What makes a financial planning business ‘modern’?

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What makes a financial planning business ‘modern’?
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We are seeing a great amount of entrepreneurship, passion and innovation blasting its way through and bringing our profession forward.

If I were to ask you to think of what a ‘traditional’ financial planning business would look like, I can probably pre-empt the answers that you would give. A word cloud from the answers may include words like ‘hidden’, ‘stuffy’ and ‘salesy’. Oh, and suspended ceilings. 

But, what does a ‘modern’ financial planning business look like? Here, we outline some traits of financial planning firms we speak to that we think define that term.

Focus on client experience and communication

For an unacceptable amount of time (and in some cases still today) we have seen client experience in financial advice firms mean a once-a-year drop-in to check everything is going OK. Sometimes this is just a telephone call every two years. 

Financial planning is a highly valuable, prestige service that, let’s be honest, is on the expensive end. Modern clients, from what we’ve seen, expect better client experience and more open lines of communication. 

The best financial planning firms that are breaking the mould today see clients as true assets (not simply financial ones) and are creating a ‘community’ out of their clients rather than building a ‘client bank’. 

Adam Carolan is co-founder of NextGen Planners

 

 

Modern financial planning businesses are finally realising the truth that work culture goes beyond bean bags and useless perks.

 

 

This shows in the stats. We’ve been surveying business leaders of financial planning firms how often they communicate with their clients, and just 15 per cent of them communicate with them once a year. A comparatively huge 37 per cent of them communicate with their clients every month.

The benefits of creating a better client experience and having stronger communication are endless, but the biggest boons are more referrals, deeper relationships, and happier clients. 

Transparency 

We did a poll on our social media recently on whether or not it is good to discuss your fees publicly. After hundreds of votes, 81.6 per cent of them said ‘yes’.

If we imagine asking this question 20 years ago, do we think the answer would be the same?

Being transparent around what we charge is now almost wholly accepted in modern financial planning businesses. A lot of firms display their charges clearly on their website, and are happy to explain them to prospective and existing clients. 

Running a transparent financial planning business is, of course, heavily influenced by our highly regulated industry. The smoke and mirrors seem to have disappeared and this is another nod towards a true profession. 

This doesn’t end there, though. It is trickling down into culture and even dress codes.

We have seen a lot of great financial planning businesses introducing fantastic employee wellbeing schemes, safe spaces, four-day weeks, remote working methods, and much, much more. 

It seems that modern financial planning businesses are finally uncovering and realising the truth that work culture goes beyond bean bags and useless perks. To make our people truly happy, they need a challenging and rewarding work environment in safe surroundings. 

Better workflows and processes

This may sound dull and boring, but it’s one of the true differentiators of modern financial planning businesses. Working hard is a common trait amongst successful business owners, but so is working smart. 

We have probably all seen (or at least heard of) some financial advice firms that have no processes or workflows, where each client’s experience is different, nothing is written down, and all files are printed and kept in a dusty (flammable) file cabinet. 

Modern financial planning businesses have effective technology in place and repeatable workflows and processes for every single touchpoint of the client journey.

We talk to contemporary financial planners in the US who are getting most of their clients from social media. It is coming.

A lot of these are automated (through things like CRMs), which means that they are scalable, allow for more time with clients, or for financial planners to take care of their own wellbeing.

Eighty per cent of financial planning firms that we surveyed have repeatable workflows and processes that work in their businesses.

If we want to bring our profession into the 21st century, we need to be flexible, be able to adapt and move faster. That is where systems and processes are going to come in the most. 

Modern marketing methods

Although we’re not quite seeing it across the board just yet, modern financial planning businesses are realising the true opportunities that are on social media and online in general.

Existing client referrals are still number one for most financial planners, but we talk to contemporary financial planners in the US who are getting most of their clients from social media. It is coming. Online presence is not something to be overlooked. 

This is vastly different from what our profession’s history looked like, surrounded by sales calls and the phrase, 'Do you know anyone else who might need a pension?'. 

With a bit of tweaking and using social media for adding value through content (rather than for simply promoting your services), imagine the reach and impact that we could gather from harnessing the digital audiences out there. 

Having a niche

This is something that is getting a lot of air-time among modern financial planning business owners. 

One counterargument we hear against going niche is “but won’t I reduce the opportunities that are out there by reducing the size of my audience?”. 

We actually think the contrary is true. By becoming a thought leader and speaking to a smaller audience but with more impact on a deeper level, this can actually increase opportunities for modern financial planning businesses.

It is certainly something that needs to be considered and researched, but today’s marketing methods are allowing modern financial planning businesses the opportunities to work with a smaller, more engaged audience. 

Overall

To end this with a generous dollop of optimism, we know that our profession is in good hands.

The innovation and sheer determination to do better that we see on a daily basis convinces us that financial planning is moving into the 21st century. 

If you ever need convincing that financial planning is now a profession (rather than an industry), just pop along to a truly modern financial planning business for a day, sit back and relax. 

Adam Carolan is co-founder of NextGen Planners