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Practice Challenges Facing Financial Planners

By Taylor Liao, CFP

The financial planning profession faces a lot of challenges including a general lack of awareness from the public, competing designations that confuse the public, lack of regulation, and people claiming to be “financial planners” when they are not qualified.  

The biggest challenge in my opinion for CFP professionals is the uncertainty about the future of financial planning. Some people in the industry don’t want to face the challenge of becoming a financial planner. It is rare to find a CFP professional who is willing to take the risk, roll up their sleeves, and setup a financial planning firm.

I don’t think being a financial planner will ever be easy, because the career deals with human emotions, desires, and money. Even developed financial planning markets such as the US or the UK struggle to gain market share. To gain market share, we must be creative and willing to try many different ideas. I think CFP professionals should be open-minded and work with a variety of people on their teams and in their firms. It is more advantageous to have people who compliment your work style by adding new perspectives, than to work with people who are all just like you.

Educating the Public about Financial Planning

Educating the public is the foundation of developing the financial planning market. We have to make the public aware that there is a better alternative to purchasing financial products from salespeople. The public receives financial information from blogs, newspapers, magazines and television every day. Unfortunately, most of the information is regarding investments in the stock market. People in the media will call themselves financial planners but they aren’t CFP professionals and don’t have the credibility to speak to the profession. In fact, most of these people are product providers trying to sell something. The biggest problem with this is that the public is misled to believe that financial planning is about selling products; which just isn’t true. It is our job to education the public about what financial planning really is.

Giving Presentations about Financial Planning

A good speech will turn a high percentage of the audience into prospective financial planning clients. Grabbing the audience’s attention is very important. The best way to do this is to relate to peoples’ daily lives and speak about things they are interested in. Lastly, conclude with the concept of financial planning.

Last year, we had news that caught the attention of the public; the Labor Pension System of Labor Insurance was in financial trouble. They announced that they would not be able to pay out the annuity to retired laborers. At that moment, everyone was concerned that Labor Insurance would go bankrupt.

When invited to talk about retirement planning at Hewlett-Packard last December, I opened by discussing the Labor Pension System because they were all interested to hear about it. I still closed with the philosophy of financial planning. As a result of this presentation, I was able to teach more than 80 people about the benefits of financial planning. This is the first step of warming people up to the idea of a paid advisory service.

It is really important to highlight an event that is affecting their every day – this will catch their attention. This approach is much more exciting to listen to than an educational course. It also helps if you can add humor or metaphors to tell the story of financial planning.

Using Technology to Get Clients

People may not be willing to attend a 1-2 hour class but odds are better that they will watch a 10-20 minute video on their smart phone. Technology allows us to have access to more people. How about putting a few free beginning courses on your website to attract interested people and charge for the more advanced courses? The technology to accomplish this is mature at this point and you can keep your costs low. The beginning videos could focus on topics like “How to keep a spending record on your smart phone” or “How to create a monthly/yearly analysis report of your spending.”

These days, people value quick and efficient solutions to their problems. Make your courses short, easy to understand, and simple to purchase and watch. In Asia, teachers are paid high respect, and concurrently, the smart phone is gaining more and more popularity. Financial planners trying to keep up with the evolving generations would be smart to create short 20-30 minute speeches that are available on smart phones, than 2-3 hours lessons in a classroom.

Easing New Clients into Financial Planning

Do you have difficulty getting clients? It can be hard to convince prospective clients to pay high advisory fees. If you put yourself in their shoes, this is the first time they are learning about financial planning and after 1-2 hours of meeting with them, they are expected to trust you right away with their most intimate life details. One way to slowly build trust would be with experiential marketing on your website. Experiential marketing integrates elements of emotions, logic, and general thought processes to connect with consumers. Financial planning is a new concept and intimidates consumers who have never heard of it, so why not ease them into it?

Due to the slow moving economy, the public has become more conscious of their spending. How much should a financial planner charge for a case? I don’t think planners should lower their prices to attract new clients. Instead, what about offering a smaller price planning package that helps clients understand financial planning better? The package could include a 2 hour consultation by phone and a planning report via email. If they like this small package, they might be willing to pay for a comprehensive financial plan later on. I recommend charging about US$155 for something like this.

Using EAP to Develop a Wider Client Base

Another way to meet more clients is an Employee Assistant Program (EAP). An EAP is a benefit that companies, usually with 500 employees or more, offer to their employees. Employees are able to speak on the phone or face to face with consultants in varying areas such as mental health, law, financial planning, etc. I recently started working as a financial planning consultant for an EAP and I now have an opportunity to meet new financial planning clients. The employer pays for the first consultation, but if the employee decides to continue the financial planning process, then they will pay the fees. 

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