Steve Long and Andy Reiss, Supernova

There are five distinct principles of the Supernova process that every advisory team must embrace to be fully immersed in improving their business.  Those five principles of Segmentation, Organization, Acquisition, Planning and Leadership are all essential to improving the client experience and improving the overall success of the business.

The Planning section is critical to fully understand the clients real financial and emotional needs. The Planning is based on discovering the values of the client, and their attitudes and perceptions on what they are attempting to achieve with their assets.  The process is purposeful and is geared toward obtaining a deep knowledge of the clients needs.  Everyone who is a client in a Supernova practice receives a comprehensive, multi-generational plan.

There are numerous methods to provide a comprehensive plan for clients.  Over the years most broker dealers have introduced planning software that can support the planning process.  The output, or actual plans can vary in size, scope and recommendations.  We have seen some planning software create over 150 pages of data and recommendations for clients to review.  Other more popular planning packages are simpler and easier for clients to understand.  The most important thing to remember is to have a planning package that can provide an understanding of the clients estate situation, how they will pass their assets along to the next generation, as well as how to invest their assets that is consistent to their needs and risk tolerance.

The only way you can really provide exceptional client service is to have a thorough understanding of that the client expects from your relationship.  Without a viable plan you can’t implement the Supernova client service model of 12-2-4.  The planning section helps provide guidance for the relationship and allows you the advisor to provide support and coaching to the client.  It also provides accountability to the overall relationship and is the best benchmark to keep the client fully engaged.

Let Excellence Be Your Minimum,

We have all had to face this difficult situation with a client. You discover that they are clearly spending well beyond their budget. They have no apparent means of replenishing their principle, but they continue to spend in spite of your advice. What do you do?

When I would visit an office in my District, I would often build this warning into my speech. “You all have one or more clients that are outspending their money. They are headed for the cliff where they will no longer be able to maintain their lifestyle, pay their bills and eventually face bankruptcy.

Who will they turn to?

Who can they blame?

Inevitably it will be you! Especially if they have a good lawyer. What will they say? ‘You should have warned me. You should have protected me from myself.’ Here is the tough part. They will often win in a board of arbitration. Potentially, there could be tremendous cost to you in terms of time, lost productivity and reputation.”

So what can you do when faced with a client that is outspending their budget and won’t listen?

1. Be sure that you have all the facts. The client may be expecting a large inheritance or other windfall that will change his/her circumstances.
2. Double check your original Cash Flow Analysis. Once you review all the facts, be sure the math is right. (See the Advanced Learning Library for a Cash Flow Analysis template)
3. Update the Cash Flow Analysis based on current figures. This usually means that the budget you had for the client may no longer applies. The new budget is even less.
4. Call the client in and share the news. It may be smart to have a witness to this conversation. Depending on the seriousness of the situation, your manager or compliance officer may make excellent witnesses. Have a clear agenda for the meeting. Present the updated analysis, your recommendations and possible solutions.
5. Explain the options available: modify lifestyle and stick with the new budget. Increase income by getting a job. Increase income by taking more risk.
6. Probation. Once the client has agreed to taking the appropriate action, put him/her on probation. If s/he doesn’t comply with your suggestions in the next 90 days, fire the client. Although this is difficult, it is better than a lawsuit.

This is an important topic to bring up with your clients during their semi-annual reviews. These are difficult conversations to have but of vital importance. Remember, as I’ve said before, clients are either spending too much or too little. They are never spending the right amount. Larry Wilson taught me a great lesson: our job as an advisor is to help our clients grow up and make better choices. Supernova’s 12-4-2 program does that by keeping you in regular contact with your clients to make sure that they are spending appropriately.

Suggested reading: Have You Ever Encouraged a Client to Spend More Money?

Do your clients need to know more about Social Security?  There are 3 simple steps an advisor can follow to help their clients realize their maximum benefit:

1. Know Your Benefit
2. Understand Your Options
3. Determine A Path To Maximize Your Benefit

This pamphlet from Principal Financial Group will help you explain how to get the most out of their Social Security benefits. Click on the link to download. 

Social Security Client Guide MM4926-05[1]

Supernova advisors look for topics they can use for their monthly calls. MFS Heritage Planning has developed key areas that ‘keeps you up at night’ that you can ask your clients about to start a conversation.

This tool, that you can share with your clients, uncovers and prioritizes their most pressing financial concerns, gets the results that spark meaningful planning conversations and offers materials that address their specific needs. See your MFS representative for more information.

Download the tool here

Supernova is a planning based program to redefine the client experience.  12-4-2 is the model for exceptional client service.  Having a planning based investment process means that your practice will address client needs directly and as specifically as the plan finds them.  Plus, the plan means that you will have a guide for your client’s investments and your team’s relationship with your client.  But what if the client does not have a plan?

• Use your introduction of Supernova as your opportunity to reintroduce the value of a plan to your client and your practice.
• Find the type of plan you feel most comfortable with and make its introduction and completion a goal for your practice in the next quarter.
• Make planning the next topic on your client monthly agenda.
• Assume all new relationship begin with a plan.  Make a plan the standard operating procedure for your practice going forward.

Remember the old quote?  “If you fail to plan, you plan to fail.”  There is more truth to that saying than most people realize.  Planning can add real value to your Supernova practice in more ways than one.

The Supernova process helps you get organized and grow your practice.  If you would like to learn more, join our member-only website or sign-up for one of our coaching programs.

The business of financial services has been described in a number of ways. But one thing that is consistent is this-this is a business of relationships. In order to build the most effective relationships with our clients and provide the very best in financial services, planning has never been more important. In one of my recent coaching sessions, an advisor gave me this idea, which he had received from another Supernova advisor. It is a wonderful, three-part open ended, opening question when beginning a new relationship with the client.

“Tell me about your experience with money, what did money mean to you growing up, what do you want your children to learn about money?”

I believe this is a marvelous question to get to know your clients better. This is especially a good question to ask when you are talking to a couple. Understanding any differences the couple has in their thinking may be important to you in the future.

Our advisors deliver one-of-a-kind service.  If you would like to learn more, join our member-only website or sign-up for one of our coaching programs.

In a recent article in the WSJ, it was asked, “Can you count on your broker or financial advisor to tell you how much risk is right for you?”  The basis for the article was the 2012 requirement by the Financial Industry Regulatory Authority’s requiring advisors to assess how much money clients can accept loosing.

The solution for many advisors is the use of a ‘risk tolerance questionnaire’. This is definitely part of the process in determining how to invest someone’s money, however, as the author goes on to say, “Even financial advisors don’t seem to believe the results of these questionnaires. A recent survey of more that 5,000 advisors by Cerulli Associates, a research firm in Boston, found the advisors believed 26% of clients had an aggressive tolerance for risk and only 14% more conservative where a parallel survey of more than 8,000 clients found that only 8% regarded themselves as aggressive, while 29% considered themselves conservative. There is an obvious different opinion between advisors and clients on what they think risk means.

What tools can you use to determine your client’s tolerance besides your risk tolerance questionnaire?  Monthly contact with clients can be a great tool. When you incorporate the 12-4-2 (Once a month meeting with four of those being quarterly reviews and two of those four being in person meetings) you create time with that client that you can use to get to know them on a more personal level. Use those nine touch base calls as a springboard to ask your clients those deeper questions about themselves. Let them voice their worry about the future if something goes wrong and use those concerns to design and implement a plan that more accurately reflects their needs. Your client’s will sleep better at night and so will you.

Adding an investment to a client’s portfolio is a decision.  Removing an investment from a client’s portfolio is a decision.  If you have a discretionary account, you review the changes with the client.  If you have a non-discretionary account, you must get your client’s permission to execute a buy or a sell.

However, doing nothing is also a decision.  Making a decision to do nothing can be as important as changes that you make.  Make sure you are discussing with your clients your decision to not make changes.  If you aren’t sharing your “hold” decisions clients may wonder why they are paying a fee for “inactive” assets.  If you have a non-discretionary account, the client may wonder if you are paying attention to their entire portfolio.

Doing nothing is an important decision.  Take credit.

Supernova Advisors use their monthly 12/4/2 meetings to “take credit” for the important work they do for their clients throughout the month.  Our advisors deliver one-of-a-kind service.  If you would like to learn more, join our member-only website or sign-up for one of our coaching programs.

How much misinformation are your clients exposed to on a daily basis?  If your clients listens to Jim Kramer or other talking heads on CNBC, read the USA Today or Wall Street Journal and subscribe to several internet news services they may be exposed to all kinds of inflammatory, exaggerated and even misleading articles about how to invest. It is almost impossible to listen to any media without someone suggesting a new way for them to invest. This doesn’t take into consideration discussions among friends about special ‘deals’ you can buy into using their exclusive finance club or investing in the latest penny stock.  It is a challenge, especially in volatile times, to keep clients calm and on the right track.

A case in point was the fiscal cliff at the end of 2012.   The media made a strong case that it would be the end of the world or maybe just the stock market and the United States economy if we fell off. You can’t really blame them for wanting to sell their product but we all need to be aware of what they are doing.  I personally know several high net worth individuals who called up their advisors, took money out of the market and put it in cash because they were afraid of loosing it. The result…they missed out on the Dow’s biggest gain in more than a year during the first week of January.

Supernova advisors use their monthly 12/4/2 meetings with clients to inform them about what is real and what isn’t. They dial back on the hype.  For example, you can quote statistics that prove if you stay the course with a diversified portfolio through good times and bad you will make more money than trying to ‘time’ the market by jumping in and out.

A wealth advisor keeps clients focused on their goals. They do that by putting current events into perspective and reminding them they need to stay the course. You can point out historical statistics and current trends. Talk to them about current affairs, listen to their concerns and fears and assure them that you have their best interests at heart. If you don’t talk to them your competition will.

The Supernova client service model is built around our 12\4\2 client communication process.  Our advisors deliver one-of-a-kind service.  If you would like to learn more, join our member-only website or sign-up for one of our coaching programs.

The Supernova client promise includes a commitment to a regularly updated financial plan.  If you have not been running a planning based practice, it may take 6 to 12 months to put a plan together for those core clients you choose to have as part of your practice.  This article outlines a simple process for getting started as well as a link to a download that will help you gather the information you need to update or create plans for your clients.

Start by taking  a look at your core client list and place your clients into one of four groups:

1.  Clients with an up to date financial plan. 

• Make sure that any action items are being addressed.
• Make sure that you continue to revisit the plan on at least a semi-annual basis during your 12/4/2 reviews.
• Make the plan a regular agenda item on their working agenda in the 5th divider in your blue client folder.
• When you are consistently reviewing and updating your clients’ plans, it gives you another great differentiating question to ask of prospects – “How often is your plan revisited and updated?”

2.  Clients with a financial plan that has not been revisited within the last quarter.

• Review the plan at your next quarterly review meeting.
• The conversation could start along the lines of:  “Mrs. Jones, in October of 2012 we completed a financial plan for you.  I was reviewing the plan and there are a couple of issues that I want to update.”

3.  Clients to whom you have suggested a financial plan, but they have declined.

• Here’s a conversation starter:  “Mrs. Jones, we have discussed completing a financial plan in the past, but you have declined.  Along with monthly communication and rapid response service, a regularly updated plan is an essential element of the my client service promise.  I still feel it is important and would like you to reconsider.  We can get this process started with a short questionnaire.”

4.  Clients who have no plan and you have not had a conversation with them regarding financial planning.

• Again, a conversation starter:  “Mrs. Jones, I recommend that each of my clients complete a financial plan.  It will allow you to see where you stand and the probability of hitting your financial goals.  It is part of my ongoing service commitment to you.  We have a way of getting that process started with just a short questionnaire.

With this breakdown of your clients in place, you can download the Supernova Planning Matrix through the downloads tab at the top of this page.  This tool will help you with your next steps.  Before you know it, 100 percent of your clients will have plans in place.

Download the planning matrix and see which categories your clients fit into.

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