Long-gone are the days when financial professionals wore the term “salesman” with pride. Today that term in relation to financial advice conjures up visions of commission-hunting, singularly-focused product-peddlers out for the big payout at any expense. Increasingly, investors expect consultative relationships with financial professionals, built on trust and transparency, and based on the assumption that they’re working together to accomplish their financial hopes and dreams.
On April 6, the Department of Labor released a ruling calling for more advisors to do just that, by expanding the definition of a fiduciary under ERISA.
While the full effects of these changes will not be clear for months to come, the good news is, there are things you can do now to get ahead of the game and demonstrate to your clients that you’re best suited to meet their needs. Here are a few of them.
1. Be open to discussing the changing industry landscape.
While taking a deep dive into the impact of regulatory reform is probably not something you need to do with your clients, providing a basic explanation of the ruling demonstrates transparency and signals to them that you’re willing and able to keep up as the regulatory environment shifts, and above all, help them meet their goals.
2. Provide ongoing opportunities for collaboration and communication.
Whether it’s an interactive planning meeting in your office, or on-demand access to digital educational workshops, enabling collaboration and communication shows your commitment to prioritizing your client relationships. And a relationship-driven approach is more likely to result in a long-term engagement, which is better for both you and your client.
3. Talk planning and goals, not just products and gains.
For many reasons, and not just the fiduciary ruling, the industry is trending toward advice-driven businesses. Of course, investment performance will always be important. However, engaging clients in meaningful conversations about identifying goals and measuring success based on progress toward achieving them—versus the performance of an individual product—positions you to evolve with this trend.
4. Automate processes.
It’s the year 2016. Like any good business operating in the digital era, leveraging technology to reduce operational costs and streamline the client experience just makes sense. With the many solutions available to cut down the time it takes to generate reports, deliver and store important documents, reduce data entry, and track progress, investing in technology that adds efficiency to your business allows you to spend more time advising your clients.
5. Implement technology to increase transparency.
Technology has added transparency to nearly every aspect of our lives … want to compare the rates of 10 different hotels side by side? Want to read honest customer reviews of contractors in your area? We all look to technology to inform so many of our decisions, to guide our actions and to provide assurance we’re making the right choices for ourselves and our families. Leveraging technology adds transparency to the wealth planning process and helps clients better understand your services.
6. Enable clients to be active participants in the management of their wealth.
Having your clients buy into an interactive planning experience is key. Granted, some people will prefer to be more involved than others. Tools that encourage clients to understand the path, and more importantly, participate in the process for achieving their goals, helps them understand the value you add.
7. Take a holistic approach to their financial well-being.
Taking a holistic view of your clients’ complete financial picture gives more clarity and insight to make recommendations with your clients’ best interests in mind. Why? Because seeing how factors like spending habits, debt, income, and risk tolerance, etc. impact each other, helps you give more informed advice.
8. Be committed to demonstrating the value of the service you provide.
In 2015, there were roughly 285,000 financial advisors in this country. As the pressure to increase transparency and more clearly disclose and often justify fees, especially as part of this fiduciary ruling, advisors who can clearly demonstrate the value they bring to their relationships are ahead of the game—and the competition.
Bottom line is, good advisors come in all shapes and sizes. They come from different types of firms, have different areas of specialization, and different letters and licenses that follow their names. Regardless, checking your preparedness in response to the Department of Labor’s fiduciary standard ruling will only help to build confidence and trust with clients.