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Tuesday, September 30, 2008

Three-Step Transition from Financial Sales Person to Financial Advisor

The tremendous benefit that accrues from status as a financial advisor is that you have no agenda, no product to sell, and no objective other than do what’s right for the prospect and the prospect can sense that. Because prospects do sense the difference between a financial sales person and financial advisor (no matter what term you use to describe yourself), financial advisors gather more assets per client and have longer term, far more lucrative client relationships. And, at the end of their career, financial advisors have a practice to sell—their client relationships have value.

Few people make the transition from sales person to advisor. Consider these figures: there are approximately one million people in the US with a securities or insurance license. There are approximately 80,000 people entitled to use either the CFP® or ChFC® credential. That’s not to say that only people with one of these credentials are practicing as true financial advisors (or that some with these credentials are product sales people and not advisors), but those that are serious about their financial advisor status do pursue one of these designations because they know that these designations are the best chance of quickly communicating their status as an advisor to the public. In short, about 8% of people with a license to sell financial or insurance products have made the effort to “brand” themselves as a financial advisor.

So the first step in the transition from sales person to advisor is to get educated—whether by enrolling in one of the recognized designation programs or through self study. You cannot advise if you don’t have adequate knowledge. Does this take a consistent effort to study each week over an 18 month period? Yes. Do most people make the effort? No. Do the people who make the effort get rewarded? Yes—the CFP® Board reports that financial planners with the CFP® designation earn 50% more than non-CFP financial planners. So if you struggle to earn more, knowing more is the first step to your goal.

Once you earn a credential or reach your goal. You’re not done. You need to invest about 200 hours annually in self continuing education. I know that most credentials require 40 or so hours a year of continuing education but this is insufficient. Not only do you forget what you know, and must spend time staying current, you need to continually add to your knowledge base. Since your prospects and clients are getting more knowledgeable in financial matters, the value you add will diminish if they keep growing and you don’t.

The next step in the transition is your presentation. When you sell a product, you typically spend most of the time talking, explaining the features and benefits of your product and convincing your prospect why they need it. As an advisor, you spend most of your time asking questions, because you don’t care what products and services you eventually sell. These are simply tools to accomplish your prospect’s objectives. Your job is clearly defining those objectives and then presenting a course of action, a course which uses products or services as the tools to fulfill the objective. You no longer care about the sale of a $50,000 annuity. Your objective is to be the sole financial advisor and gather all of the client’s assets so that they can be managed appropriately. When you build sufficient value and trust so that the prospect turns over their assets for your stewardship, believe me, the compensation will follow and a true advisor does not need to worry about that.

Third, you need to decide who you want to be as an advisor.What market niche do you want to serve and what market niche will value your service?How do you want to market yourself?What other professionals do you need to align with?What’s your unique selling proposition?What’s your financial philosophy or template in working with a prospect?

Unlike a sales person who just wants the sale or willingly gives the prospect what they want to buy, the most successful advisors don’t give clients what they want. Successful advisors show the prospect their formula, their paradigm for handling money (e.g. asset allocation, marketing timing, use of products that must provide guarantees, asset laddering, etc). If the prospect wants something else, the successful advisor shakes hands and removes himself from the engagement. In other words, prospects will either agree to your model for managing their finances or not. There is no other way to be a successful advisor. After all, does a surgeon ask the patient which technique should be used for the surgery?

Sound like a lot of work? It is, but the time will pass anyway. You’ve got nothing else to do than raise your level of expertise and provide greater value, or simply tread water in your career, doing re same thing day in and day out. You’re wasting time now making small sales and extracting only a small portion of business that is attainable from each client. So the time you invest in your transition from sales person to advisors pays off as a very sound investment. Isn’t life about seeing how much value we can deliver to others? So get on your journey, the clock’s ticking.

Post provided by Javelin Marketing