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Importance of Financial Partners

  • The practical and real benefits of Independent Financial Advice:

    1. Financial matters are often complex. There are often many different ways of tackling a financial requirement. Most financial planning is ‘holistic’ i.e. what you do in one area of financial planning will affect another (this is the ‘hip bone is connected to the thigh bone’ idea).

    2. Develop a personal relationship with your clients.

    In order to communicate effectively and relevantly, you need to take a real, genuine interest in your clients and the details of their lives. Pay attention to what’s important to them, starting with their families. Know the names of their spouses and children, their birthdates and anniversary dates. Know your client’s hobbies and interests. Don’t just call your clients when you are trying to sell them something. Become part of their extended network and strive to spend social time together. Treat your clients as friends and always be willing to extend a helping hand. By aligning your success with helping your clients achieve their personal objectives and financial goals in life, your business will grow and prosper.

    3. Many financial decisions are subjective for example relying on future (unknown) investment returns to support the value of the decisions or steps taken. In overall terms - financial planning is often difficult, convoluted and is easier to handle with an expert involved. It is not something to be taken lightly and is always better for a concentrated approach.

    4. Customized guidance based on your entire financial picture. Independent advisors are not tied to any particular family of funds or investment products. So whether you need help with retirement planning, a tax situation, estate planning, or managing assets at multiple places, independent advisors have the freedom to choose from a wide range of investment options in order to tailor their advice based on what’s best for you.

    5. Asset allocation - Where investment advice is required the most common method of finding the   right    mix of investments is via   an asset   allocation model. This is where the investor’s requirement is aligned to a carefully selected asset   split, which will   be married to the   investor’s risk tolerance. Over    many    years    considerable research has been undertaken into   the   best   way   of constructing portfolios and   generating returns within given risk   parameters; time after time    the   results from    the   research show    that asset allocation is the   key   determinant of  future returns. The   asset   allocation decision is the key influencer. An   Independent Financial Advisor can construct an asset    allocation approach without any restrictions. As   this is generally considered the   most    important part   of  the   process then    it is  crucial for   investors to  know    that   they   can   have    the   right    asset   allocation for their  circumstances; they should not   be  forced     into   an asset    allocation model     which    is determined by t heir   advisor’s restricted available solutions.

    6. A relationship that’s personal, responsive and thought driven. To offer advice closely aligned with your goals, independent advisors must first build a strong understanding of your situation. As a result, many independent advisors focus on building deep relationships with their clients. This often takes regular, ongoing interactions. And because many of these advisors are entrepreneurial business owners, they hold themselves personally accountable to their clients.

    7. A fee structure that is simple and transparent. Independent advisors typically charge a fee based on a percentage of assets managed. This fee structure is simple, transparent, and easy to understand. It also gives your advisor an incentive to help grow your assets. When you succeed, your advisor succeeds.

    8. A high level of expertise to support your complex financial needs. Independent advisors can help investors address the variety of complex investment needs that arise when you accumulate significant wealth. While specific services vary from firm to firm, they are often described as financial “quarterbacks” focused on your holistic financial picture. Some advisors are specialists in certain investment strategies. Others can assist you with comprehensive services, such as estate planning or borrowing, the sale of a business, complicated tax situations, trusts, and intergenerational wealth transfer.

    9. Appropriate solutions: products, companies, funds whatever your current position you will need to use financial ‘products’ to help you along your financial pathway. These could include pensions, tax   wrappers such as ISAs, savings accounts, life assurance products and annuities. These products will be available to  you from many different companies (the ‘product providers’), they will have costs, they will in  many cases have underlying funds that you need to  choose, terms  and conditions that will apply amongst many other factors. The best   companies for one person may be very different from the best companies for another. An   Independent Advisor will be able to match the right products, companies and funds to meet the solutions required by each individual client. A Restricted Advisor will have to fit their client’s requirement into the available (restricted) range of products and   solutions they    have    available. The   best analogy in this   regard is to think of tailoring. An   Independent Advisor is  able to  create and manage a bespoke solution for their client, the equivalent of a tailor-made fit; a Restricted Advisor has   to  offer  an ‘off-the-peg’  solution, they have to find something from their ‘railings’ even  if it is  not a perfect fit.

    10. Demonstrate value that differentiates you from your competition

    Every financial advisor is selling more or less the same investment and insurance products as every other advisor. Of course, products have differentiating features, but overall they are more similar than different. One of the best ways to attract and retain clients is to differentiate yourself with a niche specialty and/or a superior service offering. Specialization allows you to develop subject matter expertise that is highly valuable to your target market. Wrap your specialty in a superior client experience and you have the makings of a client referral engine that will drive the growth of your practice. Personal brand identity is increasingly important in financial services because your clients will decide to trust you and do business with you before they make their product decisions.

    11. Position yourself as the primary source of information.

    By taking a comprehensive view of your client and his/her needs, you can position yourself as a trusted advisor who is working alongside their other advisors, accountants, and lawyers to ensure the client’s overall plan is in place and on track. This strategy does not mean you should immediately make a play for any outside assets or policies. Instead, position this extra attention as a way to add value to your clients and become an irreplaceable part of their team. While they may initially choose to keep their multiple-advisor team, the information about their portfolio and your willingness to work with others will take your relationship to a higher level. It will also help you cultivate a referral network among the other advisors on the team. Historically, only high net worth individuals have had the benefit of an advisor with a global view of their holdings. Now, mass affluent clients can have that benefit as well. Position yourself as a trusted advisor, not a salesperson. Strive to be a trusted advisor who works alongside your client's other advisors.

    12. Have total insight into your clients needs.

    Know Your Client (KYC) has become a buzzword of a financial services industry focused on compliance. But how many advisors really know their clients? Not just how they answer the risk tolerance questions on the KYC form, but truly know their client’s full financial picture and what motivates their financial decisions.

    A successful financial advisory practice is built on fully understanding and serving the needs of your existing clients. In order to do this, you need a comprehensive view of your client, their goals and their financial holdings so you can identify gaps and recommend effective strategies for addressing them.

    The ‘hidden’ value of getting good advice?

    There is one subtle area of getting advice from a professional advisor which may not - at first - be apparent. Good financial planning involves a large amount of legwork. This may not be a word that   is often touted by financial advisors as a benefit of their work - however it should be! Legwork is a way of describing the large amount of research, dissemination of information   and   paperwork that needs to be done and the time that this requires. To get great financial planning results there is a requirement to work with the right information and to keep records and   to review matters regularly (which involves keeping up to date with all related matters, many of which change regularly). Your financial planner will do all of this for you. In terms of the   changing landscape and the need to keep on top of matters, a good example, in recent    times, is the introduction of AIM listed shares as a permissible investment within an ISA. This   changes the   options available to investors. A good financial planner can bring this to their    client’s attention, highlight whether this is a valuable possibility and analyze the new options. This is why the   term ‘Financial Planning’ may sometimes help   describe the   process better    than ‘Financial Advice’. Yes, much of the work involves providing advice on suitable companies, products, plans, funds, on the risk position, on asset allocation, but, in addition, there will be much of the work which is about hard graft and keeping on top of everything that surrounds the advice provided.