Notes from a practitioner
I remember from longtime back, what my baby sister used to do. When she was but an infant, on the threshold of learning to standup and walk, she started walking early – but only on the bed! If she was put on the floor, she would promptly sit down. No amount of coaxing did the trick. It took another 6 months after she knew to walk, to actually walk!
A child does not know fear. My sister was somehow, different. At a tender age, she was able to assess that walking on the floor was not safe. May be she fell down a couple of times, trying to walk. That might have worked as a dampner in her case.
The fear of failure is a major deterrent to progress. A tortoise cannot move forward, till it sticks it’s neck out. Yet, it would feel secure inside it’s shell. The Financial Services industry is at crossroads now; there are a plethora of regulations, many of which have changed the way business is done in the industry. Change is always traumatic- at least initially. It is for us to figure out how to make the change work for us.
Financial Planning profession is still new. People still don’t know an insurance agent from a Financial Planner. Most still think that they are both the same – only that one actually talks about goals & cashflows and other talks about goals and products to fulfil them. This is the environment into which the newly minted CFPCM Certificants are stepping into. Naturally, there are butterflies in the stomach and a feeling of nausea. But, like my sister, they also have to learn to walk – on the floor!
So, what are those things that a new practitioner needs to know and understand? How can he/she start a successful practice? How does one talk to clients and ensure that they perceive the Financial Planner is a different animal?
Soaking time… Spend a month in acquiring knowledge. This may sound out of place – now that you have the certification. But, my friend, studying to pass an exam and studying to gain knowledge are two different things. Go to the net and get updated on all the topics you had crammed for your exams. Get relevant updates on all topics that you will need to know in real life. Read up what is happening on financial Planning across the Globe, the various models, experiences of Financial Planners across the globe… This will give you some confidence to sally forth.
Dirty your hands… There is a saying which goes like - a gourd on paper cannot make your curry! Likewise, bookish knowledge on making a plan, cannot help you face a client. Clients would be comfortable with experienced planners. But, if all of them think like that, how will you get to do a plan? You need to learn from insurance agents. When they start-off they become a menace to their friends and relatives, who will receive a barrage of calls requesting/ coaxing/ cajoling, for insurance. Even this phase may not be all that easy. But these are a familiar set of faces who are sympathetic and help the agent to break the ice. Your friends/ relations may be your best bet to try your hand on planning. Once, you have created a few plans and have gained experience, you are ready for the world!
Accept your limitations – There will be situations when a client may want to know about a subject you are not familiar with. You may not know everything, to start with. The best way out is - honesty. Tell the client that you do not know about the subject and will need to find out. Give the client a time & date by when you will clarify this and get back. Even experienced planners are at sea sometimes and will have to refer or consult with other professionals, before getting back to their clients. The only key thing is being upfront & honest about it and then come back later with the required answers. Ofcourse , if you say that in every case, you can only see the client’s door, not the client!
The bag of Gold – Most people who come into this profession feel that they need to charge a hefty sum, to be counted as successful Financial Planners! Many have a ballpark figure of about Rs.20,000/- in mind! It is unreasonable to expect such astronomical sums at the start of one’s career. One has to be reasonable. It is more than a favour that a client is allowing you the privilege of making their plan. Be patient. Don’t worry about the charges. Focus on the plan. Money will flow eventually, if you have learnt the trade well.
How do I charge – Lots of aspiring financial planners are from Insurance/ MF industry. They come with their mental baggage. They can’t imagine someone paying for advice. In fact, they have been giving free advice and also a kickback, in many cases ( though, very few will admit to it ). So, firstly, it is a mindset change. Then, one has to apply the test of fairness – what is an amount I would pay for the kind of services that I can deliver today? That should be your charge. Which model you follow – Fee only or Fee & Commission, depends on your inclination.
Communication – Most times, we will be meeting new, unknown people. As planners, we will have to learn to inspire trust by our conduct & communication. Clients like people who a frank, honest and straight forward. Name dropping or bragging will turn off clients. The only way by which a client can be attracted is by communicating the value proposition effectively in a manner that inspires confidence to trust you to the extent of giving all financial data.
I have problems getting data – Obviously, the communication part has not been done well enough. Else, the client should not have a problem if he/she has understood that it is beneficial for them to share their details. The trust aspect is very important and the client has to be reassured that the data being shared is only for the purpose of creating the plan and that there is no other motive. Once the client understands that it is in his/her best interests, getting the data is a cinch.
How do I survive till my practice takes off? It would be a good idea to keep the cash registers ringing from you existing line of activity – be it insurance, MF distribution or anything else. Slowly, once the momentum builds, you could let go of the erstwhile activity and embrace Financial Planning, fulltime. There are those who would want to take a clean break and launch themselves into FP practice. That’s fine too – only that, they should be prepared for a bit of disruption in their cashflows.
Find a mentor – It would be a good idea to have someone experienced who can guide you & mentor you in the profession. Please understand that mentoring is not spoon feeding. The mentor will be the touchstone and guide who will be able to advice you on the way to go about your business. The mentor will be able to counsel you, give direction, suggest correction in your plans etc. They will not be able to come with you to meet clients or help you in making the plan. Make your expectations known and agree on what kind of assistance, you may seek. This will give confidence to the mentor about your seriousness, extent of intervention & commitment required from their side. You should be willing to put in efforts and act on advice given by the mentor. With a mentor, it will be far easier to succeed in the business.
The time is ripe now. There are few planners in practice now. The environment is conducive for Financial Planners to launch themselves– with the Financial Services space being as complex as it is and lots of people looking around for proper advice and hand-holding. Even the regulatory environment is goading the players to go the advisory way. What is required now is faith – Faith in oneself & faith that clients will come to you, if you have a good value proposition. What is also required is lots of patience. Rome was not built in a day , they say. Neither will your FP practice. There are rich pickings for those who are willing to take this career seriously. It is no longer in doubt if a Financial Planning Advisory is a serious career option…there are many of us for whom this is already our profession. Put your doubts behind you. Stop walking on the bed; step on the floor. That’s where you will have to walk. The time is now.
Published in Financial Planning Journal in Aug 2010
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