AssetMark sees all the cutting-edge advisory trends faster than just about anyone. Here's some actionable support for advisors looking to grow in the smartest way possible.
Specialization certainly has its benefits: Financial advisors who specialize build up deep knowledge in their chosen niche, and clients looking for that particular service know where to go.
But whether it’s tax planning, investment management, retirement planning, or any other specific financial planning service, specialization limits growth. There are only so many clients in need of your specific service at a given time.
What’s more, modern clients’ financial needs are different than they used to be. Today’s financial landscape is more complicated than ever and requires a host of specialists to navigate. Any client that comes to an advisor for, say, tax planning, may also need help planning for their children’s college, for their retirement, for their estate, and more.
Building up expertise in all of these different areas might seem like it requires a time machine, but the reality is that diversifying your service offering is an attainable and desirable goal for financial advisors.
But worrying about how you’ll provide all of these different services is a bit like putting the cart before the horse. Instead, financial advisors should first adopt a different perspective on how they provide their services.
Shift Your Focus to Financial Planning
Rather than focusing on the individual needs of a given client, financial advisors should take a holistic approach that accounts for their clients’ overall financial wellness. In other words, they should pivot to providing financial planning services.
This involves a greater emphasis on discussions and relationship-building with clients. When taking on a new client, financial planning requires a significant time investment upfront. You’ll want to talk about a client’s goals, the unique elements in their life that need to be accounted for, their challenges, and their concerns.
Why Financial Planning Is Key to Diversifying Your Offering
1. Financial Planning Wins Clients’ Business
For many financial advisors, the upfront time investment that it takes to make a financial plan with their clients is a non-starter. Time is already short, so why should an advisor focus on something that doesn’t actively generate revenue?
The truth is that having a conversation about financial wellness and long-term goals with clients has a direct impact on your business’s bottom line. Among its many benefits, building a financial plan:
- Identifies the additional services outside of your specialty that your clients are searching for
- Enables you to build a long-term relationship with your clients, ensuring that once you’ve accomplished one goal (like college planning), you can move onto the next goal (like retirement planning)
- Leads to referrals: As clients build a relationship with you over time and observe how well you’ve taken their financial wellness into consideration, they’ll be more inclined to refer family members and friends to you as well
2. Financial Planning Promotes Client Retention
Financial planning, as opposed to specialized advising, is inherently a long-term service. As a specialized advisor, your clients may only stick with you until a given goal is met, such as planning for taxes in a particularly complicated year, setting up their 529 college savings plan, or building out a medium-range investment portfolio.
Meanwhile, that client still has other financial needs that they have to take care of. While you’re managing their retirement plan, they might go to another advisor for tax planning services. Or, they might seek out an advisor pursuing the more holistic approach that we’re advocating for in this article.
3. Financial Planning Leads to Better Client Outcomes
As a financial advisor, you have a fiduciary responsibility to do your utmost to ensure your client’s financial wellbeing. When the services you provide are limited in scope, your ability to fully meet that responsibility is limited as well.
When you establish a financial plan with your clients, you get to see the big picture. It could be that, having understood the full context of your client’s financial life, you might change your advice even within your specialty in order to better accommodate their unique circumstances.
What to Keep in Mind
To Charge or Not Charge for Your Financial Plan
When it comes to charging for the initial financial plan they craft for their clients, financial advisors hold two schools of thought.
Some offer their financial plan for free. This lowers the barrier to entry for clients who are uncertain about what working with you will be like. For advisors looking to expand their clientele, this can be a good option. The downside, of course, is that a client may simply take the plan elsewhere and decide that they don’t want to work with you after all.
Other advisors offer their financial plan for a fee. This ensures buy-in from the client and increases the odds that they’ll stick with you for the long-haul. Of course, it also makes it more difficult for clients who are on the fence about working with you. Thus, this works best for advisors who are happy with the number of clients they serve but may want to deepen their relationships with those clients.
Framing the Conversation for Your Existing Clients
There may be some hiccups when transitioning away from your niche to providing financial planning services. It’s a good idea to develop a communications strategy for your existing clients to make this transition as smooth as possible.
They’ll want to be reassured that you’ll continue to safeguard their financial future in whatever capacity they initially came to you for. Simultaneously, you’ll want to clarify how your new approach to financial advising will benefit them should they choose to build a financial plan with you.
Jump in Feet First
Expanding your practice to offer more holistic financial planning services is an intimidating prospect. There are all sorts of additional services that you’ll need to become familiar with; it may seem like gradually expanding your scope is the best approach.
But committing to offering end-to-end financial wellness is better than expanding in a piecemeal approach. Not only will the latter lead to client confusion, but it will also deliver the worst of both worlds: You’ll feel overextended, and you won’t deliver the benefits of a holistic, fully informed financial plan.
Fortunately, you don’t have to make this leap alone. While you build up your expertise and the capacity to serve the full spectrum of your clients’ financial needs, you can seek support from third-party asset management platforms like AssetMark.
We provide advisors looking to diversify their practice a foundation to build upon. That includes:
- Knowledgeable business consultants and financial advisors who can support you in the services you feel less confident in providing
- Technology and tools that can bring you more time in your day to devote to diversifying your service offering
If you want to know more, don’t hesitate to request a consultation today.
