Is Cost/Benefit Dead?

By Ed Morrow

In a recent entry on this blog I discussed whether the plans you are producing make sense.  Just to keep the math simple and not frighten away the RFC members who have not yet charged fees, I suggested the benefit of $10,000 in the future might have a present value of $5,000 which would be a healthy return on a $1,000 Plan Fee.

Forget that!  Let’s get real!  If your clients really value your financial advice they will pay a lot more.  $3,000 would be the minimum and $5,000 average and some planners are charging up to $25,000.  I am not talking about AUM (Assets Under Management) fees.  I mean the fee you charge for the testing, examination, diagnosis and prescription – not the surgery, therapy or radiation treatments delivered by a physician.  And remember, you are proposing treatment of the second most important organ in the human body – the wallet.

If you spend hours gathering facts, objectives, goals, emotions, and family history, plus the organization of all that data and testing various treatments and portraying it vividly to a client – you are at least 75% of the way toward the implementation of successful financial improvement.

One thing that attracts RFC members to planning for business owners is that it clearly does not require “investment advice” as described by the SEC and the various pieces of legislation and regulation.  So they can charge a fee of any amount and not be involved in SEC, RIA or FINRA.

You can do the same with advice for consumers personally.  Avoid any investment advice during the plan design and implementation stage and avoid those issues.  Of course, if you later offer AUM or sell securities products then those actions are subject to regulation by the SEC and its cohort FINRA,

Should a broker/dealer or RIA get a portion of your Plan Fee, despite the fact that it contributed little or no effort toward the construction and implementation of the Plan?  That will depend on you, your b/d and your legal counsel.

If you want to see a sample of an Engagement Agreement, Disclosure and Plan Assurance documents, then email the IARFC office.  Be sure to let us know if you are interested in business clients or individuals.  Send your email to: susan@iarfc.org

Why should RFCs become sponsors of the Financial Plan Competition?

By Les Anderson,

All of us in any profession have an inherent responsibility to continue the legacies and skills of that profession. To that end, the Financial Plan Competition offered by the IARFC, is a way to get hands-on development of young people by teaching them the skills necessary to provide the services we currently give, to the next generations. 

This is a noble calling as the services to our clientele are needed for their security and by extraction the security of our nation. It is therefore our responsibility to support in whatever manner possible, the continuation of our profession.

I believe that no person ever achieves success without one hand up on the rung above him lifting themselves – and one hand down lifting someone else. Often we don’t have the time to personally go do this. By pooling our assets we can encourage the next generation to do the right things for their clients.

Someday I will retire. I have clients who are younger than me and I want someone to look after them as I would have. It’s part of my responsibility to ensure that there are capable people to advise them on their asset requirements for the future.

How do I become a sponsor?

• Through an individual contribution designated for this specific purpose.

• By advocating that mutual fund companies, annuity companies, alternative investment companies, broker dealers and life insurance companies are aware of this effort and encourage them to participate on a corporate level.

• By contacting schools and organizations who have not previously participated in the past and encouraging them to enter.

• And finally by promoting corporate sponsorship.

In the Register we will displaying your name and recognizing those who have “stepped up to plate” to assist in the assurance of quality future consultants. Board Members have already committed themselves. We ask and challenge each RFC to join this list with your own personal contribution.

Like the military doctrines of old – he with the most powerful army, wins the war. You as individual RFCs are the army. And our war is to better serve our clientele

For more information on becoming a sponsor, contact info@iarfc.org or download a sponsorship package. A contribution of $100 or whatever might be appropriate and is the right thing to do.

In Your Own Home, Your Own Family

By Nick Royer, IARFC Board Member

April is designated as Financial Literacy Month. The best place to start is right in your own home, your own family. Teaching your kids from the beginning the value of using money wisely is a responsibility as a parent and responsible citizen.

When I grew up, my parents taught me to SAVE. That’s a word rarely used these days as it seems the word SAVE has been replaced by the word SPEND. Spend even if you don’t have it to spend. The philosophy has changed and unfortunately the future generations will have less saved for retirement and not be able to enjoy a confident retirement lifestyle like their parents or grandparents before them. I’ve been a retirement income planner for 13 years now and when we meet with people we help them properly invest their retirement NEST EGG for both a dependable retirement income and growth to help out with future costs or inflation…but you first have to have a NEST EGG. People are saving less, spending more, and let’s be honest it does cost more to live now. Look at the cost of college or gas! If you want to provide for your family like your parents did for you it is going to cost dramatically more. All of this takes money out of your pocket now. But more importantly takes it out of your future pocket.

I’ve already started an envelope system with my 6 year old Bradley to teach him the value of money. He has a chore list and can earn money by doing his chores. Once he has that money my wife and I help him put equal amount in each of three envelopes. The three envelopes are Spend, Save, and Give. It’s always awesome when we go to church on Sunday and Bradley carries in his Give envelope and pulls out a few bucks to put in the collections basket. This past Sunday he noticed he didn’t have much money left in his give envelope so he told me, “I better work to get more money in here”. That’s the ticket, and it made me a proud dad to hear that.

This is something simple that you can do today to teach your kids how to be a better steward of their money later!

Nick Royer
Group 10 Financial, LLC

Workshop in the Windy City

Listen to webinar featuring Ed Morrow discussing Buy/Sell seminar in Chicago.

On May 17th, Ed Morrow will be conducting a Business Owner Consulting Workshop as part of a 2-day Buy/Sell Business Transition Seminar (May 16th & 17th) hosted by The Wealth Preservation Institute.

Day 1 will feature prominent attorney Jim Duggan, founding principal of Duggan Bertsch, LLC a Chicago-based business, tax, estate and wealth planning firm comprised of attorneys and accountants. Jim will approach his part of the seminar from the legal and numbers aspect.

Day 2 will be Ed Morrow talking about marketing to business owners and how to work a defined process when presenting your services to this underserved market. Attendees will receive the tools to implement their approach strategies and communications.

Recently, Roccy DeFrancesco from the WPI, featured Ed Morrow in an informational webinar regarding what consultants would be learning during his session. Ed reviewed issues that business owners face and presented the listening audience with previews of how they can solve the problems.

In addition to receiving sage advice from Ed’s experiences, attendees will get the tools in the form of Word files, PowerPoint presentations and Excel files to prospect this “Untapped Business Market”.

Download the workshop brochure here.

Does the Plan Make Cents?

By Ed Morrow

After reviewing over a thousand personal financial plans, I am amazed at how few of them attempt to relate the time, trouble and fees of the plan with the ultimate benefits that are achieved.

Suppose the client paid a fee of $1,000 and we do not include all the time gathering facts, determining objectives and reviewing the Plan documentation. If the recommendations achieve an improvement of $10,000 in ten years, we might say the present value of that is $5,000. If a client pays $1,000 and receives a benefit of $5,000 then we have an improvement of $5 for every $1. That 5 to 1.
Pretty good, I’d say. (Some plans achieve far more.)

If a planner delivers a benefit to cost ratio of 5 to 1, doesn’t he or she deserve referrals?

Is Your Office a Turn On for Clients?

Thanks to Steve Bailey and his review of what makes a comfortable, workable and professional office environment…

When meeting the public – first impressions count and can make a difference. A successful person needs to LOOK successful. A competent person needs to LOOK competent.

What about your office? Have you looked around with an objective eye and taken stock of your important surroundings? Imagine yourself as a client coming in for the first time and then review this list.

Location – How easy is your office to find? Is it accessible? When choosing a location remember that if a client arrives unhappy with their trip, they more than likely will be unhappy with you. Traffic flow is an important factor. It can cause stress and anger in minutes.

Parking – Is there adequate parking available? No one enjoys the hunt for a place to park or trying to find their vehicle when leaving.

Accessibility – No matter what your client base, handicap accessibility will be important as some point. Are there unimpeded walkways to the building? Landscape trimmed and tidy?

Security – How secure is the building – surveillance cameras? secured doors with dialed entry? alarms? The client needs to feel secure for both themselves AND their information.

Lobby Presentation – The client or prospect truly gets their first impression of you as they enter your building. Welcome each clients with a personalized message as they enter or while they wait.

Equipment – In this day of technology, everyone – no matter age or stature, knows that state-of-the-art tools are vital. Keep what the clients will see up-to-date and well maintained.

Decor – Varies widely from consultant, region and local attractions. Awards and designations are displayed throughout the office (non-product).

Cleanliness – No amount of decoration, technology, or comfort will be appreciated unless your office is clean and well maintained.

Refreshments – It is important to provide a variety of refreshments as each client is unique.

Space – The ability to move about in your office is important to keep the client and staff relaxed. Most people do not like the feeling of being “on top” of one another.

Main Board Room - Is the most prestigious and expensive. Prospects gain their opinions of the way you conduct business. Technology, seating and overall decor should combine comfort with respect.

Small Board Room - Is more formal and less personal for families, sales reps and inner-office meetings.

Client Meeting Room – Should be small and personal to meet the clients on a one-to-one basis. It should be the least intimidating, set up in living room style with some of your accomplishments displayed.

Perhaps as Spring has just arrived, it is time to revamp and redecorate. Have someone else appraise your surroundings. In any event, you are spending a lot of time in these spaces. They should work for your clients AND for you!

Advancing our Understanding of the Science of Personal Finance.

Recently the IARFC published and mailed to its members, a new issue of the Journal of Personal Finance (JPF). When asked for comments regarding his recent work on the publication, Dr. Finke, JPF editor, had this to tell the IARFC members…

Branding – Start with two easy updates on your IARFC member profile

The only real product you have to sell – to any consumer, professional or business owner – is yourself. You must differentiate yourself and the core of these differences must be reflected in your brand. Since nearly all products and services are available from your competitors – what makes you different?

Financial Products are now all commodities – look-a-likes to consumers! There are many providers of similar products with features that appear almost identical to the untrained consumer. Large organizations offer packages of financial services that all seem very much alike – and which are presented to the public in similar fashion. National institutions have giant advertising budgets that convey a message to consumers that bigger is better. Again, you must ask – what sets you apart?

The answer is you, yourself, your brand. It separates and distinguishes you. It identifies you and helps you compete. An easy place to start building your brand is your Member Profile on the IARFC website.

Currently, we are making efforts so you are more visible. The Find-a-Member link on the top of our Facebook page means consumers can get to the member profile section on the IARFC website and find a consultant in their area. In our media releases, we are making a concerted effort to link to your profile page when applicable. What does it say if your information is incomplete or worse not there?

So, your task for the month of February is to:
1. Post a picture on your member profile page if there is none.
2. Fill out the profile details or review what information you have posted and either revise it or add new details.

Just do it!

Why a Financial Plan Competition?

By David Stitt

For professionals who believe in the need for having a plan to guide an individual, it is important that young people entering the industry have knowledge and experience in how to develop a comprehensive financial plan that informs, educates, and motivates clients to take appropriate action in order to meet their goals.

Every profession needs a steady stream of educated new entrants in the field to replace those who leave. The average age of planning organizations is getting older and there is a real need for new, fresh blood to reenergize and to be ready to carry on as the older professionals retire. If a prospective employee has specific experience in actually putting together a comprehensive financial plan, they will be in a much better position to step in and contribute to an organization from the beginning.

As one might expect, submitted plans in our past competitions have represented many different approaches to solving the issues of the case. That is both encouraging and challenging when judging the plans. There is not only one answer and there is a lot of room for creativity in terms of how to most effectively deal with the issues at hand.

A good plan must accurately reflect the facts of the case, clearly explore the challenges in meeting the client’s objectives, not be biased for or against any particular product or service, show a solution that moves the client closer toward their objectives, and motivates the client to take action rather than confront them with more questions.

As the IARFC Plan Competition enters its judging stage, we look forward to reviewing the efforts of this year’s participants. A panel of highly qualified and experienced Registered Financial Consultants will judge the submitted plan and select two finalists. Judging criteria:

20% Correct insertion of the case data and the “soft information”
20% Understanding of the problems, including any incomplete data
40% Recommendations made (the logic, priority and suitability
10% Physical construction and design of the written plan
10% Supplemental text and illustrations.

A secondary judging panel will then judge the competing finalists and will consider their personal presentation as additional judging criteria.
The personal presentations will be by live web presentations and the winner determined by the secondary judging.

Conceal and Carry or… Add Pork and Legislate

By Ed Morrow

Currently I live in one of the most Republican of Districts, Ohio #8. It is so gerrymandered that there is no effective opposition to our current Representative, John Boehner. Unfortunately neither the Speaker of the House nor any other member of the Republican Congressional majority have read the U.S. Constitution where it is clearly stated who has the responsibility to correct fiscal foolishness.

Article 1 – Section 7

All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.

The Constitution does not say: It is the responsibility of the President to develop a budget. The job of the President was historically conceived as being the chief employee charged with carrying out the wishes of the deliberative body – the Congress.

Why doesn’t the House of Representatives simply write a balanced budget, submit it to the Senate and adjourn? Because they all want to stuff more pork into any bill! For example, the Compromise Fiscal Cliff Deferral Bill did not solve anything. It just postponed decisive actions. When the public is not watching, more pork will be inserted. Where is the attention of Congress?

Impact on all of us.    This is how Congress tries to get in their priorities. Ideally you want this all done through regular order and the normal appropriations process. We’ve been jumping from a debt ceiling crisis to government shutdown crisis to whatever crisis comes next.

Write your Congressman.  Don’t bother to write mine – he does not acknowledge inquiries. Frankly I am not very optimistic that your congressional servant will read your letters either.

Where’s the Good News?  I am certain that we will receive more bad news and more poor performance in Washington until we get fed up and do what the founder of the IARFC, Jack Gargan, said we need to “THRO – Throw the Hypocritical Rascals Out.”

Many families are concerned.  There is more disillusionment and fear than I have known in my lifetime. And yet, America still leads the world in new products and new medical procedures. America is where most persons in the world want to live. But some are frozen into inaction.

Businesses are challenged.  Some are under great stress and that goes for many financial consultants. Costs of doing business are escalating much faster than revenues. If that applies to you, then I think you should consider what has worked for Americans for over 300 years – work a bit harder, work a bit smarter, strengthen bonds with others like you and hang in there until we turn the corner.  Some businesses are doing well, accumulating a surplus, approaching retirement, postponing estate planning and are without a succession plan. They are concerned, but ultimately optimistic that the USA will survive the current economic conflicts.

Business owners are your ideal prospects.  Why? They are accustomed to paying fees, they believe in insurance and conservative investments. They will quickly tell you if things are not doing well and that you should come back later. If you could only add one new business owner client every quarter how much would you earn? What if you added one per month?

Maybe we all need to ignore the political and economic situation and just concentrate on one area we can for sure get powerful results – more business owner clients.