For financial advisors who are planning to switch their clients to a future ready business model (clarity around your value and fees-see previous blog post "The Future ready Financial Advisor) and process, here is one strategy that will help you build a process for getting there faster. Build two practices. One practice called the ideal business practice or new practice, and one called the old practice or non-ideal clients. The ideal practice which has clients that are a future ready business model and already are fully aware of your process,your fees, understand your value, and are an ideal win-win client (they are happy with your revenue and services and they are happy to pay the fees for your services which are fully transparent). If you have no clients under this new business, then create the new business process and create your value promise. Under the non-ideal or old practice, you must have a plan also for managing them. As a coach, I spend more time with financial advisors on building plans for non-ideal clients ( old practice) than I do ideal clients.


A simple yet critical part of the process is to segment clients by recurring revenue. What is the ideal recurring revenue you want to generate on an ongoing basis from ideal clients?Once you create your ideal client plan, you can test it on clients and build your process of moving clients from your old business model to the new ideal business. List the clients you want to move into the new business and make a plan of how long it will take to get them to “buy in” to your new ideal business. This may include a discussion, paperwork and additional planning and document gathering. Now make a list of all clients in your old business, and go through which ones may fit your new business practice and which ones will stay as part of your old business practice.


Outcomes on the new ideal business

Make a list of outcomes for your ideal clients for the new business including well defined planning checklists in the five key areas including: financial planning or retirement planning, tax planning, risk management and insurance planning, estate planning and investment management. Now that you have a list of outcomes, find the tangible and intangible value of each outcome. This forms the basis of the new business process. More value delivered to your client. After you have quantified the value of all of your services, quantify what someone would be willing to pay for all of these services compared to the benefits and costs. Focus your value proposition on your new practice.

Outcomes on the old business

Now add up how much your outcomes are worth on the old business or non-ideal clients. You will find that some advice and planning you gave away for free. The bottom line is that you must have confidence that the work you do is valuable in order to expect other people to value you and your work. It’s business. Value is measured by money. Stop leaving this money on the table and under-serving your clients. It is not a percentage of assets, it is a dollar amount. How much is your advice worth? List the clients under the old business that will stay under the old business model.

By the end of this year, how many clients do you want on the new ideal practice and how many clients will stay on the old practice? What are the metrics for the new practice versus old practice in 12 months? We know the research by Pricemetrix suggests a potential lift in revenue over time (Source: Pricemetrix Insights, Transitioning to fee, Volume 6, August 2012

Make two client lists, new ideal practice, and old practice.

Now you have two business models, old practice and new practice. You may choose to run on two models for a period of time but eventually you will hit capacity issues and will be faced with the challenge of how many clients can I manage old practice and new practice. Start by writing out the lists and segmenting your clients based on annual recurring revenue and services provided. It will become clearer just by doing this simple exercise on how many new practice versus old practice clients there will be for you in the next year.

How do you answer the question “What exactly do we get for the cost?”

When I first started in the financial services industry in 1989, I was given a manual and a video of how different commissions work. Back then I remember having this VHS video to help me understand compensation. I wish I kept it to see how much the world has changed. Imagine you are sitting with a new prospective client and they ask” how much does this cost” and you hand them a video and a manual to explain how much it costs. Understand that compensation is all about proper disclosure, but having a simplified answer that is easy to understand and remember is critical in the trust building process. Do you have a scripted answer? Is it easy to understand and remember? Do your clients understand and remember, or do they ask you again at progress update meetings how your fees work? Is it in dollar terms easily divisible into a monthly dollar cost? Or is it percentage and dollar terms, or only percentage terms? I cannot remember the last time I purchased a major item such as a home or car or anything that is a percentage, which does not include dollar terms. A common mistake advisors make is not having a clear scripted answer to the question” how much does it cost? “ . To test this point even further, many advisor do not record conversations they have with clients. If you want to have better conversations, record them with the client’s permission. Then let a trusted colleague or coach help you by giving feedback. You cannot learn to play better golf by watching it. You must practice it.

The importance of body language when getting future ready

With regulatory change, comes industry change. With industry change comes consumer change. Will consumers change when they fully understand the total costs of financial advice? We know that not all consumers do not fully understand their total cost of advice. Once consumers change, will they want more? Will they want something different? What does their body language tell you when you discuss transparency and fees? Their body language may give you the answers. In other countries such as Australia, South Africa, The United Kingdom and the United States, something different may mean switching clients into a fee based account. A new type of account that means change. Simply offering the alternative and letting the consumer decide is the first mistake. It comes down to trust with your existing and future clients. Trust is composed of two key components: authenticity - do you say what you mean - and reliability - do you mean what you say? A common mistake I pick up in meetings with advisors about fee based accounts is their body language. It is also the body language of the client.

Body language is crucial in our discussions with clients because it tells us what they think about us and our idea of going fee based. According to Dr. Nick Morgan ( who is one of America’s top communication theorists and coaches “People decode emotions primarily through gesture and tone of voice. The emotional component represents a separate, nonverbal conversation that parallels the verbal one, and typically happens a split second before.” According to Dr. Morgan, “When people communicate topics of great importance to them, they gesture what they intend a split second before the word comes out. We use surprisingly few words, and convey the emotional colors and tones of the conversation mostly through gesture. So you want to look at the language of the gesture to see what’s really important. Body language tells us what we think about other people. People decode emotions primarily through gesture and tone of voice. The emotional component represents a separate, nonverbal conversation that goes on parallel to the verbal one, and typically a split second before the verbal one.”

Record your conversations

We are asking our clients to trust us with this new program. We all have smartphones with video recorders. I encourage you to record your next fee ready discussion with clients (with their permission of course) and watch the body language of yourself and your clients. Having a good script is important, but equally important is body language. Are you conveying the message in a nonverbal way with your body? Go to Dr. Morgan’s website if you want to gain clarity in your body language. As Dr. Morgan suggests “that conversation will make or break you as a communicator. Again, you may be entirely unaware of it, but it may confirm you as the top dog, sabotage your authority, connect you with your mate for life, get you in a fist fight (or out of one), win you a game, or lose one, blow your chances at getting a raise, get you the big sale, lose you the prize, or win it — and so on, through most of the big moments in life. That’s how important body language is. That understanding is what you want to apply to reading your clients and presenting yourself”. If your clients are uncomfortable with change, maybe it’s time to change your body language?

Practice your conversations

Do you have a script binder? By practice, I mean by recording your conversations, playing them back then improving your conversation by having a clear, simple and compelling statement to answer the question” how much does it cost?”. Listening to you answer the question” how much does it cost, will help you become a better advisor. More importantly, have a script or process. It will also help your clients see the trust and conviction when you have a simple, yet compelling answer to a very common question. I am not going to give you an answer here, because that is unique to each practice. Each practice may have different company requirements, cost structures, products and services. However, each practice must have a clear and simple, yet compelling answer. There is lots of simple recording software on your smartphone that you can use to record conversations. You can audio record your discussions, but body language is also important. For audio recording, one app I found easy to use is Dragon Dictation by Nuance software With your smartphone, there are several options. To implement this idea, record three meetings with clients and prospects, then play it back and listen to your answers. Can you improve your answers and build more trust? What do you say when you talk about fees? If clients are 100% convinced and confident of your answer, then they should be handing over dozens of referrals to you. Remember my earlier question. What is the ideal recurring revenue you want to generate on an ongoing basis from ideal clients?

One final question. Do you have ideal clients who works with you, give a few of their key contacts in their smartphone for you to talk to? That is the ultimate proof that they are confident of the value you bring to the table when you talk to them.