So long, mr weddle
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I'm an IAR and a CFP. That being said, no, I do not engage in formal financial planning with clients on a regular basis. I've tried that in the past and I felt like I was, for the most part, shoving it down the throats of my clients. Most clients want retirement asset and income projections. That can be done with Monte Carlo simulations and/or a simple spreadsheet. If, as a part of my fact-gathering pattern, I see a need for LTC, life insurance, trusts, ILITs, etc., I'll introduce those topics as needed. When I used to work in a more formalized structure, I found my clients to be for the most part, insufficiently sophisticated to desire and appreciate these efforts...their eyes would glaze over and I would hear a lot of "uh-huh's". At that point, I decided that life is too short to waste time doing something that very few appreciated or understood, so I de-formalized the process and made it much simpler. End result is, clients appear to be more satisfied with the process and I have more time to do the things that they are asking for.
...and incidentally, what one of my EDJ buddies told me was that, in preparation for rolling out the fee-based program, ALL EDJ reps got the mandate to take the 66 regardless of time and tenure in the business and whether they even intended to offer any fee-based accounts to clients or prospects. Several of the big vets were pretty pissed by this mandate, but to my friend's knowledge, there were no exceptions made.
The resources are there for the estate planning issues that Philo asked about. A call to the Trust department and you can have more planners in your office than you can shake a stick at. Another call to the Life Consultants at Hartford (the favorite in my region) gets you the funding for some very complex estate tax issues. A call to your favorite local Estate Planning attorney and you get the legal work done. All in your office.
For the average person, I don't need to make any phone calls. The financial planning that I think about is the retirement planning, college funding, income planning, LTC planning, etc. Most people don't walk into your office with $7 million and an estate tax problem. They have to worry about not running out of money at 75. I see what Philo is talking about as just a part of the whole financial planning process. The Estate Planning part. In my opinion it's the most fun part because you can get really creative with ILITs and other trusts. You can also get paid the most because you are usually using insurance to fund the program. But even with those cases if the guy has a $500K/yr need for income, you have to run the programs to see if his $7 mil will be enough to last him. I would echo the sentiments of some of the others about the lack of "planning" out there. It's much more transactional in nature. I read a stat a while ago that said that 2 out of 5 people have actually taken the time to figure out what they need to be saving to retire. And half of them didn't use the right variables. This biz is too focused on my fund is better than yours or my fee based is better than your commission based. I'm as guilty of it as the next guy. I think the guy who is going to come out on top at the end of his career is the one who can both prove why his method of investing makes sense and at the same time get his clients to focus on the bigger picture. The type of car you're driving doesn't matter if you're on the wrong road.So, for almost all cases you know enough to do it yourself, and in the rare instance you get one more complex you’d call whomever answers the phone at the trust department, an annuity/mutual fund wholesaler and a local attorney.
That’s good.
Best of luck to you!
[quote=Indyone]
I see a need for LTC, life insurance, trusts, ILITs, etc., I'll introduce those topics as needed.
[/quote] IMO this is "financial planning" just without the 150 pages of crap that the client throws in a closet and never implements. The best financial planning is the one that makes the clients implement your suggestions, if you're niche market is engineers and analytical types (God help you), you might have a need for all the supporting graphs and charts, for most people it's counterintuitive to the process. Like you I've found simpler is better.[quote=ExPropTrader][quote=Indyone]
I see a need for LTC, life insurance, trusts, ILITs, etc., I'll introduce those topics as needed.
[/quote] IMO this is "financial planning" just without the 150 pages of crap that the client throws in a closet and never implements. The best financial planning is the one that makes the clients implement your suggestions, if you're niche market is engineers and analytical types (God help you), you might have a need for all the supporting graphs and charts, for most people it's counterintuitive to the process. Like you I've found simpler is better.[/quote]A couple years ago I met my first retired Executive prospect. I had a couple of his managers as clients. So I took a shot and he agreed to meet with me. What I didn't know is he had about 5MM of his 8MM net worth in vested stock options. After going through getting to know his situation, completing the fact finder, etc. I mentioned to him I may need to bring in some outside resources to do "more extensive financial planning" His response is something I've built my business on since. "Young man, I agreed to meet with you because I was told you kept it simple" and, "If your just going to show me a bunch of stuff I'll never understand than were wasting each others time"
I took a step back, and approached it like any other case. Ironically we've implemented everything that Indyone mentioned. I've built my business since then by keeping it simple. It doesn't matter how many zeros they have in their NW.
[quote=Big Taco]Okay, so if everyone has 66s, do those of you who work at wirehouses feel that you're focusing on financial planning (other than advice that is "incidental", and comes up in conversation at review meetings)? [/quote]<?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />
I think you’re assuming “Investment advisor” (which is what the advisory accounts/66 is all about, being paid for advice rather than execution of orders) and “financial planning” are synonymous. I know the FPA (I’m a CFP) likes to use the two terms as if they’re one in the same, but I see that as a self-serving argument on the part of their largest constituent group, flat-fee planners. They want to argue that they deserve some on-going fee for “planning” but also think “investment advice” isn’t all that important since they’ve embraced MPT so tightly that they figure that need is met with a five ETF portfolio and annual rebalancing.
It seems to me that many, perhaps most of the people that would benefit from genuine financial planning, expense review, etc., are people with no investable assets to begin with, and I don’t seek those people as clients. More importantly, I don’t see the crowd that considers “investment advisor” and “financial planner” to be the same thing chasing those people down to gain their business.
Like I said, a 66 allows me to charge for investment advice, rather than execution of orders, and with that comes a different level of obligation to the client on the subject of conflicts of interest. That doesn’t mean I have an obligation to go over their checkbook with them to review their spending if I want to embrace the title “advisor”.
[quote=Big Taco]By this I mean that many of your clients (10% or more) pay you a retainer to gather pertinent data on their finances, run it through some sort of planning software and meet with the client frequently (quarterly or semiannually) to educate and help implement documented advice and provide a compliant deliverable. I don't see this being done at any of my local competitors. [/quote]
Yes and no. We can charge a retainer and a fee for planning services. The planning service pricing menu can be complicated, but suffice it to say I chose from that menu in such a way as to provide needed services without additional cost to the client, since in the vast majority of cases I’m already charging a fee on investment management.
I think you’ll find your competitors are meeting with clients on a quarterly or semi-annual basis, but if my plan for the client suggested additional saving for some goal or the re-titling of assets I educated them on that when I delivered the document, I’m not going to schedule regular meetings with them to harangue them again on the subject. I will, however, meet with them to discuss investment results and review/tweak the plan around changes in their circumstances or the investment environment.
I’m so stupid, I just use barcharts and American funds. Dumbass, dumbass…dumbass…I’ll just go back and sell vacuums…its easier…
I must be missing something in this conversation. You keep throwing these questions out here, I answer, then you come back with a response like that. I'm sure I'm not the only one wondering what you would do with that client you mentioned before. Possibly I'm confusing Estate Planning with Financial Planning, because we seem to not be communicating very well. Why don't you spare me the look down your nose and tell me how you would handle that situation. Spears- if you're not going to add anything to this conversation besides your normal snide comments, why don't you just keep your mouth shut.So, for almost all cases you know enough to do it yourself, and in the rare instance you get one more complex you’d call whomever answers the phone at the trust department, an annuity/mutual fund wholesaler and a local attorney.
That’s good.
Best of luck to you!
I was adding what I was taught to do…possibly even by you. If it stung…or if your defending the legend Lee (whats his name)…I can’t help it. Just keeping curtain pulled back there Mr Wizard…
The legendary American funds ICA chart is the holy grail amongst the EJ FA's..and not just the newbies. Spears, I feel your pain.I’m so stupid, I just use barcharts and American funds. Dumbass, dumbass…dumbass…I’ll just go back and sell vacuums…its easier…
[quote=mikebutler222]
[quote=Big Taco]Okay, so if everyone has 66s, do those of you who work at wirehouses feel that you're focusing on financial planning (other than advice that is "incidental", and comes up in conversation at review meetings)? [/quote]<?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />
I think you’re assuming “Investment advisor” (which is what the advisory accounts/66 is all about, being paid for advice rather than execution of orders) and “financial planning” are synonymous. [/quote]
I'm gonna stop you right there. Don't assume what I'm assuming. I know the difference between investment advice and comprehensive financial planning and have explained the difference to clients for years. I understand what a few posters wrote about a 150page book that no client will EVER read. I've understood this from the beginning. That's just a deliverable. A compliant deliverable. It doesn't matter. The value is the client that's actually committed enough to bring in all the statements (paystubs for calculation of income, tax w/holding, FICA, qual. plan contributions, group insurance prems., etc.), other investment account statements, insurance policies, SS estimate, Pension estimate, other incomes, Tax returns, estimations of property values, mortgage info, other debt info, etc. Then it's time to discuss goals: retirement, college saving, vacation home, what will retirement or semi-retirement look like (and figuring out how much it may cost), charitable giving, do they plan on spending all of their money, or do they want to leave an inheritance, and WHEN do these goals need to happen... During the analysis I generally uncover a thing or two that is important, but that I had not considered before I saw all the clients info. After the analysis is done, it's time to explain the clients current situation, how on track they are, and recommendations. This does not need to be complicated. It should be as simple as possible. This should never be: "here's a 150page book. Read it and call me with questions". There's no value in that. The value to the client is that if they understand your assessment, and your recommendations and how to implement the recommendations, then they will most likely be able to achieve their goals, or possibly a more realistic revision of their goals. They've also purchased your time to see you every quarter or 6 months, whereas they may not have been a lucrative client before (most of their investments in 401k). The value to the advisor is that you have a much more complete and black-&-white picture of their finances, you will identify more business usually (other accounts, insurance coverages/replacements, too much money in cash at their bank, etc.), and as your clients realize that you're their financial architect who understands their big picture, they'll bring new business to you. I don't do this for even a quarter of my clients on a regular basis. But it usually deepens the relationship and allows me to offer a higher level of advice.[quote=Big Taco][quote=mikebutler222] <?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Okay, so if everyone has 66s, do those of you who work at wirehouses feel that you're focusing on financial planning (other than advice that is "incidental", and comes up in conversation at review meetings)? [/quote]<?: prefix="o" ns="urn:schemas-microsoft-com:office:office"/>
I think you’re assuming “Investment advisor” (which is what the advisory accounts/66 is all about, being paid for advice rather than execution of orders) and “financial planning” are synonymous. [/quote]
I'm gonna stop you right there. Don't assume what I'm assuming. I know the difference between investment advice and comprehensive financial planning and have explained the difference to clients for years.[/quote]
Then why did your question jump from “incidental”, which is what investment advice is considered by governing regulations, in any form of brokerage account to “focusing on financial planning”? If you weren’t relating investment management with focusing on finnancial planning, I didn’t understand your point.
[quote=Big Taco] The value is the client that's actually committed enough to bring in all the statements (paystubs for calculation of income, tax w/holding, FICA, qual. plan contributions, group insurance prems., etc.), other investment account statements, insurance policies, SS estimate, Pension estimate, other incomes, Tax returns, estimations of property values, mortgage info, other debt info, etc.
Then it's time to discuss goals: retirement, college saving, vacation home, what will retirement or semi-retirement look like (and figuring out how much it may cost), charitable giving, do they plan on spending all of their money, or do they want to leave an inheritance, and WHEN do these goals need to happen... [/quote]
I think you'll find your wirehouse competition does the same thing for those clients in need of comprehensive planning. Most of time I’ll leave it to the client to tally up income and debt information on a questionaire, and won’t ask them to bring in stubs for that sort of debt side issue. I will, however, with most every client ask for everything related to the asset side of the equation. That’s pretty much basic profiling and know-the-client stuff that’s part of wirehouse training.
bspears you have GOT to find something else to talk about- wow, it’s just embarassing…
New new…so your embarrassed by my comments. Sorry, I don’t post my rants to embarrass you, I just try to report the other side…you know…fair and balanced reporting. Try to avoid my postings. This will allow you to continue the lie and feel good about yourself. So the market is down 7%, and the poor schmuck you put into a 5.75 A share is now down what…do the math. I bet you can’t wait until the statements hit in December…ya hooooo
[quote=mikebutler222]
[quote=Big Taco][quote=mikebutler222] <?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Okay, so if everyone has 66s, do those of you who work at wirehouses feel that you're focusing on financial planning (other than advice that is "incidental", and comes up in conversation at review meetings)? [/quote]<?: prefix="o" ns="urn:schemas-microsoft-com:office:office"/>
I think you’re assuming “Investment advisor” (which is what the advisory accounts/66 is all about, being paid for advice rather than execution of orders) and “financial planning” are synonymous. [/quote]
I'm gonna stop you right there. Don't assume what I'm assuming. I know the difference between investment advice and comprehensive financial planning and have explained the difference to clients for years.[/quote]
Then why did your question jump from “incidental”, which is what investment advice is considered by governing regulations, in any form of brokerage account to “focusing on financial planning”? If you weren’t relating investment management with focusing on finnancial planning, I didn’t understand your point.
My point is that when you have a client with only an advisory or wrap account, as far as I'm concerned, the conversations and advice will be account-centric, and not really get into the fine tuning of a documented financial plan. Yes, it will still be an advisory situation/relationship, but will revolve around the assets, not the "big picture" of the client's financial life. You may say that you're very thorough in this respect, and I will not disagree, but if that's true, then I assert that you're underpaid if you're offering comprehensive financial planning included with the price of asset advisory.
[quote=Big Taco] The value is the client that's actually committed enough to bring in all the statements (paystubs for calculation of income, tax w/holding, FICA, qual. plan contributions, group insurance prems., etc.), other investment account statements, insurance policies, SS estimate, Pension estimate, other incomes, Tax returns, estimations of property values, mortgage info, other debt info, etc.
Then it's time to discuss goals: retirement, college saving, vacation home, what will retirement or semi-retirement look like (and figuring out how much it may cost), charitable giving, do they plan on spending all of their money, or do they want to leave an inheritance, and WHEN do these goals need to happen... [/quote]
I think you'll find your wirehouse competition does the same thing for those clients in need of comprehensive planning. Most of time I’ll leave it to the client to tally up income and debt information on a questionaire, and won’t ask them to bring in stubs for that sort of debt side issue. I will, however, with most every client ask for everything related to the asset side of the equation. That’s pretty much basic profiling and know-the-client stuff that’s part of wirehouse training.
[/quote] Trust me: you want all the docs in black and white. Garbage in, Garbage out. I'm not saying clients are incompetent in this respect... but actually they usually are. That's fine if you have them fill out the profile, but have them bring in the docs anyway to back up their questionaire, and it's good for you to have these docs scanned in your database for compliance in the case they review your documented advice and wonder what the basis for your recommendations is.[quote=Broker7]
Only 4% of new news make it to the 5 year mark...good luck...you will need it[/quote] Where did you get that stat? Out of your butt?Mr. Spiff,
I recall that you once mentioned that you had gone from HO to the field, How long ago was that? What did you do before EJ? How large of a book did you take over? What departments did you work in? What segment are you at? As they say on all the law shows on TV "shows credibility"I thought I cornered the market on Spiffy bashing…I need to call my agent. From what I’ve taken from his comments…he’s been out 11 years, trades a little over 6mill in business and wants to be a GP. He likes long walks to Weddles office, when the janitor lets him in after hours. He worked in HR department doing phone interviews of newby’s. He is now…I mean just now…segment 3.
Oh…and he is a cancer. I mean his sign…not an incurable disease destroying his clients accts.