In a nutshell: building a great fee-for-service financial planning practice

[ February 12, 2013 ]

A fee for service financial planning practice will reward you intellectually, socially and financially – and make a real difference to your clients’ lives

FOFA means the traditional emphasis on placing institutional financial products is about to go. It will be replaced by something better and more meaningful: a successful fee for service financial planning practice. One more profitable and more valuable than before, one more interesting and satisfying for you and your team, and one that positively improves your clients’ lives.

The key to developing this successful fee-for-service financial planning practice is to first provide the services. Don’t just refer your clients off to big institutions. Provide the services yourself. You will be your clients’ primary adviser. You will be their go-to person, their first port of call on money matters, their trusted adviser.

Your statements of advice will be concept based. They will cover business plans, long-term retirement strategies, tax planning, legal structures, asset protection techniques and inter-generational financial planning principles. They will include business advice, property advice, estate planning, SMSFs, direct shares, accounting services, and risk management advice (a much wider concept than risk insurances).

Your statements of advice will recommend different types of investments. Commissions are gone, so why would you only recommend managed funds? Managed funds shift profit away from you to big institutions. Why would you do that? Why wouldn’t you instead survey the broader range of investments and recommend industry super funds? Index funds? Direct property? Direct shares? SMSFs? Cheap life insurance via industry funds? Businesses as investments? Non-deductible debt reduction as an investment?

Your approved product list will be the investments your clients want, not the investments big institutions want.

Your statements of advice will be real client advices not product sales pitches. Your statements of advice will be concise, effective and to the point. No more than five or six pages, in line with ASIC’s SOA recommendations. Plain English writing will rule the day. Disclaimers and disclosures will be provided via links, and detail will be disclosed in separate documents.

The days of 80-page SOAs filled with of defensive drafting and compliance overkill will be gone forever. They aren’t needed any more. Your statements of advice will now be in your clients’ best interests.

Your statements of advice will be prepared in just an hour or two, making them affordable for your clients and profitable for you. Your statements of advice will be understood by your clients. Your clients will use your statements of advice to make informed decisions based on the information you provide to them. Your clients will value your advice.

Your statements of advice will be supported by regular client meetings and constant contact via websites, newsletters, blogs and social media. You will be in constant touch, letting clients know about trends and developments. Your goal will be to create and maintain a thriving long term practice, not maximise next month’s commission cheque. To do this you need happy and satisfied clients who value your services, who want to keep using you and want to refer their friends to you. Their timeframe will be thirty years, not thirty days, and your’s should be too.

The new cash flows from your new services will lift your profit, limit your business risk and create new value in your practice.

The demand for quality financial advice will increase dramatically as the population grows, becomes wealthier and ages. If you build it they will come. Your problem will be how to handle all the work.

A fee for service practice is a real financial planning practice. It will establish you as a true professional, more important to your clients than their solicitors and accountants. It will reward you intellectually, socially and financially and make a real difference to your clients’ lives.

Step one: start providing the services.

The Dover Group