Financial Planning Firms Grow Best In Tough Times - FP Advance

Financial Planning Firms Grow Best In Tough Times

BY brett

Tough times are a godsend for financial planners. 

Great financial planning firms grow faster in difficult times than in the so called ‘good times’.

It may seem counter-intuitive but if you’re an experienced financial planner who has been through falling markets and economic recessions before, you’ll know this to be true. 

If you’re a bit younger or you’ve only moved to a financial planning business model in the last 5-10 years, I’m writing this blog for you.

Why is now a great time for financial planners?

Because clients can now start to see the difference between advisers. Here are a few ways that happens:

1. The promise of great returns

A rising tide floats all boats. 

In our profession, that means that rising investment markets delude the general public into thinking they’re receiving good advice. However, as Warren Buffet says “Only when the tide goes out do you discover who’s been swimming naked.”

Run-of-the-mill advisory firms sell ‘supposed’ investment skills and financial returns to their clients. In difficult markets and recessions, clients start to question the validity of the promises they’ve been made. 

Financial planning businesses don’t do that. They’ve been telling clients year after year:

“We can’t predict returns or control investment markets. We’ve got you in a suitable portfolio to work through any downturn. If you see markets fall, take two aspirin and have a good lie down for an hour. If that doesn’t work call me. But whatever you do, don’t touch your portfolio.”

Great financial planners have always focused on delivering lifestyle outcomes for their clients. If a client does have a wobble as they watch their investments fall in value, the financial planner prepares an updated cashflow model and shows the client that, even with a significant fall in investment values, “everything is still going to be alright.” Now the client is re-focused on what matters, not short-term volatility. 

2. Communication, communication, communication

Financial planners communicate with their clients frequently during a downturn. 

Your communication (via written blog, video or audio message) will simply be repeating what you’ve been telling clients for the last 10 years (i.e. sit tight and do nothing). However, clients will really appreciate you being proactive and giving them that reassuring reminder. It shows you have empathy and that you’re organised. 

Don’t be misled by some (often very good) advisers bragging about how they haven’t had any client calls as the markets have fallen. What they’re trying to say is that they’ve educated their clients. I get it, but I’d still be communicating with my clients regardless. 

Additionally, you should add a paragraph in your communication about being available to assist any friends, family or work colleagues of your clients that are not getting the advice or service they thought they were from their own adviser. This is a great time to be offering a free “second opinion service”. 

Maybe you could even run a webinar for your existing clients and let them know they can invite a guest or two who might also benefit from the information. This can be the source of a few extra leads as well. The team at Expert Wealth did this brilliantly in the early stages of the pandemic.

3. Answer the damn phone

Financial planners answer their phones. What an amazing skill.

Bad advisers go missing in action and stop answering their phones because they’re shit scared it’ll be a client who’s upset about their returns. 

The simple act of answering the phone and answering any difficult questions builds trust. 

And in difficult times higher levels of trust generate a lot of incoming lead traffic for you. 

Hooray for tough times

I’m saying “hooray for tough times” flippantly just to make the point. I realise that out in the world lots of people are really hurting. I’m not trying to downplay that. 

This is the time to let the world see the high-quality work that you do as a financial planner. It’s not always easy for people to know the difference between good and bad advice until we hit some bumps in the road.

This is when you earn your money as a financial planner. 

Often you’ll be taking a few more calls, responding to a few more emails, AND getting a few more leads than usual. All of that can add up to an increased workload. Don’t shirk it. The next 12 months or so is when you can build trust with your clients that will pay you back for the rest of your career. 

Hooray for tough times. This is when the great financial planning firms grow.

P.S. This blog is about the gift in tough times. If you and your business are struggling right now then go to my blog Under pressure right now? Here’s what you need to do. It will give you some guidance on how to create your own turnaround plan. I wrote it at the beginning of the pandemic, but the advice is still sound.

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As the economic screws slowly get tightened, here are a few reasons to be cheerful if you run a financial planning firm

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ABOUT BRETT DAVIDSON When you work with FP Advance you work with me, Brett Davidson, directly. My motto is ‘advise better, live better’ and I practice what I preach. I’m straight talking and get to the heart of an issue quickly. There’s no beating about the bush, just a focus on helping things improve. Ask my clients – what I teach works.