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CRM2 and Fee based mistakes financial advisors make - Advisor Practice Management


CRM2 and Fee based mistakes financial advisors make

With regulatory changes coming in the form of CRM2 to Canadian financial advisors, making changes to your practice may not be as simple as moving your clients to fee based accounts. Fee based, whether flat fee or percentage or both is a fee on assets managed. Where does the fee for financial planning and advice come in to play? A common mistake I run across in discussions with advisors is transparency. CRM2 is about transparency. Will clients see the total fee for advice, money management and planning on their statements? What do you charge for planning and advice and how does that compare to top advisors in the industry? For your fee, what work do you complete in a calendar year for each client? Do you have a list of comprehensive services you provide to those clients on an annual basis for the fee? Bill Bachrach of San Diego ( ) teaches advisors to have a checklist of 149 things you do for your clients on an annual basis. In his latest webinar, Bill talks about “5 Ways Financial Advisors Leave Money on the Table, Under-Serve Their Clients, and What to do About It. Here is what Bill Bachrach sees as common errors advisors make.

1. Not charging a fee, or charging too small of a fee, for up-front planning and advice work.
2. Not consolidating your client’s assets.
3. Unimplemented advice.
4. Referrals.
5. Wasting time.


1. Not charging a fee, or charging too small of a fee, for up-front planning and advice work. If I had a nickel for every time I’ve heard a Financial Adviser say, “I do the planning for free in the hopes of getting some of their assets” I’d have a lot of nickels. Instead, charge a fee for quality planning work that stands on its own merits, whether the client implements with you or not. And if they do choose to act on your advice with you then you deserve to be paid for that as well. How is this better for the client? Because when a person pays for advice they tend to be more inclined to act on it. And it’s acting on advice that produces results. No action. No results.
2. Not consolidating all of your client’s assets in as few accounts with as few institutions as possible. It’s common knowledge that most people, especially financially successful people, have their finances and investments spread among several advisers and institutions. Multiple advisers are not diversification. There is no actual benefit to a client to have their money with multiple advisers and more institutions than necessary. In fact, the opposite is true. Multiple advisers and institutions can create the illusion of diversification and security, creates more complexity in their life, and could be a real nightmare for their heirs when they die.
When you advise your clients to consolidate their finances into as few accounts as possible you make more money, their life is simpler, and it’s very likely that there is now less risk to their plan and a greater probability they are on a track to achieve their goals. Stop leaving money on the table and under-serving your clients. Consolidate.
3. Unimplemented advice. How many clients do you have who have only partially implemented the plan you created for them or advice you have given them? How much did you get paid for that? Probably nothing. How much value do they get from your unimplemented advice? Definitely none. Give your advice with more conviction so your clients implement and stop leaving that money on the table and under-serving your clients.
4. Referrals. The research on this subject is consistent over my almost 30 years in this business: most clients are willing to refer and most advisers don’t ask.
My informal research indicates that most people have between 200 and 500 contacts programmed into their mobile phones. You owe it to yourself to ask for referrals, get warm introductions, and become effective at converting referrals into appointments. By not developing a way to ask for referrals and orchestrating a warm introduction you are leaving money on the table and under-serving your clients. Stop it!

5. Wasting time. Yes, time is money. Work time that is. And wasted work time is wasted money. There’s a big difference between being in the office and working. Working is being productive. There are the obvious time-wasters like doing $15 / hour admin work and watching too much finance TV.
Two very powerful ways to the shift your client relationship to a higher level where they will be more willing to pay for your advice, consolidate all of their assets with you, more quickly act on your advice, and introduce you to their friends, family, and colleagues are:
1. Add more value.
2. Deepen the relationship to a greater level of trust.
Adding value can often be accomplished by doing more by making a checklist of all the items you do for your clients”. As Bill Bachrach suggests, 149 planning items for each client may be too much, but it is better than not enough.
The other idea is to deepen the relationship by asking better questions and having better, deeper, and more meaningful conversations. Having a list of great questions is a start. Consider hiring a coach to help you develop skills for having meaningful, deep conversations and holding you accountable. Focus on what you can control and go get clients!