Do You Share Any or All of these Characteristics?
Over the past 25 years, Vince Valenti had the pleasure of meeting and working with many, many financial planners. However, only a relatively small number of them have really stood out as an example of what a great financial planner should be. Who is Vince Valenti you may ask? He was the President of Independent Planning Group Inc. He was also the Chairman of IPG Insurance Inc. and Virtuco Technologies Inc. and was the President of Brigata Capital Management Inc. In 1995, he co-founded Winfund Software Corporation. Bottom line, he has worked with many Financial planners over the years.
Here are some of the common characteristics that I believe exceptional financial planners share.
1. Comprehensive Financial Planning
All great financial planners insist on developing comprehensive financial plans for each new client, and usually for an upfront fee. To them, this part of their process is non-negotiable.
They will discuss their client engagement process and fee structure at the introductory meeting with each new prospect. If a prospect is not willing to sign an Engagement Agreement, they will not proceed with the prospect.
Exceptional planners are totally committed to their client engagement terms and conditions, and realize that in order for the financial planning process to work correctly and effectively they will not compromise. In addition, the planner generally will not negotiate their fees or their value offering because they have full confidence in their skills & abilities, the advice they provide, and therefore, their value.
2. Fee Based vs Commission Based
Great financial planners prefer to be compensated through fees, rather than product commissions. Whether it’s a flat up-front or annual fee or a fee that is based on the assets under management, they believe that fee-based compensation removes any potential or perceived conflict of interest that may occur when selling a product that pays compensation.
In addition, a compensation structure that is independent of the products sold allows the financial planner to be more focused on monitoring the overall plan, versus monitoring each individual investment.
3. Judged on Plan, Not Market Values
Their comprehensive financial plans will be monitored on a regular basis and a variety of components are of primary concern, such as; tax efficiency, insurance needs, retirement needs, distribution of estate, etc. Therefore, fluctuating market values are a secondary byproduct of their financial planning process.
In reality, many financial advisors live and die by market values because they don’t want to, or know how to implement comprehensive financial planning. Their only true value proposition is the rate of return their client’s will experience.
Alternatively, while great planners care about market values, their planning involves a wide variety of components to ensure that the investment approach is directly tailored to the client needs in every way. It is not just based on risk, time horizon and objectives.
Should market values decline, the planner may do nothing or may recommend making minor adjustments to the financial plan, rather than sell-off or switch around the assets.
4. Great Financial Planners Become Part of Your Team of Professionals
Great financial planners realize that accountants and lawyers may inadvertently leave or create ‘gaps’ with respect to a client’s financial plan. For example, the client may have created a Will, but their lawyer had not taken into consideration that they do not have the ability to pay estate taxes at death. A thorough financial planner will request copies of Wills and tax returns to ensure all bases have been covered, and will always recommend corrective action (with confidence) when necessary.
A great financial planner is keen to engage other professionals that a client may use and may offer to meet with a client’s existing professional team. They will want to learn about any prior financial related initiatives, inform the others of their comprehensive planning process and recommendations, obtain the other professionals feedback and ultimately ensure they “buy-in” to the planner’s recommendations. As a bonus, they will often receive future referrals from these other professionals.
5. Always Learning & Improving
Great planners are always learning and seeking opportunities to improve their knowledge. As a base line, a great financial planner will at least have a Certified Financial Planner (CFP) designation, and may complement their skills with other educational programs, such as; Challenging clients Perceptions, Offering New Insights, Educating customers, teaching them and more...
6. Continuous and Regular Follow-Ups
Regular updates and discussions are critical to the success of any financial plan and great financial planners insist on regular client meetings. At each meeting, they will provide an easy to understand summary of how the plan is progressing.
These meetings will often include time for additional information gathering, as they want to ensure the client’s short and long-term situation is always being considered. Clients will be told if changes or adjustments are warranted.
In addition to regular meetings, these planners often provide very informative newsletters to their clients, and they often write and edit their own newsletters & Blogs rather than subscribing to a third-party distributor. They are dedicated to ensuring all content is relevant to their clients, their industry and their own practices.
All great financial planners understand the importance of running a compliant operation. They realize that adhering to compliance requirements will help to protect the best interests of their clients and their practice. They will read and understand the regulatory policies and procedures and their obligations as a licensed practitioner. They will not take any chances when it comes to short cuts or questionable practices.
8. Limited Number of Clients
Great financial planners will realize that they can effectively work with a specific number of clients and will generally not exceed this limit. In addition, based on the services they provide, if they decide that their maximum client base cannot exceed 100 clients (as an example), they will create guidelines whereby minimum investable assets levels, or other criteria will be required.