小故事

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Best Practice Principle: A well-defined engagement process leads to greater client and advisor satisfaction.

TIP:

  1. The Six Step Financial Planning Process provides a “framework” for an engagement process with room to be flexible.
  2. Know the prospective client and their situation before inviting engagement









小故事

大家时常会争论,除了向客户量身定做提供一份书面的建议书以外,是否在理财顾问过程中还有其他的单一行为可以在最初阶段对客户产生更好的影响。(请注意,此处建议书等同于建议信)。

理财顾问会发现,即便只在短期内使用书面意向书为客户服务,那产生的作用都是非常明显的。当然,对于有些只专注于交易成果的理财顾问来说,书面的意向书无非是浪费时间,毫无必要。然而事实并非如此。正确使用书面意向书,可以更好的为客户服务,不仅可以很快提高理财顾问的服务效率,随之也可以增加账户额度。由此可以在交易进行之前先行增加理财额度。

以下的小故事可以更好的解释此点。我们假设有个名叫比尔的新的理财顾问。新年过后,他举办了数次论坛来发展一种基金。其中的一个参与者罗伯特已经在比尔推荐的基金中投入了5千美金。

一个月后,比尔的新客户罗伯特接到了一个王先生的电话。王先生是一位资深的理财顾问,由他的另一名客户推荐给了罗伯特。在电话中,王先生和罗伯特先生约好了下次见面。在第一次见面中,王先生向罗伯特夫妇解释了他所提供的服务能如何通过几种方式改善或稳定罗伯特一家的财务状况。实际上,罗伯特夫妇当时就可以实打实的看到王先生能帮助他们评估所有的理财目标并协助他们完成这些目标,因此,他们毫不犹豫的当场就与王先生签订了建议书。

从王先生的角度来看,他所花费的时间比上面那个比尔所花在认识新客户并卖出一小笔基金的时间和精力要小的多,他所做的只是为罗伯特夫妇准备以下资料:

  • 一份退休计划分析和随后的一份投资策略说明,这两份资料使罗伯特夫妇将23万3千美金置之于王先生管理下的投资资产内,并签署了新的未来存款预授权书。
  • 一份罗伯特先生的伤亡意外分析报告,看到这份报告,罗伯特先生马上决定将签署几份保险单。

此外,王先生为罗伯特先生出具的退休计划分析详细说明了如果通过更改投资策略和储蓄习惯来使罗伯特先生在56岁的时候退休,罗伯特先生对此分析报告非常满意,因此又将王先生推荐给了其他好几位朋友。


A Laborious Client Development Cycle

To add emphasis to this argument in favour of obtaining an Engagement Agreement from every client, let’s see a picture of what Bill Jones was doing to secure new business. The following diagram shows the typical steps followed by many advisors in developing a client. It illustrates how the typical client development approach is laborious, inappropriate and not totally effective.

In a transaction-driven advisor’s world, the Approach for an Appointment is made with a “product” in mind. It could be insurance, a segregated fund that offers attractive guarantees during a protracted bear market, an RESP, an RRSP (because it’s that time of year), or a mutual fund, etc. If the approach happens to coincide with and “fits” the client’s perceived needs of the moment, an appointment may be granted.

From that point forward, the advisor then works diligently (and as quickly as possible) to complete the remaining steps to get to “pay day” which occurs at the Implement Product Recommendations stage. Along the way, often driven more by compliance requirements than for any other purpose, the advisor will complete a Know Your Client (KYC) assessment. Unfortunately, all to frequently, it is thought that the time and effort to gather the information needed to complete the KYC form is “wasted” except, of course, to make certain that the investment is suitable.

In the case of our new advisor, Bill Jones, he failed to realize the benefits of an effective client meeting. He should have taken a little more time to find out Robert and Marilyn’s values, goals, and objectives. He then could have aligned the breadth of his service offering with their declared values. This would have opened up a whole new viewpoint for the client, a world of opportunity for him, as well as thwarting any competitive overtures.

Why Engagement Agreements Work so Well

Which arrangement do you prefer?

A. Service by Transaction (Salesman)

  • Not knowing if a client is really interested in hearing from you
  • Not knowing for sure what a client is expecting of you
  • Not knowing if the client will keep you informed of changes in their situation
  • Not knowing for sure when or how you will get paid

B. Service by Engagement (Trusted Advisor)

  • Knowing the client thinks of you as their trusted advisor
  • Knowing what services you will provide and under what terms
  • Knowing that the client has agreed to contact you with any changes in their situation
  • Knowing when and how you will be paid

And looking at it from a client’s point of view…

A. Service by Transaction (Salesman)

  • Hoping that the investments they bought will go up in value
  • Hoping there was no undisclosed compensation that might compromise the recommendations
  • Hoping you will provide the service they need
  • Hoping their advisor will be responsible when helping them as they may require

B. Service by Engagement (Trusted Advisor)

  • Knowing there is an Investment Policy Statement that outlines what they can expect with respect to the process of managing their money
  • Knowing exactly how their advisor is paid
  • Knowing the level and range of service they can expect
  • Knowing they have a written agreement to fall back on that even tells them how to handle redress

From both the advisor’s and the client’s point of view, it is obvious which arrangement is preferred.


A Superior Client Development Process

Now here’s a picture of a Client Development process that is clearly superior to the one described previously and is, in fact, more like the process that the veteran advisor in our story, Carl Wong, followed. We see how it’s possible to create a client development cycle that is efficient, effective and professional


Note that the process now begins with a referral to a prospective client. Top advisors long ago learned that referrals are typically much easier to obtain when they have provided a comprehensive service rather than simply sold a product. Most importantly, this process acts as a filtering system separating good prospects from the rest. A frequently used method for doing this is to request that the prospective client bring certain documentation or information with them to the first meeting so both the advisor and client can determine if they “qualify” for each other’s investment of time and effort. It’s important to note that a good client doesn’t necessarily have to be a comprehensive planning client. Modular planning clients can be just as important to the practice.

The initial Engagement Discussion is used to determine if the advisor can be of service to the prospective client. If, following the discussion, there is agreement on that point, an Engagement Agreement is completed and, ultimately, a plan designed to meet all of the client’s needs and objectives is developed. With the Engagement Agreement in place, there is never a question as to if or when the advisor will be compensated because as part of that agreement the client agrees to implement any plan that is developed to meet their needs. Further, rather than providing service on an ad hoc basis, all the client’s service requirements are rendered in accordance with a definitive written action plan.

The foregoing seems intuitively obvious, so why don’t all advisors have a written Engagement Agreement with every one of their clients? The reason most often cited by advisors for not using an engagement agreement is simply that they lack the knowledge of how to get clients positioned to accept the idea.


Getting Clients to Want to Engage You as Their Advisor

Before most clients are prepared to endorse an engagement agreement, some level of respect and trust in the advisor must be established. Respect is gained when an advisor can demonstrate their competence, and trust grows out of strong relationships. People normally trust one another when they feel that the other person has everyone’s long-term interests at heart. Trust leads to a willingness to help each other. In the advisor/client relationship, this means having the client willing to provide all the information the advisor requires to do their job well. Clients will be willing to do so as a result of the advisor demonstrating that they have a sincere concern for the client’s well being.

So before advisors are in a position to seek engagement, they must first demonstrate that they have a real interest in the client’s life values, their financial goals and objectives. Top advisors have a definitive process to build trust and facilitate engagement. What follows is an outline of an engagement process that is easy to learn and easy to use.

Simple Engagement Process

This process is designed for use with the Initial Assessment & Evaluation questionnaire starting a little further on in this section.

I. Positioning - Start out with a positioning statement to the prospective client as to what the process will entail. (Note: the same process can be used for existing clients you have elected to convert from a “transactional” approach to a “service approach”.) A marketing brochure can be an effective aid providing the content focuses on the process and is not a “general services” type of brochure.

Tell the prospective client that you have a process designed to help you find out more about their situation so you can determine if you can help them. Then if you feel you can help them, you will also determine what level of service would be most appropriate for their situation. (Note: This approach need not be used literally. Your approach should ideally be customized to showcase your distinctive value).

II. Preparation for Engagement Discussion – Invite your prospective client to bring the following documents to the meeting:

  • Investment statements
  • Pension statements and plan description
  • Insurance policies, including group benefits information
  • Tax returns

Explain that, by reviewing this information, you will better be able to determine how you can enhance their financial well being.

III. Discuss Purpose – At the beginning of the first face-to-face meeting, confirm that the purpose of the meeting is to determine how you can help them. If you can help them, you will specify the service that you can provide that would be most beneficial to them. The length of the meeting would depend on a number of factors such as; the advisor’s practice structure and professional style, and how he prospective client came to the advisor.

IV. Discuss Agenda – Propose to the prospective client that you follow this discussion path:

  • You will ask some questions that will help you understand their values. For greater clarity please refer the first section of the IA&E Questionnaire below. There you will see four questions you can use to start the values discussion. The critical point is to talk with your client. Do your best to try to understand what is important to them. What is it that drives them?
  • You will ask some questions so that you understand their financial goals and objectives, as well as any financial concerns they have
  • You will look at the information they have brought with them and put a summary together
  • You will assess their situation
  • If you can help, you will explain what services you can offer and how those services would be provided

V. Follow the agreed agenda using the Initial Assessment & Evaluation questionnaire as a guide. A description of how to use and understand the Initial Assessment & Evaluation follows.

  • Section I. – Ask the questions. The questions are designed to help understand the prospective client’s values and record their candid responses.
  • Section II – Ask the questions and record their objectives
  • Section III – By reviewing the documents they have brought with them, fill in the Type of Asset and Cash Flow segments. For information that is not available, ask the prospective client to estimate it. Estimates are fine at this point in the process. Note: Do not try to do the Asset Allocation segment unless it is extremely simple. Complete the Life Insurance, Disability Insurance, and Pension segments.
  • Section IV – This section is intended to be the advisor’s quick assessment of their situation. If the advisor has sufficient experience to do an “on the spot” preliminary assessment of their situation after reviewing the documents and answers to questions, follow through by outlining the type of service that is recommended.
  • Section V. – This section proposes the next action to be taken. Typically the “objective” for the next meeting would be to consummate an engagement agreement, and collect the detailed information that would be required to offer the service proposed.


Many Paths Lead to Engagement

The Simple Engagement Process just outlined can have a number of variations to fit the needs of the advisor’s training, education, and experience as well as the client’s circumstances. For example, at the conclusion of Section III, the advisor may elect to do further analysis or consult with another advisor before doing an “assessment” of the situation. (This would be the appropriate action for anything outside of the advisor’s area of competence.) In an ideal professional practice, the advisor would have a more-or-less automated process in place for collecting information that could be immediately entered into a financial needs analysis software program to do a preliminary analysis of:

  • Retirement goals
  • Needs in the event of death, and
  • Needs in the event of disability

An analysis such as this will be referred to in this document as a Client Planning Assessment.

A review of the Client Planning Assessment should highlight if a problem is present that requires a more detailed analysis, for example, a needs analysis in the event of death. If so, the engagement sought at the next meeting should include performing that analysis.

This process can be easily tested. Simply take the data you’ve collected and go to the Advocis Best Practices Resource Library located at www.planplus.com/advocis. There you’ll be able to register for access to Web-based planning, specifically the online Client Planning Assessment. You can now complete a sample Client Planning Assessment. Note: a sample of the output can be viewed at the end of this section (a generic CPA).

A similar process may also be appropriate for prospective clients whose needs are more basic and not likely to qualify for your full range of services. In such situations, the Engagement Agreement can be easily consummated at the first meeting rather than at a subsequent meeting.

An advisor who is working with more affluent clients may not elect to review the prospective client’s documents at the first meeting at all. Instead, solely through supplementary questioning in Sections I and II, the advisor would be able to articulate how the service that they were proposing would help the prospective client reach their financial objectives. That may be all that is required to facilitate engagement, especially if the prospective client was referred and credibility was established prior to meeting the first time.

The important thing to keep in mind is that a well-defined process is required that allows advisors to gather sufficient financial data which leads to an overview of any basic problems and opportunities – before “engagement” can be completed.