The Full Monty

A Chicago financial advisor recently lamented to me: “I feel like we're offering a complete array of wealth-management products and services, but we aren't as consistent in delivering those products and services as we should be.”

The advisor's concern is the bane of many financial professionals, but his remarks are on target, too. Terms like “financial advisor” and “wealth management” imply an ongoing relationship, and our research tells us that affluent clients want a clearly defined and structured process that will produce the right solutions for managing their financial affairs.

For many financial advisors, this means coming up with a formal plan. The International Certified Financial Planners Association has made it easier for you by creating one on its Web site that is broken down into six steps, which are summarized below. (For a more detail explanation, you can go to cfp-board.org/learn and click on “Financial Planning Process.”) This is likely only the beginning, though, as you add, delete and revise elements that fit your client process:

Six-Step Financial Planning Process

Establish and define the client-advisor relationship. Clearly explain or document the services you're providing.

Gather client data, including goals. Make sure you understand what risks they're willing to take to reach those goals and over what time frame they will be achieved.

Analyze and evaluate the client's financial status. Study indicators like the value of their investments and insurance coverage.

Develop and present financial-planning recommendations and/or alternatives. Go over these carefully with the client and make revisions where necessary.

Implement the financial-planning recommendations. You can do this alone or while serving as a “coach,” coordinating the process with other professionals.

Monitor the financial-planning recommendations. Do this on a regular basis and make adjustments as needed.

Step five focuses on the financial solutions you offer. Discussing them with your client is part of the process, but the solutions are not covered in the six-step process, so let's take a quick glance at what are considered the nine key financial areas that are important to the affluent. For each item, think about this: “What do I know about this?”; “Am I providing this type of service, and if not why? If so, how?”; and “What can I do to improve?” Do not feel an obligation to do everything. The idea is to use this list to help refine both what you can deliver and how you deliver it.

Nine Key Financial Areas

Budgeting, Cash-Flow Management and Determining Net Worth — This covers the gamut, from controlling spending to defining cash inputs and systematically maintaining a cash surplus for investment purposes. Your affluent clients hate all of these complicated statements. The affluent want a simple and current annual net-worth statement.

Banking Services — Providing a range of daily banking services: checks, savings, deposits and borrowing services are what the affluent expect now from their financial quarterbacks. This doesn't mean you must work for a bank, but you'd better have a strategic alliance with a couple of professional banking experts.

Insurance Planning — Insurance not only provides a safety net, it can be used in tax planning. The affluent want to minimize their tax bite and protect what they have. Once again, if this isn't your area of expertise, you need to have a strategic alliance with an expert so that this category becomes part of your process.

Asset Management — Yes, the affluent care about their investments, and don't let anyone convince you they don't care about performance. Performance is important. They expect it. The key is to determine their risk tolerance and systematically manage their asset mix.

Education Planning — This normally applies to affluent clients with children and grandchildren planning on attending college. However, clients may want to support others as well. They need your advice about projecting the future costs of education.

Tax Planning — Unless you are a certified public accountant, you're not expected to be the expert. But you'd better have a strong working knowledge of the current tax angles and work closely with a tax specialist to provide top-of-the-line tax advice.

Retirement Planning — One of the greatest concerns for the today's working affluent is being able to maintain their lifestyle after they retire. This requires ongoing and comprehensive planning, reviews and making adjustments when necessary.

Estate Planning — Minimizing taxes and generational planning has become a top priority to the affluent. This area is complex, easy to procrastinate on and full of professionals pretending to be experts. Your mission is to have a sound working knowledge and an alliance with real experts.

Charitable Giving — This category forces you to know the values and desires of your affluent clients so that you have a good understanding of how they enhance their quality of life through a sensible philanthropic plan that works for them.

After you have determined which of these nine categories you are going to offer, your next step is to evaluate your competency level for each category and determine whether you are going to hire, contract or partner with the appropriate experts, like lawyers, to fill in the cracks.

You now have a platform of services you can deliver and upon which you can design a financial advisory process that works for both you and your clients. This, however, cannot happen without a level of operational structure that combines FedEx efficiency with Ritz-Carlton service, which will be the focus of my next column

Writer's BIO: Matt Oechsli is author of Building a Successful 21st Century Financial Practice: Attracting, Servicing & Retaining Affluent Clients. oechsli.com