Building a High-End Financial Services Practice - The Next Level

For the high-end financial services practice, Oberlin and Power's research identified 5 trends they see for the industry going forward and like most trends, these seem to lead to both opportunities and dangers.

The growth of affluent client markets. Studies show that there are more than 2 million people with financial assets of at least $1million - not including real estate, and that number is estimated to grow significantly in the coming years. So the opportunity for advisers looking to build a high-end financial services practice is very clear - more people with more investable assets equals more potential for success.

On the flip side, there is more and more competition among advisers for these investors. Additionally, these affluent investors of a high-end financial serices practice require - even demand - more and more sophisticated services. Their needs are complex and often intertwined with needs across many disciplines: investing, accounting, tax, and legal. It's really impossible without the right financial software and technology for one person to be able to adequately service each of these needs.

The Technology of the Industry is rapidly evolving. The opportunity that financial software and technology offer advisers is immense. Just considering all the ways to keep in touch with your clients regardless of their location (or yours) is really exciting.

The increase in available information and the speed at which you can slice and dice that data makes advisers of a high-end financial serices practice even more efficient and effective.

The downside is that clients expect you to make these technological advances. In fact, they sometimes relate adviser's skills in managing money or providing financial planning advice to the adviser's ability to deliver according to technological expectations.

The authors believe it's the rare adviser who can afford NOT to invest in technology - both with hard dollars and with his/her time to understand how to use the technology.

And then there's always the downside of when technology fails - everyone's seen that and experienced it. It's frustrating and it wastes time and money. Unfortunately, it's a given with today's systems.

The third trend is the rise of competition: Jill Powers and Cliff Oberlin see real challenges here.

The challenge: not only facing down your competition, but identifying who it is in the first place. Example: the representative who needed a signature guarantee stamp on a document and took his client to the bank to get it, while in the bank, the bank's broker sold the client another investment!

Another adviser lost a 401k client to a bank headquartered in a distant city - their trust department had been marketing to corporate clients, and there wasn't even a branch in the area.

Also, the authors call "Investing Noise" - which is a kind of like white noise, noise that is designed to play all the time and help block out other unwanted noise. Instead, this investing noise comes at clients from every media and advertising channel.

Usually, it's just hype, but it gets people's attention and steers them in often dangerous directions. Obviously it's not that attention grabbing and headline-worthy to stay invested for the long haul - so the media touts the Hot Stock of the Hour as a way to maintain interest in the mainstream public.

This makes the average investor feel that if he or his financial adviser isn't working this way with their money, they're somehow asleep at the wheel.

The Me-e-Generation also contributes to the success of the media message about doing your own thing.

The opportunity here is: If you can consistently communicate with your clients in a way that they will understand, you will become a trusted resource and they will tune out this Investing Noise. Most people really don't want to worry about their money 24/7 - in fact, most rarely want to think about it more than every quarter.

But advisers need to help clients sort through the junk news and see the big trend and how it does or does not affect them as individuals. For the advisers who can do this type of communicating, the opportunities to gather a large and loyal following are immense.

The 4th trend is Outsourcing. Not the kind of outsourcing where we are predicting jobs to go oversees to India - although there are tax preparing services who contracts with H and R Block who does the tax prep work in India. What they are talking about is working with other professionals to outsource those pieces of the financial services puzzle that fall outside your area of expertise.

Having a bevy of other experts and specialists at your fingertips makes you

The threat is that you will have to give up total control of the client - unless you build all of these outsource possibilities into your overhead. Even then, you can have turnover in staff and a client may have bonded with one member of your specialty team and leave with them. It's a risk, but it seems less risky than the alternative - overpromising and under-delivering.

The opportunity is that you can attract clients who have more complex needs and this often equates to clients who will be a good fit for an adviser because they have more assets or will need more services.

Consolidation in the industry as a significant trend affecting advisers - especially independent financial advisers. Here the consolidation of companies - specifically, broker/dealers.

The opportunity: With consolidation you usually will see 1 of 3 things happen: First, a large bank holding company will acquire broker/dealers hoping to increase the distribution channel for it's banking services and products;

Second, a large insurance company will purchase several b/d's again hoping to increase the number of agents and advisers who will be able to distribute their insurance and annuity products, and third - but not as often today - large b/d's will acquire small b/d's to increase revenues.

The opportunity for folks who have been a part of a consolidation effort is that there may be more products and services available under the consolidating parent company, more staff, better pricing may result as economies of scale are passed down.

The drawbacks are, beyond the discomfort that often accompanies a shift in personnel and departments, there may be a change in clearing firm, there may be a change in philosophy towards certain product offerings or compliance procedures, and there may be a change in organizational structure that fundamentally affects the way you've done business.

Oberlin and Powers also feel that there is a consistent and significant push from the parent company to impose their identity, their "brand" on the end-client, often stripping the adviser of their own unique identity - a branch name for instance…Powers Financial Services now becomes Bank 123 Financial Services.

advisortechsolutions.com wanted to know if Cliff Oberlin and Jill Powers believed that advisors have embraced technology They believe it really varies. There are advisers who embrace it too much!

They just enjoy the technology so much that it distracts them because they would rather play around on the computer than go out and find new business - in fact, Bill Good's system for years did not allow the Registered Representative to have a computer on his/her desk.

The representative had to rely solely on a service team to do the computer entry and look up - it was for that very reason: lot's of people enjoy poking around on their computer and not getting down to business!

What they think is more important is that advisers seem to do 2 things: embrace the wrong technology, and get stuck in old technology. The first is easier to fix.

By embracing the wrong technology, don't think comprehensively about what you really need in your practice and then go about solving the entire problem. Find one problem and solve it with one piece of software.

Then there's another problem, and there's a separate piece of software for that. This is not the adviser's fault at all! It's just the way that technology has evolved. And every time the new "Does It All" system comes out, it seems that it can't do that one little thing that YOU need done!

The dangers advisers face without technology according to the authors starts with compliance. Advisers face real recordkeeping dangers.

Meeting notes can be stored or, if taken by hand, scanned and stored for easy retrieval. If you're diligent about staying in touch with your clients, technology can easily keep that process manageable.

In terms of efficiency, There are not many people who can do without email anymore.

In terms of providing value to clients, technology is really important to the types of analysis and research that all the best advisers do - the web has been essential to that. For the clients themselves, technology may or may not impact them.

For example, the authors have clients who love to look at their accounts on line - whether or not it's a good thing they are checking too frequently - and they have clients who don't even own a computer and just want their dividend check to show up every month!

The trend toward communicating with clients is obviously leaning towards using technology more…especially for video conferencing capabilities - which would be a great leap forward when it's available en masse.

Bottom line: advisers face falling behind in all areas without technology, but getting a trusted technology adviser is a very good investment for an adviser in terms of money, time, and frustration.

Even if it's your grandson, get someone you can turn to for advice and assistance!

The authors of Building a High-End Financial Services Practice want readers to walk away with: A better understanding of the future that awaits them in the financial services industry: both its opportunities and its pitfalls.

Real Tools for transforming their practice into a high-end business - including an index of resources that they have successfully used themselves in their own practice and a greater insight into one of their most important strategic alliances, their broker/dealer relationship - with real tips on how to get the most from the relationship.

On all accounts they have succeeded on many more levels. To buy this book at the bookstore click here This outstanding book gives you the map to maximum efficiency and profits.