a plans as to what you want out of it and make sure you can get value out of it; don’t shoot randomly into the ether,” she said.

Once advisers decide to market themselves using Twitter, Facebook or other social networks, they need to create a community and balance the content they put out, according to Wealth Enhancers managing director Sarah Riegelhuth.

“It is absolutely critical to spend time and money on web presence, but be personable – post a combination of finance-related content and personal stuff,” she said.

“You need to put some personality behind yourself and your staff.”

Work with other professionals

Addressing a broad range of clients’ financial needs does not necessarily mean advisers have to diversify their own services. They can instead form referral partnerships with lawyers, accountants, mortgage brokers and other professionals as an effective way to grow their client base.

However, as Fiona Mackenzie from Macquarie Practice Consulting recently pointed out, you must ensure you have a great personal relationship with these professionals, or they will not feel comfortable sending their clients your way.

“They need to be both a good match with your business and be ready to build a relationship,” Mackenzie said.

“In the same way that you need to understand how engaging a referral partner can benefit your business, it is important for your potential referral partner to really understand your offering before they engage with you too.”

Client engagement

Focus on the ‘why’

Research shows clients are 80 per cent likely to refer you to their friends and family if you make a good first impression.

This’s why the first conversation with a potential client is crucial and shouldn’t be purely about the money, according to Wealth Enhancers’ Sarah Riegelhuth.

“It is very much client-centric and what they want in life; it is not based on ‘I want X amount of money’,” she said.

“We don’t talk about money, we talk about the family tree, for example, and we build rapport.”

Aspire Retire Financial Services’ Olivia Maragna said her first question revolves around the reason of why the client picked up the phone and got in touch with her.

“That’s where they’ll tell you what’s bothering them,” she said.

However, advisers need to make sure they can add value and give clients a positive experience. Otherwise, Maragna said, the relationship will suffer.

“In our industry, there are advisers who take clients they shouldn’t take on,” she said. “If we don’t think we can add value, we point them in the right direction rather than adding them to our client list.”

Manage the relationship

Record-keeping is no doubt one of the most important aspects of compliance – and new technology has definitely made life easier in this area.

However, research has shown many financial planners fail to successfully utilise some of the very useful client relationship management (CRM) tools offered as part of financial planning software.

Many major software providers offer CRM features which allow advisers to view clients’ birthdays, policy expiration dates, review dates, to-do items, as well as the more complex back office elements (see pages 16 and 17) – all of which could help engage or re-engage clients.

Client engagement needs to be a very structured process, according to Riegelhuth.

“We use mind-mapping software,” she said. “We customised a mind map based on our process and we use it to get everything we want out of a client.”

A 2011 Technology Investment Adviser Technology Report found many planners still used Microsoft Excel as their main software provider.

Give them homework

While the initial meeting is all about clients’ goals and aspirations, advisers need to know everything about their financial situation, too.

But doing the fact finding during the initial interaction can put them off, according to Anne Fuchs from Pinnacle Practice.

“There is only so much time clients can allocate to their adviser,” she said.

This is why the fact find sheet should be given as homework.

“We ask that they complete the fact find before they even come in, so that we can examine their goals and objectives against their financial situation,” Riegelhuth said.

“Sometimes their goals will be unrealistic, but at other times they can be too modest and that’s where the adviser comes in with the facts about their financial situation.”

Under the bonnet: making the front-office look good

Setting up the systems

There would be few, if any, client-facing financial planners who would admit they entered the profession to become involved in the administration of a financial planning practice. For most, administration systems are something that grew to support the advice and the client – and as such are still just the means to that end.

Zurich Financial Service national manager for sales strategies and research Marc Fabris said that the best administration systems are not always run by those who have invested in software solutions but by those who have ensured accountability across their processes.

“Not all planners have adopted a fully fledged technology-driven administration process in their office but it does not mean they do not have well working systems,” Fabris said.

“What they do demonstrate is that any practice which is looking at shifting to using planning and administration software should be very clear what their process is before committing to tools to drive that process.”

MLC head of practice management Jasia Fabig said good administration systems come from clear workflow models but also familiarity with procedures by all those involved in the processes.

“They are also systematised so that in the event that someone is removed from the process other people can still make it work and still continue to provide advice and client support,” Fabig said.

“In the event planners are not using software solutions, I have found they are ensuring their processes and systems are well-documented and no-one in sophisticated planning practices is doing otherwise.”

Fabig said software is one of the best methods on offer that planners can use to make administration improvements. She recommends planners choose commercial third-party providers when choosing to implement a software solution.

“The larger providers have already made the investment and commitment to the financial planning market and while some planners may prefer to build their own, should they be directing time and effort to something outside their core focus?” she asks.

Fabris said modern planning software can be criticised for having functionality not required by some planners, but it should be considered as more than a planning and portfolio management tool.

“Financial planning software removes any single-point dependencies in the administration process and industrialises the process. It can appear to cost more but it creates efficiencies across the business and drives continuity and accountability while creating an audit trail,” Fabris said.

Building people power

However Fabig sees human resources management as a new area of development for financial planning practices who have been focused on clients, compliance and their own levels of training and knowledge.

“Planners need to do the basic things such as setting out clear job descriptions, areas of responsibilities and regular reviews to ensure and lift staff satisfaction and engagement.

“Being aware of staff skills and personalities and using them accordingly in the business has also resulted in better and longer staff retention in some of the best practices that we have seen,” Fabig said.

Providing areas for staff to engage in the business planning process is also useful, said Fabris, with better planners using staff to help find and reach conclusions – while others struggle to proceed after informing staff of what will happen and expecting it to take place.

“Participation is the key which builds engagement but also accountability which often leads to staff looking at further ways to meet the aims of the business and the role they have been given.

“Asking staff to participate also means not having to talk them into further education or development because they can see the need and benefit,” Fabris said.

However Fabris said planners looking to improve their own educational standards and that of their staff should look beyond the minimum standards.

“Look at the Diploma of Financial Planning as a baseline position and work upwards from there wherever possible, but don’t overlook on-the-job experience as well.

"A good industry education is a combination of the necessary academic training but also personal interaction with clients and mentoring from a more experienced professional,” Fabris said. 

Marking out the paper trail

Financial planners have long been aware of the need for accountability and a clear audit trail but under the Future of Financial Advice (FOFA) regime these requirements will become increasingly important.

Here too software can play a role, tracking file notes and client-planner interaction, but Fabig warns that using software as the only solution may still leave planners exposed.

“Software is useful in this regard but it is not designed to meet every licensee’s compliance requirements nor all aspects of the relevant legislation and regulations under which the planner is providing advice,” Fabig said.

“Given this, planners should, under guidance from their licensee, create their own checklist and standards and ensure their advice and administration process are covered by the checklist and standards.

Fabris said planners have come unstuck in a client dispute after files were lost and the planner had no information with which to respond. He recommends that planners consider replicating their paper trial offsite.

“Moving a complaints and compliance system online or into a digital system is necessary to create a system which is easily audited and also secure against physical or planning disasters which may strike a practice.”

“This relates closely to building a business continuity system as well, as they will share many of the same features, and should be checked and tested regularly,” Fabris said.

He recommends testing a business back-up system at least every six months and having an annual business continuity day where all systems are checked, updated and tested.

Fabig said planners are usually well prepared for selling their business but not for being out of it for any period of time due to sickness or family matters.

“Planners often develop their business and their processes but they also need to develop staff members and key people to ensure the business can function for the time they may be away. This also means appropriate business planning around insurances and contingency plans,” she said.

“We have collected data that suggests clients who have dealt with only one person will leave a practice if they cannot access their planner, but are likely to stay if they have developed a relationship with the practice itself and not just the planner who provides them advice.

“Planners who don’t address this reflect a short-sightedness they would advise against with their clients.” Fabig said.