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New advisors face an uphill battle. Building your clientele from scratch and producing results for your firm – all while trying to learn the business – is tough. In fact, 80 to 90% of financial advisors fail in the first three years.
This is due to three major obstacles:
- Not only is the learning curve steep, but there's often a heavy reliance on senior advisors for guidance, lengthening the time until you can offer services that will earn a big enough paycheck to stick around.
- Lack of confidence and understanding stalls your ability to offer value independently, impeding your ability to quickly build a client base.
- You’re expected to do your own prospecting, but you lack the knowledge or tools to do so, making it difficult to build a clientele, offer your services, and grow.
Put all that together, shake it all about, and you’ve got a recipe for failure.
If any of this feels uncomfortably close to home, you may be thinking, “I’m aware of my problems, Hendrik. Do you have a solution?”
I do. And it’s a good one.
Offering cash-flow planning as a service
I have found that new advisors who offer and lead with cash-flow planning services during the otherwise slow ramp-up time in their career see extraordinary results and dramatically increase their chances of success. This strategy works because it simultaneously addresses and solves all three of the major obstacles mentioned previously.
What is cash-flow planning? Cash-flow planning is the proactive process of managing the timing and frequency of income and expenses.
As a result of going through the cash-flow planning process, clients have a personalized plan that shows them how to reach their short-term and long-term goals. Cash-flow planning helps your clients by:
1. Empowering them to understand their cash-flow so they can tell their money where to go instead of asking where it went.
2. Giving them a permission slip to spend money because they know what their monthly “allowance” is that will keep them on track to reach their goals.
3. Identifying and preparing for periods of negative net income and future needs they may not have anticipated.
Cash-flow planning helps both the client and the advisor.
When you offer cash-flow planning as a service, you will achieve four goals:
1. Quickly gain independence
Cash-flow planning has a short learning curve, allowing new advisors to offer value, empowering them to build their clientele, produce more sales, and earn a paycheck they can live off quickly and confidently.
2. Open more doors
Everyone has cash-flow and most struggle with it. Cash-flow planning is a very valuable and desirable service that few advisors properly address. Even fewer market with it, leaving a blue ocean opportunity for new advisors to differentiate themselves and stand out in a very noisy industry. Even people who are hesitant to meet with a financial advisor see the value.
3. Grow faster
This is two-fold. The collaborative nature of cash-flow planning enables you to build immediate trust and confidence, winning more clients. And the cash-flow conversation can lead to other areas of your business, uncovering opportunities for more sales.
4. Create raving fans
This valuable service creates raving fans (that refer clients) because of the tangible improvements made in their lives now as compared to the possibility of improvements made in the distant future. Every advisor I’ve spoken to has said the same thing, “this changed my clients’ lives for the better and they love me for it.”
Case Study
Click here to get a case study of how new advisors at Alliance Advisory Group (AAG) increased production by 374% in less than a year.
The challenge
Just like you, most new advisors struggle with a slow ramp-up time from training to independently growing their client base and earning enough money. When you read the case study, you will discover that new advisors at AAG faced the same challenges and obstacles as most new advisors do.
This is reflected in AAG’s 2018 and 2019 low production rates.
- $13,890 = Second-year average production from 2018 new advisor hires.
- $12,000 = Second-year average production from 2019 new advisor hires.
This amount of production was making it difficult for new advisors to survive and thrive.
The solution
Committed to helping its associates achieve success, AAG added cash-flow planning to its new advisor training. Effectively, new advisors were trained to efficiently offer cash-flow planning as a service and help prospects and clients become world-class savers.
The results
The resounding success of this program was quantitatively reflected in AAG’s 2020 production rates.
Less than one year after implementing the strategy, new advisors’ second-year average production increased 374%.
Conclusion
The odds for success for new advisors are heavily stacked against them. But cash-flow planning as a service has the power to drive the success of new advisors and sustain them during the slow ramp-up time between training and independently growing their business. New advisors who leverage it correctly can quickly and independently build profitable and sustainable practices.
To your continuous success!
Hendrik de Vries is the managing partner of Cash Flow Mapping, a cash flow planning software and the CEO of MM RIA Marketing. As a former financial advisor, he works with financial advisors to accelerate business growth quickly and efficiently. You can reach him at [email protected].
Read more articles by Hendrik de Vries
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
Case Study
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