Why You Need to Be a Financial Director; Not Just an Advisor

Couple sitting with an advisor - comprehensive financial planning | The Advisor Authority
August 29th, 2023

As the investment landscape continues to change, it’s never been more important to differentiate yourself and your services from your competitors and DIY-brokerage accounts.

It’s never been easier for your clients to access financial information, update their own portfolios, place trades, and even purchase insurance policies without speaking to an advisor. While this can seem like a pretty significant threat to your business (and it could be), it’s also the best reason for changing the way you operate so you can rise above the robo-investors.

After 31 years in the business, I can tell you the importance of your investment philosophy and how your particular firm manages client money is close to zero. Every advisor your clients and prospects speak to follows the same script. Your clients are more informed these days, and more importantly, they’re simply not interested in your Callan charts and manager selection process.

They want someone who has their back – Not just a money manager.

If you’ve ever attended one of my training webinars or in-person workshops, you know I stress the importance of focusing on the NON-Investment side of a prospect’s balance sheet. This is important because it’s an area most advisors don’t touch; it is an area of significant vulnerability for most prospects, and it’s a way to differentiate yourself from all of your competitors.

Prospects do not like feeling vulnerable. They do not like thinking there may be blind spots in their financial life, especially when they are retired or getting ready to retire. Your job, as their potential advisor, is to identify any weaknesses that may exist in the prospect’s life and then assure them you can help fix those weaknesses.

To do this, you conduct an initial client meeting so different from every other advisor, they are literally compelled to work with you. No charts, no brochures, no performance metrics from a pitch deck. Just a series of questions about the non-investment areas of their lives to uncover any potential pitfalls or risks that exist… risks that could derail their plans for a nice, comfortable retirement, or whatever goals they have.

Financial Director | The Advisor Authority - Erin BotsfordAt some point along the way, most prospects come to realize they are looking for a plan and they want that plan executed by a Financial Director. They want someone to understand all aspects of their financial lives, not just their investment portfolio. Like a concierge doctor, prospects want one person or entity to coordinate all of their other relevant advisors and make sure all of their boxes are checked.

A good Financial Director will not only identify weaknesses that may exist in the prospect’s current situation, but they will also have contacts and/or resources to help fix those problems.

The good news is that a Financial Director doesn’t have to know everything. They just need to recognize potential problems and bring in experts to fix them.

Why position yourself as a Financial Director

Prospects will typically interview multiple advisors before deciding which one to use. Certainly, they’ll be looking for someone they can trust, but more importantly, they’ll be looking for someone who will look at all aspects of their financial lives, not just their investment portfolio.

Since most advisors focus extensively on the money management side of the business (because that’s where all the money is), positioning yourself as a Financial Director can be a huge differentiator, especially in competitive situations.

How to positions yourself as a Financial Director

If you have ever taken one of my free webinars, I teach exactly what to say to position yourself as your client’s Financial Director. To do this, you first have to forego the temptation to bring out your investment pitch deck or talk about your manager selection process – they’ve heard that pitch already.

Instead, begin by focusing on the risk management side of the balance sheet and ask them questions about things like the titling of their properties, how much umbrella liability insurance they have, or whether they have teenage children driving automobiles in their names, for example.

All of these non-investment topics could have serious implications to their overall financial well-being. For instance, what if they have a teenager away at college, driving a car in their name and he or she is involved in a car accident? Knowing accidents happen all the time, what are the implications to your prospect or client if they end up being sued as a result of the accident? Do they have sufficient umbrella liability coverage? What if the child was underage and had been drinking? In that case, do they know their insurance coverage would likely be nullified? In that case, which of their assets would be available to satisfy a judgment?

That should also lead to a discussion of exactly how all of their assets are currently titled. What if they have rental properties? How are those properties titled and what happens if a renter is injured on their property?

A good Financial Director is going to ask these types of questions and bring in experts to help shore up any weaknesses in the non-investment side of the balance sheet.

Clients intuitively want and will pay for a Financial Director

Most advisors focus on the investment / money management side of the business and charge appropriately for manager selection and oversight. But AUM fees are being squeezed as clients realize all or most of the information they need is readily available to anyone willing to do their research.

That said, clients typically don’t mind paying for asset management, as long as their account values are going up. What they don’t like is paying for asset management while watching their account values go down. There’s always that uncomfortable conversation that happens as clients realize your crystal ball is no better than theirs.

Clients value and appreciate advisors who think outside of the box, who challenge the assumptions they have, and point out potential pitfalls that could come along and wreak havoc on their financial lives.

Typically, as clients prepare for retirement, they have factored in a decline in the market value of their portfolio; they hope their advisor has a backup plan for that scenario.

Car accident - financial director | The Advisor Authority - Erin BotsfordWhat they haven’t factored in are things like a lawsuit that results from an accident where their son or daughter is driving a car in their name and hits a plastic surgeon. That scenario has rarely, if ever crossed their minds. They typically have no idea how much umbrella liability insurance they have, or what possible threats exist to their financial future.

It is the advisor, acting in the capacity of Financial Director, who can point out the pitfalls that exist, provide potential solutions for those risks, and bring to bear the resources to take those risks off the table.

Clients and prospects will quickly see, through the appropriate questions you ask, you may have potentially saved them from financial ruin. Trust me when I tell you they are willing to compensate you handsomely for staying on top of potential risks that could come along and ruin them financially.

Interestingly enough, ultra-high net worth individuals (professional sports figures, for example) are typically surrounded by advisors. They usually have money managers, tax advisors, estate planning attorneys, insurance agents, etc.

Often times their advisors operate in silos, never consulting with the client’s other advisors. While these advisors bring expertise to the client, in my experience, most clients want a single person or entity to organize and manage all of it. Essentially, they want a Financial Director to know, understand, and coordinate all of their other advisors, bringing them in as necessary.

They also want their Financial Director to interpret concepts for them and be able to speak to them in plain English. That’s where you come in. You should aim to be the Financial Director in the lives of your clients

Clients expect to pay for your expertise, and charging fees will help grow your business

A student of our Elite Advisor Success System™ was recently on a call with our Mastery group, explaining how his business completely changed once he realized the value of what he brought to the table. After completing the client exploration conversation, the client asked, “okay, what’s it going to take to fix these issues?”

This translates to: “If I want to hire you as my Financial Director, what’s it going to cost me?”

Having never charged a financial planning fee before, this advisor took a chance and replied, “my annual financial planning fee will be $44,500.” In his own words, “the client didn’t hesitate for a single second before agreeing to my fee arrangement. They already expect to pay for all the advice, guidance, and expertise they receive from other providers, why shouldn’t I be compensated the same?”

Clients are leaving advisors who don’t provide a plan.

More than just my personal belief that charging fees to act as your client’s financial director is what builds a bigger and better practice, the data shows how important it is for client retention.

It’s not just a nice add-on; it’s something clients are expecting.

“A recent study by CEG Insights found 14% of clients with $5 million to $10 million were considering switching advisors. Among individuals with $10 million to $25 million, that figure rose to 22%.

“Topping the list of client complaints in the CEG study was that advisors had failed to provide comprehensive financial planning counsel in areas like tax and estate planning and asset protection. Though many independent RIAs stress the breadth of their services beyond basic money management, especially when competing against wire houses and private banks, a major portion of their clients don’t believe they are receiving it.” source

You may not be worried about your clients leaving to go to another advisor, but if you’re not providing comprehensive financial planning, you might want to reconsider. Clients expect a certain level of support for the net worth they bring to the table, and for advisors looking to attract more high-net-worth individuals, this means more guidance, more foresight, and a plan that covers all their respective bases.

Frustrated losing a client | The Advisor Authority - Erin BotsfordIf you’ve ever had a client leave, you know it’s not an easy conversation to have. In many cases, there’s no conversation at all – a request comes in that assets be moved, and suddenly you’re left out in the cold. Could you have saved the relationship and kept the client? Maybe, but more often than not, the client leaves because they weren’t getting what they needed, and they weren’t interested in asking for something that might be out of your expertise. If you don’t start with a plan, they may not think you have a plan at all.

Again, the ever-expanding availability of financial information and DIY investment platforms presents the perfect opportunity to step up your game and move from being just another advisor to the financial director for high net worth clients. Comprehensive financial planning gives your practice a new line of revenue, more credibility, and a way to keep your clients happy and well-serviced.

If you’d like to learn more about how our students close high-net-worth prospects at the very first meeting and charge for comprehensive financial plans with confidence, check out the Elite Advisor program or contact us to learn more.


Business Success, Client Relations, Closing Prospects, Sales
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