Standard Financial Planner

Building and Managing A Successful Financial Planning Practice

Grahame Evans Managing Director – Professional Investment Services Director – Standard Financial Planner

Presentation Outcomes

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5 Critical Success Factors Turning Your Value proposition into a Value Add proposition Value of Existing Clients and Segmentation Centres of Influence – Key Issues How do I charge?

7 Key Ingredients to Beat Competition

“Even if you are on the right track, you will get run over if you just sit there!”

Will Rogers

5 Critical Success Factors 1. Know what you want to achieve (Any road will take you there if you don’t know where you are going!)

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Simple, short, succinct, realistic plan to achieve your goals.

Start with “big picture” and the “reverse engineer” (BHAG Software)

Your Plan on a Page

What

– What financial and non financial goals do I want to achieve?

Why

– What is my purpose or reasoning for achieving these goals?

When

– What milestones and dates will I place on these achievements?

How

– What actions will I take to achieve these goals?

How will I know if I am Successful

– what measurements will I use to see if I am a “bum” or a “hero”

5 Critical Success Factors

2. Unless you stand for something, you stand for nothing

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Have a point of differentiation Be good at it, be very good at it!

Let everyone know what it is Continuous improvement

5 Critical Success Factors

3. Measure everything you do! ( What gets measured gets done)

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Suspects, prospects, meetings,closing – What do I have to do to achieve my financial goals?

Prospecting methods – What is successful?

Client types – who do you most relate to?

Buy a system to collect data.

5 Critical Success Factors

4. Surround yourself with successful people

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Successful people do what unsuccessful people don’t!

Optimism is a force multiplier ( so is pessimism) Ask questions, continue to learn, listen intently Board of advice as you get bigger Little thinkers, Big stinkers!

5 Critical Success Factors

5. Hire staff as soon as practical

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You need to “see the people”; that’s where you, make the $$$.

Paperwork, compliance, assistance Involve, reward and communicate Servicing, gate keeping The investment will pay back many times over

" Rules for Picking People:” Look for intelligence and judgement, and most critically,a capacity to anticipate, to see around corners.

Also look for loyalty, integrity, a high energy drive, a balanced ego, and the drive to get things done.

We recruit for attitude and train for skill.

“Court your own clients before you start courting somebody else’s clients.”

Evert Gummesson, Total Relationship Marketing, Butterworth Heinemann, 1999, p. 26

Longstanding Clients More Profitable 100 80 60 Return on Sales (%) 40 20 0 62% 20% Old Clients -20 -40

1. Old Clients (over 3 years old) Source: Mills Research

Intermediate

2. Intermediate Clients (1 to 3 years old)

New Clients -38%

3. New Clients (under 1 year)h

The Top 20% subsidises the Bottom 80% 40 20 0 -20 -40 140 120 100 80 60 +112% Top 20% Profits Bottom 80% -12% Losses

What advisers do or are!

• Translate • Trusted • Analyse • Recommend options • Keep watch • Provide “comfort”

What advisers aren’t!

• Fund managers • Research houses • Stock selectors • Every day transactors like banks

Commodity or

Value

Buying investments Selecting investments on past performance Personalising a strategy Communicating effectively “The plan” Establishing trust/sleep at night Keeping Watch Portfolio construction Commodity Commodity Value Value Value Value Commodity

How Do Customers Assess Value?

• Technical

– Is the advice I am getting the best for me?

• Economic

– What is the financial benefit to me?

• Service

– Am I being treated correctly?

• Social

– Do I feel good about the benefits received?

Adapted from James C. Anderson Kellogg University

This might sound simplistic but … ( Value – Price ) > ( Value – Price ) y y a a y = your proposition a = next best alternative Your mission – to make Value y as large as possible

Adapted from “ Understand What Customers Value” Harvard Business Review Nov 1998

The Value Add Equation Customization + Integration+Consistency

=

Premium Pricing + Client Advocacy

The Four Basic Competitive Strategies Specialised Services Price High Value Added Differentiation Niche Market Low Price Niche Market Low Narrow (Niche) Market Value Added Differentiation Broad Market Low Price Broad Market Broad High

Segmentation is Essential Segmentation Evaluation Size Growth Competitive Intensity Gross Margins Fit with Capabilities Market Conditions

Very Favourable

Legend

Very Unfavourable

How to turn your Value Proposition into a Value Add Proposition What are you deeply Passionate about What you can be the best in the world at What drives your economic engine “A simple concept flowing from a deep understanding about the intersection of the three circles” The three Circles of the Hedgehog Concept

@Good to Great – Jim Collins

“Top advisers track not only the revenues they generate but also the

business value

they deliver and the reaction of their customer”

Mckinsy Quartery 2003, Number 3

Charging Structure

A component of your value proposition

– Have a set basis! – Promote/ Promulgate – Provide a “menu” of services of the value

you provide

– Stick to it! Don’t get greedy – Try to give something back?!?!

Key Aspects of Successful Joint Ventures with COI’s

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Professional respect for the parties involved

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Alignment of interests for the JV Partners

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Client well being

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Revenue

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Equity

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Servicing

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Regular formal and informal communication between the parties

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Agreed targets for financial planning revenues

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Inclusion in KPI’s of agreed actions for accountants regarding referral to JV partner

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Regular training (at least once a month) for staff of the Accountants Practice on financial planning matters.

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Agreed divorce provisions from outset

7 Key Ingredients to stay ahead of your competition.

“Business is like a man rowing upstream. He has no choice; he must go ahead or he will go back!” - Lewis E. Pierson

7 Key Ingredients 1. Communicate, communicate, communicate with your clients! (Especially in the tough times)

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Clients don’t leave you because of bad service… …they leave you because of a feeling of indifference i.e. you don’t care.

7 Key Ingredients 2. Make a commitment to regularly update your knowledge on markets, products, strategies to help your clients.

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New Issues to discuss with clients New marketing ideas

7 Key Ingredients 3. Do the unexpected with your clients? (and your centre of influence)

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Referral rewards Invitations Film nights

7 Key Ingredients 4. Network – every hour, every minute, every second of the day!

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Who don’t you know?

What do you know about people?

7 Key Ingredients 5. Develop or use a sales track?

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Keeps you on track Makes sure you cover all the important issues Creates a professional appearance, attitude

7 Key Ingredients 6. Dress “One – up”

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It is better to be overdressed than underdressed Always look professional

7 Key Ingredients 7. Importantly – 2 Ears! 1 Mouth!

Clients love to talk about themselves?

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Worst Investment?

Best Investment?

Money was no object, I would….

Questions

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