Tag Archive for: financial planning

Wells Fargo Advisors ad gets the focus right

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Excerpt from Wells Fargo Advisors ad

Financial advisors often struggle to communicate the value they offer to clients. I think Wells Fargo Advisors nailed it with an ad I saw in The Wall Street Journal (p. A5 on Dec. 29). The image above is excerpted from that ad.

Four things make this ad powerful, in my opinion.

1. Emphasis on the CLIENT, not the firm

More than half of the ad is taken up by a client photo. However, what the client says is more important than the photo, as I explain in point #2. Too many ads, advisor websites, and other marketing pieces emphasize the firm more than the client.

This emphasis on the client carries into more use of “you” than “we,” “us,” or “Wells Fargo Advisors.”

2. Emphasis on the BENEFIT, not the feature

The client says, “Confidence comes from knowing I have a plan for my future.” That’s a powerful statement with great appeal for many prospects, especially in a volatile year. The ad gives more attention to this benefit than to the feature, which is the plan.

3. Reassuring discussion of uncertainty

Uncertainty about the future has people on edge, but Wells Fargo Advisors is “With you when you need clarity in an uncertain world.”

The firm also has a reassuring tag line: “Together we’ll go far.” It’s reassuring, but it’s also vague enough to make it through compliance review. Nice job!

4. Effective use of numbers

“95% of Envision(r) Plan holders are able to live the life they planned.”

This is one of the client-benefit-focused statistics used in the ad. It’s powerful.

Plus, the statistic is given credibility by an external source: a survey conducted by Harris Interactive.

Communicating advisor value and Twitter

Thank you, Twitter friends, for getting me fired up about the topic. I jumped on this ad partly because of an online conversation about advisor compensation that included @MichaelKitces tweeting, “@nathangehring @MattBrandeburg @rwohlner @susanweiner I think primary reason we talk abt comp is b/c we’re bad at explaining our real value”

What about you?

What do YOU think of this ad?

Can you suggest a better or different way to discuss how advisors provide value to clients?

Guest Post: “Math and the Gender Gap: Does it affect financial planning?”

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My friend Laura Laing has written a book that demystifies math. She also writes an entertaining blog about math. I’m delighted to share her guest post about women, math, and financial planning.

If you’ve ever encountered math anxiety among your clients, Laura and I would like to hear about how you tackled it.

Math and the Gender Gap: Does it affect financial planning?

By Laura Laing

So let’s get one thing straight right away: men are not inherently better at math than women. And as our mothers and grandmothers and daughters have shown, women are not inherently bad at managing their finances.

But there are some ways that men and women experience and perhaps think about math differently. And those differences may affect how they approach financial decisions.

Math anxiety

Some research has shown that women are more likely to experience math anxiety than men.  And that math anxiety can translate to insecurity with financial decisions.  If a client feels helpless when faced with a math problem, the same can happen in situations involving money and planning.

Gender stereotypes

Even if women don’t feel anxious about math, they may buy into the myth that women are naturally bad at math.  This idea is often planted at a very young age, and the notion is reinforced by the fact that, relatively speaking, there are few women in science, technology, engineering and mathematics (STEM) fields.

Educational experiences

And then there’s the backlash.  If girls are more anxious and somehow believe that they’re not good at math, it stands to reason that they aren’t always able to take full advantage of their math education.  This is a kind of self-fulfilling prophesy, and we end up with women who not only think they’re not good at math but haven’t done enough math to know for sure.

What’s the point?

None of this is to say that all women lack confidence in their math skills or that all men are terrific mathematicians.  And certainly the next generation will be better off.  But when working with clients on setting financial plans, it can pay to recognize signs of math anxiety and insecurity.  The good news is that women are generally very forthcoming with their fears. But in case she’s not—or you have a male client who’s spooked by math—here are some signs:

  1. Becoming suddenly talkative or suddenly quiet
  2. Avoiding a particular topic.
  3. Not making eye contact.
  4. Skipping appointments or refusing to make decisions.
  5. Letting the partner or spouse do all of the talking.

What can you do about it?

If you think that your client might be experiencing some anxiety, it helps to slow down. Look for easy ways to connect the math to your client’s situation.  Instead of writing

out formulas or using graphs, try explaining the concepts in terms of the client’s goals.  But don’t be afraid to do a little teaching, as well.  If a graph is the best tool, take time to define the axes and the units being measured.

Whether you’re working with men or women, your clients may stumble with the math involved in financial planning.  Recognizing this, you can help cut through their anxiety and assist them in making solid and profitable financial plans.

Laura Laing is the author of Math for Grownups, a funny, easy-to-understand and practical guide to how adults use math in everyday life.  She also blogs at www.mathforgrownups.com.

Financial advisor prescription by Statman evokes strong response

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“Teaching clients the science of human behavior” is how financial advisors can help clients to overcome the fears that prompt bad decisions, writes Meir Statman in “Client fears and financial advisor services,” his guest post on my blog.

That may be easier said than done. As financial technology blogger Bill Winterberg said, “For a minority of clients, I think teaching the science of behavior may work in changing habits, but for the overwhelming majority, primitive survival instincts are seemingly impossible to counteract.”

I asked some experts–Rick Kahler, Justin Reckers, and Kathleen Burns Kingsbury–to contribute brief reactions to this controversy. Here are their responses.

Kahler: Partnering with a financial psychologist helps

Based on my experience with financial psychology, it is doubtful that all it would take for most investors to change their financial behaviors when feeling fear is more information about how the brain works. While more information will be enough for some investors to change their destructive, it really won’t help the majority.

Changing harmful financial decisions is similar to changing the behavior of any addiction. More information on alcoholism won’t be enough to change the destructive behavior of most alcoholics. Knowing you have a drinking problem is certainly the first step, but “knowing” isn’t “doing.” The same principals go for over-eaters or over-spenders. More information is rarely enough.

It takes a deeper “re-wiring” of the brain to create new neuropathways to change the manner in which we respond to difficult emotions, like fear. There are many tools available to help people do this, the most well-known being various forms of psychotherapy and group psychotherapy.

This is an example where a financial planner who partners with a financial psychologist can have such a positive impact on hurtful financial behaviors.

Rick Kahler is president of Kahler Financial Group in Rapid City, S.D. He writes the Financial Awakenings blog and is a pioneer in the evolution of integrating financial psychology with traditional financial planning profession.

Reckers: Professionals who work directly with clients will make the practical breakthroughs

I think an understanding of the science of human behavior is valuable in any setting. I do not believe “teaching clients the science of human behavior” will do much to counteract economically “irrational” behavior in financial decision-making. This is especially true when the decisions are made in the midst of emotions like fear or greed. Emotional biases are difficult if not impossible to dispel. They often require an advisor to adapt their own behavior to help work with the client’s emotional decision-making rather than try to change them. Advisors must remember that the fear exhibited by their clients is a reflection of the individual’s financial reality. I agree with Statman when he says “the fear of clients is normal.” I also believe one of the most important functions of an investment advisor is to help clients make fully informed decisions whether beset by fear or not. So I do not think the term characterizes what we should be concerned about. We will return to bull market territory and the emotions with which advisors contend will shift from fear to greed.

The real revolutionary contribution to Behavioral Finance will be a framework for advisors to apply concepts while working with clients. This framework will be developed by professionals who actually work with clients. The contributions of Statman, the Libertarian Paternalism of Thaler, the Heuristics of Kahneman & Tversky, the experiments and research of Ariely and so on, are amazing, important and exciting. But they mostly miss the next step: application to real individual lives. (Note: I have not read Statman’s book in its entirety. I will.) Otherwise we are left to contemplate whether “teaching clients the science of human behavior” will make any difference in how they actually behave at the moment of truth. I believe calculated interactions, interventions and nudges are necessary to truly have a positive effect on the financial decision-making of our clients.

Justin A. Reckers CFP, CDFA, AIF, is director of financial planning at Pacific Wealth Management. He writes with clinical psychologist Robert Simon, Ph.D., in the Practice Builder section of www.MorningstarAdvisor.com and on their blog www.BehavioralFinances.wordpress.com

Kingsbury: Rationality vs. “Fight or flight” response

Meir Statman’s prescription for financial advisors is right on the money.  Clients do react, and often overreact, when emotions are involved in financial decision-making.  Numerous behavioral finance experiments, some mentioned in Statman’s blog post, show how rational thought is overruled by a desire to minimize the pain of a financial loss.

Neuroscience tells us that the brain actually processes financial losses differently than gains. This results in clients experiencing the anticipation or actual pain of loss three times more than the joy of a financial windfall.  Scans of the brain tell us that the limbic system, normally accessed during sudden or traumatic events, is used when facing a potential loss. In contrast, the frontal lobes, the part of your brain where rational thought and executive functions,  processes financial gains.  By knowing this science and educating clients about it, financial advisor can help counteract the fight-or-flight response when fear is part of the equation by offering rational, longer-term solutions.

Understanding behavioral finance and the human side of financial advising is paramount to offering client-centric services.  Not only will this knowledge help the advisor in guiding his client, it will empower the client to understand his own psychology and use the advisor more effectively.  Like it or not, all of us are flawed, emotional human beings.

Kathleen Burns Kingsbury is founder and CEO of KBK Wealth Connection, a company passionate about helping financial services professionals and their clients master their money mindset through wealth psychology. She is the author of a new audio program called Creating Wealth from the Inside Out.

Guest post: “Generate Quality, Low Cost Leads with Facebook Ads”

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Kristin Harad’s video series on marketing for financial advisors caught my eye-especially because she talks about niche marketing. I’m a big believer in niche marketing.  So I was delighted when she offered to write a guest post for my blog.

By coincidence, Kristin’s guest post arrived not long after a wealth management firm executive suggested to me that Facebook ads could be a powerful tool for financial advisors.


Generate Quality, Low Cost Leads with Facebook Ads

by Kristin Harad, CFP®

Adding new prospects to your sales funnel can be a costly endeavor for financial advisors.  Workshops, mailings and other tactics can be effective, but the cost-per-lead from these channels is often quite high.  Recently, I’ve discovered how to effectively use a new marketing channel that’s been right under my nose to bring in a steady stream of quality leads at an incredibly low cost:  Facebook.

Now, you probably know that Facebook has become the second largest Web site in the world and last month it was all over the news for registering its 500 millionth user.  But what you perhaps didn’t know is that Facebook also offers an incredible self-service advertising platform that is an absolutely amazing tool for laser-targeting ads to your precise audience.  There are four reasons I really love Facebook Ads:

1)  It’s really easy to create and manage ads.  No technical nor design expertise required.
2)  You can target practically any niche.  Target your ads by location, demographics and interests. You can reach your EXACT audience.
3) It’s highly effective. Put together a well thought-through campaign and you can move people through your sales funnel to becoming paying clients!
4)  It’s really cheap! You don’t pay anything for impressions and some of our ads cost just six cents per click!  I’m adding targeted prospects to my marketing database at a cost of just 83 cents each.

It’s fast and easy to start testing your own Facebook Ads campaign.

Start by going to www.facebook.com/ads where you can sign up online in just a few minutes and instantly begin creating ads that appear on nearly every page of Facebook.  It’s very easy to create the ads — you can make one in just a couple minutes and you don’t need to have any technical or design expertise.

Be sure to design at least five different ads so that you can test different ideas to see which performs best.  The headline and the image you use in your ads have the most impact on click-through rates, so write a few very pithy headlines.  Images of people generally attract better click-through rates.  The more often people click on your ad, the more it will be shown and Facebook will actually reward you with a much lower price.

Next, and most importantly, think carefully about how to target your ad.

Start with location.  My firm mostly serves families within 25 miles of San Francisco, so in the Location section, I target by City, then type in San Francisco and select cities within 25 miles.  Under demographics, identify who your best potential clients are.

Next comes age, relationship status, likes and interests. Since I work with expectant parents and young families, most of my clients are between their late 20s and early 40s, so I put 28 – 44 as the age bracket.  I choose ALL for relationship status, especially since many people on Facebook don’t state theirs.  However, many advisors base their niche off of relationship status, so it can be a really power way to target.  (If you are focused on couples who are getting married, think of the precise messaging you can deliver when you target people who are engaged!)  Then, you’ll come to the small Likes & Interests section, which is where the real power targeting comes from.  This identifies users by what they have placed on their own Facebook page, and you can target them based on practically anything!

As an example, I put in ‘pregnant’ and ‘pregnancy’ as two keywords.  Based on what I picked for location, age, gender and these two keywords, Facebook estimates that my ad will reach 2,200 people.  That’s 2,200 pregnant women between 28 – 44 in the San Francisco Bay Area — my exact customer demographic!  You can’t find that kind of precision anywhere else.  More importantly, now that I know exactly who is going to see these ads, I can write messages that speak directly to them.  For instance, “Pregnant in San Francisco?” or “What New Bay Area Moms Must Know.”  It’s pretty easy to catch my audience’s attention when I know exactly who they are.  Plus, I can quickly create other ad campaigns that micro-target other groups, like expectant fathers or parents of a kindergartner.

These ads work incredibly well for me.  Dozens of people click on them each day, visiting special pages on my Web site that I’ve set up for them.  About 1-in-5 visitors take a further action on my Web site, like subscribing to my email newsletter or signing up for the monthly events that I hold.   It’s critical that you design a Web page with a specific action in mind for these visitors.  Send them to your company’s home page and they will bounce off without spending two minutes on your site.  But, if you offer an informative and relevant free report in exchange for their email address, they will opt-in to your marketing database by the dozens!

That’s what makes Facebook a great way to fill the top of the sales funnel.  Is anyone going to click on a small ad and instantly purchase complex financial products for thousands of dollars?  Of course not!  But by structuring a well-thought out campaign that is designed to pull targeted prospects into the start of my sales funnel, I can begin to form a relationship with them that will evolve over the months ahead and I absolutely convert a portion of these leads into paying clients over time!

Finally, Facebook ads are incredibly low cost.  You can set your own budget, and I’m only spending about $25 per day.  You only pay when someone clicks on your ad, and the price is usually well under one dollar per click.  I think it’s a great marketing tool that is absolutely worth experimenting with, so give it a try today at www.facebook.com/ads.

About the Author:  Kristin Harad, CFP® is the President of VitaVie Financial Planning, a fee-only financial planning firm in San Francisco.  She offers a free video series on marketing strategies for financial advisors at http://www.next10clients.com.

Using CFP in your Twitter name–Read the CFP Board’s position

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Using a term such as CFP in your Twitter name makes sense as a marketing strategy for financial advisors. It immediately identifies you as a credentialed professional. However, it also means you’re violating the CFP Board’s rules.

Twitter alerted me to this issue. When I dug into the CFP Board’s Guide to Use of the CFP Certification Marks, I discovered that point 1.7 says “CFP certificants may not own or use an email address or internet domain name that includes the CFP mark.” (Sorry CFP Board, I don’t know how to make the (R) mark appear in a Blogger blog). 

Here are some examples from the CFP Board of proper and improper use of their mark.



A Twitter name isn’t an email or a URL. But Twitter does make the name into a URL following the format http://twitter.com/TWITERNAME.

I contacted @CFPBoard to ask if a Twitter name using CFP would violate its rules. Here’s the reply:






It sounds as if the CFP Board is open to your feedback about using CFP in Twitter names. So shoot SLaBonte an email, if you’d like to be heard.
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Receive a free 32-page e-book with client communications tips when you sign up for my free monthly newsletter.  

Copyright 2010 by Susan B. Weiner All rights reserved

How to improve your financial planning client relationships

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You can improve your relationships with financial planning clients by encouraging them to communicate honestly with you from the very beginning. 

This is the main lesson I took away from Shari Harley‘s presentation on “How to Say Anything to Anyone: Paving the Way to Powerful Working Relationships” to the annual conference of the Financial Planning Association of Massachusetts.


Ask for honesty
Harley suggested that audience members achieve this by saying, “I want a great relationship with you. If I do anything that violates your expectations, frustrates you or causes you challenges, please tell me. I promise I will say thank you.”

Assuming that your client says “yes” to your request, then you can add, “I hope I can do the same with you.” This sets the stage for two-way communication. If it works, you’ll never be surprised again by a client defection. 

I asked Harley what she’d recommend saying after “thank you” when a client gives negative feedback. Don’t say anything other than “thank you” right away, she suggested, because you’ll feel defensive. Go away and think things over. You can follow up later.


Follow up with questions
Don’t stop with your initial agreement to be honest with each other. Follow up with questions that help you to understand your client better, said Harley.


Here are some of her suggested questions:
1. Who was the best service provider you ever worked with?
2. What made him/her the best service provider?
3. What are your pet peeves?
4. Do you prefer email or voicemail?
5. What do you wish I would start, stop and continue doing? 

I can see how these questions would benefit me as a service provider and a client. It’s time to rev up my courage and start asking more questions.

I believe Harley’s approach could benefit you in your professional and personal life.

____________________    
Receive a free 32-page e-book with client communications tips when you sign up for my free monthly newsletter.  

Copyright 2010 by Susan B. Weiner All rights reserved

Tips for keeping your credit score high

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Credit scores are important in the financial lives of your clients, so I’d like to share a few tips I picked up at “Understanding Credit and Credit Risk Scores,” a presentation by Todd Overstreet, director of field sales and service at Rels Credit, the credit reporting agency for Wells Fargo, at the Women’s Business Network in Wellesley, Mass. on Jan. 8.

Overstreet gave many tips about how to minimize damage to your credit rating. The following particularly piqued my interest:

  • Use less than 50% of your credit line. If you use more, creditors will start to worry about your ability to repay.
  • Make all of your loan applications within a 14-day period if you’re shopping for loans. Each credit inquiry by a lender typically lower your credit score by three to five points. However, “If a consumer shops with five different mortgage lenders within a 1- day period, those five inquiries are grouped together and will only affect a consumer’s score 3-5 points total,” said Overstreet in an email to me.
  • If you must close a credit card account, start with your newest card. Creditors like to see a long credit history.

Useful resources

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Susan B. Weiner, CFA
If you’re struggling to pump out a steady flow of good blog posts, check out my five-week teleclass for financial advisors, “How to Write Blog Posts People Will Read,” and sign up for my free monthly e-newsletter.
Copyright 2010 by Susan B. Weiner All rights reserved

Guest Post: My Six Best Marketing Tips for Independent Advisors

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When Steve Lyons spoke with me about his tips for helping financial advisors market themselves, I knew that I’d like to share them with you. When I first met Steve, he was a copywriter for Fidelity Investments. Today he enjoys working with clients of all sizes, including individual advisors.

My Six Best Marketing Tips for  Independent Advisors
by Steve Lyons


As a professional marketer and copywriter specializing in advisor communications for print and the Web, I know firsthand the challenges independent advisors face in marketing their business to investors. Whether  you’re a veteran or just beginning your practice as an independent financial advisor, these marketing tips can help you stay on track to achieve your goals.

1.    You’re not just a business, you’re a brand. True, your business relies on you – as a financial advisor and person. But take the initiative to create and build your business as something that is bigger than you are – a brand with goals and values. Work with a reputable marketing consultant or firm to help you understand and tell the world how unique you are. And more, take your brand development and marketing as seriously as the big firms. They’re spending and working overtime to make sure that investors do not notice you.

2.    Quit talking about yourself. Successful marketing begins with telling your audience the BENEFITS of working with you – not the details of your personal or professional life. It may be interesting that you have a master’s degree in finance, but it’s much more powerful to talk about how your degree creates opportunity for your clients.  Use your one-to-one sale time to be more specific about why you as an Independent Advisor and person and why you are the advisor for them (and they’re the client for you).

3.    Remember, you’re not selling only financial advice. You’re selling a lifestyle. What sets the larger and more successful firms apart from less successful independent advisory firms? They understand that money management is only the means to an end. The real goal is to help clients achieve their goals and dreams, whether it’s living in luxury, providing charitable contributions and/or leaving a legacy for family and friends.  Use imagery in your marketing that helps them see their financial future as they want it to be–fun, exciting, adventuresome and secure.

4.    Understand what makes you different.  It’s important to know what makes you different from the advisor down the street.  Is it your investment philosophy? Your investment strategy? Do you offer a fee-discount for multi-generation wealth management?  Do you accept only select clients by referral only? Whatever it is, and the list can be extensive, know why you are different from your competition.

5.    Create a marketing plan. And implement it. If there was ever a time for independent advisors to make a difference, the time is now. There is more cash on the sidelines than any time in modern history. How do you obtain some of the stockpile? By creating a marketing plan that includes long term and short-term goals. Regardless of your budget, there are opportunities for you to get your name out there.

6.    Think out of the box. Your clients are everywhere. You have to find them and they have to find you. Sponsor community programs, leagues and events. Create a billboard. Write guest columns for local publications. Create a blog. Use social networking on the Web. Make calls. Make more calls. If this feels overwhelming, hire a reputable consultant or firm to help you think out of the box and execute marketing programs that builds and supports your brand. 

Steve Lyons’s experience includes marketing, copywriting and content development for both Fortune 500 and small businesses, with clients including numerous independent advisors and wealth managers throughout the country. He is a principal in LD Marketing Communications Consultancy and SoWa Ad Group, a collaborative offering the full branding experience, including public relations, for businesses of all sizes.

Harvard’s Charles Collier on "The Practices of Flourishing Families"

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 “The critical challenge you face is not financial,” said Charles Collier, senior philanthropic adviser at Harvard University in his presentation on “The Practices of Flourishing Families” to an audience composed mostly of wealth managers at the Boston Security Analysts Society on December 15, 2009. He believes “The most critical challenges are relationship-based and family-based.”

Of course, money plays a role in these challenges, so this is a topic that should concern all wealth managers. Whether it’s scarce or abundant, money is a challenge in every family, said Collier.

Three questions are critical to addressing family challenges, said Collier.

  1. What topics are easy or difficult for your family to discuss?
  2. How do you manage yourself in life’s transitions?
  3. Is family harmony an important principle for you, and, if so, why? 

Collier’s interactive presentation focused on Question 1 and raised the following difficult questions around finances:

  1. What is an appropriate inheritance for your child?
  2. Who gets the money, and when? Do they get equal shares?
  3. Who gets information about the money and when?
  4. How much will go to philanthropy?
  5. What do you think will be the impact of unearned money on your child’s life?
  6. How can you encourage your children to find their life calling?

Collier did not suggest how financial advisors should raise these questions with their clients. So, I’m asking you, how do YOU address these questions with clients? Do you address them at all?

Which wealth managers have the highest profit margins?

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People are always curious about who makes how much money. That’s probably why I zeroed in on the profit margin comments made by investment banker Elizabeth Nesvold, managing partner of Silver Lane Advisors, when she spoke about “Trends Amid Turmoil in the Wealth Management Business” to the Boston Security Analysts Society on November 18.

Because multi-family offices (MFOs) deal with wealthier clients than financial planners, I was surprised to learn that their margins are lower than financial planners’ in typical market scenarios, ranging from 10%-30% vs. 20%-35% for financial planners and asset allocators. However, the difference made sense when she explained that MFOs get hurt by “scope creep.” It’s expensive to service a multi-generational family as compared to an entrepreneur who just sold his or her business, Nesvold said.

Here’s the hierarchy of margins under typical market scenarios, in descending order, according to Nesvold.

  1. Hedge funds, 50%-70%
  2. Hedge funds of funds, 25%-60%
  3. Traditional institutional, 30%-70%
  4. Investment counsel, 25%-40%
  5. Financial planning/asset allocation, 20%-35%
  6. MFOs, 10%-30%

Do these margins sound realistic to you?