You want to invest, but don’t know where to start. You want your money to grow and work for you but how do you make that happen? That is where financial advisors come in. They have many products that will help you grow your money. Consequently, it will help them grow their money too if they receive a commission on the plans they sell.
Many customers know that and are inherently leery of financial advisors like they would be many salespeople. They think you just want a commission from your client’s sale whether it’s good for them or not. That’s not the case with fee-only advisors. Many don’t know the difference between each type of financial advisor. How do you market yourself as a fee-only consultant and drop the reputation in your industry?
Your biggest competitive advantage is that you are paid by the client. The National Association of Personal Financial Advisors or NAPFA legally requires you to act in the client’s best interests. This gives you the opportunity to educate the customer on how fee-only financial advising differs. How you honestly want to collaborate with them to manage their money. The fact that you have no stake in a plan is reassuring to customers. They want someone who is in their court and as a fee-only advisor that’s you. So, market that angle.
Relationship building is an easy and effective way to market your business. It allows you the opportunity to earn testimonials and referrals to build your clientele. Since customers know you have their best interests at heart that enables them to trust you. Commission-based advisors might have this luxury. Clients are more guarded with them because ‘what’s in it for them’. John Marotta of Forbes said it well. “Most commission-based agents and brokers are no doubt sincere people trying to do honest work for their clients. But I also believe human nature is bent, and good intentions often succumb to repeated temptation.” This is something your clients don’t have to worry about with you.
Your target market may be slimmer being a fee-only advisor. Investopedia states that you may have to offer a smaller range of consulting services or charge a higher fee to stay in business. Many small investors don’t have the liquidity to pay an advisor an hourly fee or retainer. However, those who are wealthy would be more likely to afford your services. This is something to keep in mind regarding where you market and what advertising avenues you use.
You can use the ethical advantage here quite a bit. You don’t have to be a salesman like many other advisors. You truly are a financial consultant. You have the unique opportunity to educate your clients about investments without them wondering about an ulterior motive on your part. The turnover rate for commission-based financial advisors is high, just like with any sales based job. You don’t have to meet quotas and are in it for the long haul. This is comforting to customers. They want an advisor whose advice they can trust. You are not a ‘here today gone tomorrow’ investment expert. This allows you to brand yourself as dependable, ethical, and long-standing.
Many don’t have the liquidity to pay a financial advisor a retainer or hourly fee. But, can a client afford to pay in on a policy that is completely wrong for them? Clients are looking for peace of mind in their investments and a fee-only advising situation offers that. Another weakness is if a customer needs a specific product that you aren’t specialized in. If you are a well-networked expert you know someone who can help them. This can be very valuable to your customer. It will also keep them coming back to you since they know you will do what it takes to make their money grow. Countering these two weaknesses will help your business develop.
When it comes to growing your financial advising business you have the competitive edge as a fee-only advisor. You can be trusted and since you have NAPFA backing up your work. You are not a salesperson you are a trusted consultant. When push comes to shove that is exactly what every investor wants.
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