Weekend Digest for Financial Planners/Advisers & Paraplanners (2nd & 3rd March)


February was all about momentum! And if the sound bites coming from Canary Wharf is anything to go by, even the FSA was on the ball! The latest centres on a warning about the risk of ‘systemic mis-selling’ from poor DFM risk mapping and another set of top questions on RDR which also includes guidance on the use of DFMs/DIMs! Worth a read

So, in this week’s digest, we look articles on business developments, specifically getting referrals from existing clients,  options to ‘tap’ into the ‘orphaned clients’ goldmine and the use of technology among the affluent. We close with a very interesting article on how to value the client’s career as an asset class (similar to cash, equity etc) in the financial planning process. 

But first, if you have ever been through that awkward experience of negotiating with client who want the ‘lowest’ price, you may find this video by Voxinabox amusing…


[embedplusvideo height=”365″ width=”600″ standard=”https://www.youtube.com/v/7_qwjcxwUqw?fs=1&hd=1″ vars=”ytid=7_qwjcxwUqw&width=600&height=365&start=&stop=&rs=w&hd=1&autoplay=0&react=1&chapters=¬es=” id=”ep8564″ /]


 Thanks to Dennis Hall (@YellowtailFP) for sharing that on Twitter.


Never Ask for a Referral (Here’s Why)

If you are vaguely interested in how best to get referrals from existing clients, this article by Ken Haman goes against the grain of conventional wisdom on the subject. He says ‘don’t ask!’

His view is premised on the fact that asking a client for referral places an obligation on two people – the client and the person being referred. In other words, asking for a referral put that client in a social “double-bind” where her freedom of choice is constrained. In essence, you are ‘forcing’ the client to make a choice between saying “yes” and offer up a name or two, or saying  “no, I’d rather not do that” and risk disappointing you and stressing the relationship.

Haman also points out that the person being referred is also being constrained in the sense they didn’t ask to be referred.

When you ask your client for a referral, you are trying to cause him to take an action he didn’t choose for himself. This constrains his freedom. In addition, you are trying to cause another person to take an action he didn’t choose for himself. You are constraining the freedom of two other people—and no one likes to have his freedom of choice taken away.’ He wrote

Instead, Haman recommend educating clients about referral rather than asking them! This means  educating clients to recognise that when someone in their social network – friend, family, coworkers – has a problem, the adviser is able and willing to help.  In this case, both the client and the person being referred enjoy freedom of choice, and no one feels any pressure of obligation.

“ The strategy is actually quite simple: educate your clients about the value you place on referrals and your willingness to be deployed as a resource to their friends and family members whenever there is a need. Remind them several times a year so that whenever they encounter such a friend, they immediately think of you and take action.”

This way, you haven’t just asked for a referral; you’ve preserved the client’s freedom of choice and defined your values. Instead of stressing the connection, you’ve deepened your client’s appreciation of you as a resource and the value of the services you have to offer.


The ‘Orphaned Clients’ Goldmine 

This article by Michael Trudeau in the FTAdviser highlights the several approaches to low-value/orphaned clients, which according to the CII, is estimated at 14m potential clients.

Trudeau draws an interesting analogy between this ‘ever-deepening well of low-value clients and the Canadian oil sands. The resource is there waiting to be tapped, but it is so difficult to extract value in a profitable way that traditional methods of exploitation will not work. You can’t just drive up and dig a hole to get to that black gold.’

He outlines 4 options for dealing with low-value clients in a Post RDR world

  • Ignore them and concentrating instead on your core competency of face-to-face advice.
  •  Sell the client book, if you have any
  •  Outsource lower-value clients to a third party which would allow them access to a restricted menu of products from a handful of providers.
  • Continue ongoing advice with a telephone-based restricted, pared-down advice service.

And there is also the option of digital/online propositions? For many advisers, it’s not so much a matter trying to establish a new source of business. Rather, it’s a matter of not abandoning clients that until now they have been able to serve.


World’s Affluent Want Digital Access to Investment Advice

This article looks the findings on a recent study on clients’ assessment of how wealth managers use technology in delivering and implementing investment advice.

The study reveals that while  affluent people around the world are generally satisfied with their wealth manager’s use  of technology at the transactional and reporting level,  they are not  so impressed with the way advisors use technology to deliver advice and recommendations.

The report also sheds some light on how the affluent use technology to find an adviser, showing that the affluent checked wealth managers’ credentials and investment recommendations through various digital filters before making decisions.

While  previous personal experience is the key driver ( 62%) in their decision to work with a particular financial provider, they  double- and triple-checked information digitally. 50%  percent said tools such as “ratings and reviews of firm’s products and services” were most important, followed by “firm’s website” (47%), “news articles about firm and products” (46%) and “price comparison sites” (44%).

Interestingly, respondents ranked a firm’s social networking presence and blog posts as the least important factors when evaluating a financial provider.

The Futurewealth Report, conducted by SEI, Scorpio Partnership and Standard Chartered Private Bank,is based on a survey of 3,477 respondents globally with an average $1.9 million in net worth and due out in the second quarter of the year.

Sebastian Dovey, the Managing Partner at Scorpio Partnership who authored the report will be joining us on G+ Hangouts in a few weeks to explore the subject. Watch out for details soon.


Career Asset Management: Where Wealth Is Created

This very interesting article by Michael Haubrich, CFP® in the Journal of Financial Planning looks at client’s career as an asset class.

The current financial planning practices tend focus on investment management, tax planning and risk management but ignores clients most valuable asset – their career. There is a need to expand the traditional view of asset classes to include career as an emerging, vital element in the financial planning process.

Haubrich observes that ‘like traditional cash, stocks, bonds, and real estate asset classes, the career asset class represents an opportunity for clients to acquire additional financial assets. It also offers planners the opportunity to add significant value to client relationships by increasing their clients’ potential income, optimizing work/life fit, and extending the life cycle of the career asset.’ This is what he refers to as   – career asset management.

For example, the new reality is that rather than clients retiring abruptly at say 65, they tend to ease themselves into retirement by gradually reducing their working hours. This may have the effect of extending their career by another 5 years or so. The effect of which is additional earnings, benefits, pension contribution etc, all of which are quantifiable in financial terms.  In addition, there are many qualitative  factors of the career asset, including job satisfaction, social interaction, and self actualisation that also would be measured as part of calculating a client’s total career value.

So the question is how? How do you take estimate the value of clients asset? Try this….

Career Financial Value (CFV) = (PV of Wages + PV of Benefits)-(PV of Employment Costs)

This helps quantify the financial value of the client’s career but it is worth bearing in mind the qualitative value as well. Financial Planner can use this in supporting the client in managing risks inherent in their career by establishing working capital fund – to help with such matters as career development, career breaks, training and re-training.



I hope you have enjoyed this and hopefully it’ll make you job a little easier! As paraplanners, that’s what we do! As usual, thought and comments are welcome. Enjoy your weekend!









Abraham Okusanya
Abraham is the founder of FinalytiQ, a research consultancy for platforms, asset managers, and advisory firms. Recognised as one of the country’s leading experts in retirement income, platforms and investment propositions, Abraham has authored several papers on these subjects and delivered talks to the Personal Finance Society, The FCA and several conferences across the country.

Read Full Bio

Submit a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.