Of Fee-Only Financial Advisors
By Jim Ludwick, CFP®
As a financial coach whose mission is to talk fee-only advisor prospects “off the fence” of procrastination, I find myself answering two questions frequently. Here they are along with my answers. Advisors can answer these questions in initial interviews before they are asked by prospects (and not left unanswered) to eliminate these questions which we sometimes called objections.
- Why do personal finance decisions have to be so complex?
- Multiple factors to consider. Personal finance decisions can be complex because there are many factors to consider. Some of these factors include your current financial situation, your long-term financial goals, your personal values, your risk tolerance, and the current economic environment.
- Trade-offs. One reason personal finance decisions can be complex is because there are often trade-offs to be made. For example, saving for retirement may require you to forgo spending on other things in the short-term, such as vacations or new clothes. Similarly, paying off debt may require you to cut back on your spending in order to free up more money to put towards your debt payments.
- So many options. Another reason personal finance decisions can be complex is because there are many different options available. For example, there are many different types of investments to choose from, such as stocks, bonds, mutual funds, index funds, and real estate. Each of these options has its own set of risks and rewards, and it can be difficult to know which one is right for you.
- Hard to predict the future. Finally, personal finance decisions can be complex because they often involve making decisions about the future, which can be difficult to predict. For example, you may need to decide how much to save for retirement, but it’s hard to know exactly how much you will need or what your expenses will be in the future.
- Why is it so hard to trust a financial advisor?
- Conflicts of interest. Some financial advisors may have incentives to recommend certain products or investments that may not be in the best interests of their clients. For example, they may receive commissions or other forms of compensation (like free software) for selling or pushing certain products.
- Lack of transparency. Some financial professionals may not always be upfront about the fees they charge, that vendors charge, or the risks associated with certain investments. This can make it difficult for clients to fully understand the costs and potential outcomes of the advice they are receiving.
- Limited knowledge. Some financial advisors may not have a deep understanding of the financial products and strategies they are recommending. This can lead to clients making poor decisions based on incomplete or incorrect information.
- Lack of personalization: There are financial advisors who don’t always take the time to understand a client’s unique financial situation and goals. This can lead to recommendations that are not tailored to the client’s needs or current situation.
- Important to do your own research. When working with a trustworthy financial advisor it is important to do your own research and ask questions about their qualifications, experience, and any potential conflicts of interest. It is also a good idea to work with a fee-only advisor who charges a flat fee or hourly rate, rather than one who earns commissions on products they sell.
Understanding prospect experience and behavior can lead to more successful engagements without having to wait so long for some prospects to get over “thinking about it” and making their positive decision to use your services.
About Jim Ludwick, CFP®
For fee-only financial advisors, a certain percentage of potential clients procrastinate on moving forward. Jim Ludwick coaches prospects off the fence so advisors can close the sale and help more people achieve their financial goals. For more information visit procrastinationjunction.com/for-advisors