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In my 20-plus years as an advisor, one of the most significant ongoing challenges has been proving my value as a financial planner before a prospect commits to becoming a client. There’s an array of services we provide to our clients, but we can’t divulge everything before signing – and prospects are rapidly becoming harder to woo.
Still, investors from Gen Z to Baby Boomers say they want real advice now more than ever. So how can we demonstrate our value to differentiate ourselves?
At my firm, Altfest Personal Wealth Management, we’ve adopted a new tool that we created at my AI-driven tech company, FP Alpha. That tool is appropriately named the Prospect Accelerator, which proves our value in a new way, allowing us to give automated, specific, and informed planning advice to prospects.
In the same way that Riskalyze revolutionized conversations around investing, the Prospect Accelerator has done so for our discussions around everything else that falls under the vague, fuzzy umbrella of “planning” that advisors do.
And it works. Since implementing the Prospect Accelerator, we’ve tripled our conversion rate with new prospects and dramatically shortened our sales cycle.
Here are a couple of recent examples that show the Accelerator in action (client names are changed).
1. Expat on the verge of a huge capital gains tax hit
One of our newer clients, Sally, is a U.S. citizen who lives abroad and is married to Robert, a citizen of the country where they reside. She is a business executive whose primary compensation is stock in the company she helps run.
When Sally came to us, she knew a big capital gains tax was coming her way sometime soon, but she assumed it was a few years away and wasn’t sure what to do about it.
We ran her situation through the Prospect Accelerator, which identified an impending liquidity event that needed immediate attention. We advised her to transfer ownership of her stocks to her husband – the country where they live does not tax capital gains – by the end of the year.
Needless to say, she signed with us and we immediately walked through the transfer of her assets, saving her hundreds of thousands of dollars in the process.
Sally was a savvy investor, but when we first talked to her, she had a healthy dose of skepticism that we could do anything for her. By taking the conversation outside her portfolio to overall financial health, we were able to show our value in tangible terms, thanks to the Prospect Accelerator’s financial wellness score report.
2. Newly retired couple with large forthcoming RMDs and new health concerns
Barry was a physician who recently sold his private practice and had built a good nest egg for himself and his wife, Ann. He was a DIYer and treated managing their portfolio as a second job throughout his life. He had done a great job.
Still, retirement was a new realm for him, and he was very nervous about how to handle RMDs. On top of that, his wife had recently had a health scare and they wanted help with long-term care and Medicaid planning.
We were not the first firm Barry and Ann investigated – and they were not impressed with what they had seen from other advisors.
We sent them a secure questionnaire through our website and by answering a few questions and uploading a few documents, the Prospect Accelerator identified multiple actionable opportunities. We still didn’t have all their pertinent information, and we were already delivering them impactful recommendations.
Their financial wellness report showed very low scores in the areas of estate planning, tax planning and insurance planning.
It’s understandable that their estate plan score was low, considering they didn’t have one. In addition, we saw that they exceeded the estate tax “cliff” in their home state of New York, which meant their estate was due for a significant hit when the time came.
As far as tax planning was concerned, we showed them the value of performing a Roth conversion. And with insurance planning, the Prospect Accelerator identified the pros and cons of Medicaid versus insurance versus self-pay when it came to long-term care.
We still hadn’t met with them at this point, but those high-level recommendations grabbed their attention and resulted in scheduling a meeting where we identified even more opportunities, and they signed with us shortly thereafter.
When you’re talking to prospects and clients, by exclusively focusing on investments, you’re competing with everyone else (including the clients themselves, in many cases). But by addressing these often under-planned areas upfront, you can identify far-reaching pain points much earlier, thus demonstrating the value of planning upfront.
The further you engage prospects upfront, the more likely they are to want total access. With the advances of new tech, it’s time we stop playing the long game when it comes to proving our value as advisors.
Andrew Altfest, CFP, is president of Altfest Personal Wealth Management and founder of FP Alpha.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
