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“The shoemaker’s children go barefoot.” You have heard the expression before. It might have several meanings including people with a skill often don’t utilize that skill within their own household. Financial advisors know financial planning is part of their tool kit. They personalize this advice as much as possible for their clients. Do they apply their superpower to their own situation?
1. Do you spend everything you earn? This can be an issue if you are a competitive person and you associate with people just like you. You might compete in areas like who can take the most expensive vacation or own the most luxurious car. You earn a great income and you are paid very well. If you make more year after year, you will likely find ways to spend more year after year. Is that a good idea? Would you advise your clients to do the same?
2. If you are paid on assets under management, what will you do if those assets decline? You have seen the ads on TV “We do well when our clients do well.” You can see how the message describes asset based pricing. If the stock market declines 10%, this means you income would decline by the same percentage. Your expenses don’t decline, they likely increase because of inflation. What’s your plan?
3. How much of your asset growth comes from market appreciation and how much from new assets? You have heard the expression, “In a bull market, everyone is a genius.” If the stock market rises 15% and most of your client assets are in equities, your assets under management growth is impressive. You did nothing to add to those assets, you prevented them from leaving. If the stock market declines by 10%, your assets under management (and your income) declines. You need to put effort into opening new accounts and bringing in new assets from current clients pleases with their performance.
4. Do you assume the good times will last forever? The stock market has done well for a long time. It has pulled back, but it usually bounced back. Some might think this is the new reality or the new economy. Others had that idea in the late 1990’s. If you remember the dot.com crash, you know how that turned out. That was 25 years ago. People have short memories.
5. What’s your number? Years ago, people on Wall Street would have a “walking away” number. How much would they need to have set aside to leave their job and retire early? You should put away money while you are earning the big bucks.
6. Are you doing something that strays into a “grey area”? If you subscribe to online publications for financial advisors, you often see articles about “advisors behaving badly.” These tend to be court cases where an advisor embezzled money or misrepresented a product. You might say “I would never do that!” Do you think a client might be trading on inside information? What could possibly go wrong? Think about it. Your Compliance manager has a great catchphrase: “Have a problem, get a partner.”
7. Beware when “the exception becomes the rule.” This ties into the above point. Sometimes we are asked to bend the rules for friends. “Just this once.” It might involve revealing confidential information. If you did it even once, you client can have significant leverage over you to do it again and again.
8. If I started over again, what would I do differently? You are a successful advisor. Many in your training class cannot claim that distinction. Why? Because they left the industry. What made you successful? Do you gave your clients the same degree of attention you did back then? When was the last time you did whatever you did to get your best clients?
9. Do I need a coach? Olympic athletes have natural talent. That seems obvious. They have coaches, especially when they get to the top of their profession. Have you ever asked yourself “Where can I go from here?” A good coach can help you project where your business could be in five years and help craft a plan to get there.
10. Am I learning about new products or staying in my comfort zone? It is easy to stick with what we know best. Years ago, money funds, CDs, lending, mortgages and insurance were all new product areas. Could you imagine doing business without them today? Financial planning was once a new concept. History can repeat itself. Perhaps you should learn about new products the moment they come out.
11. Would I be described as charitable? You make a great income as a financial professional. Remember the two Wall Street movies? Remember “Greed is good.” You are a recognized figure in your local community. Would others describe you as charitable? Do you donate money or your skills? In addition to the “feel good” factor, being charitable can also open doors.
12. What is my succession plan? You have heard the expression, “There are no pockets in shrouds.” It’s another way of saying “You can’t take it with you.” At some point you will want to enjoy your money and take longer vacations. If your clients are gradually retiring, they expect you will do the same. They will start asking questions. What’s your plan? Your firm might offer you some alternatives.
All clients need financial planning, at least to some degree. Financial professionals fit into the same category.