I have a question for you. Why don't financial advisors get a copy of the client's tax returns and review them for tax reduction strategies and opportunities? It is because the financial advisor does not create a habit or a process to review tax returns. What is your process for reviewing tax returns? Do you have a process for collecting the information and do you review it with other professionals such as accountants? This is a big mistake and it is an easy one to correct. Check with your firm, compliance, or branch manager, because not getting the tax return, what are you missing?
Ask great questions, not fact-finding questions
Start by asking clients and prospects a couple of questions. “Do you know about our tax reduction review program? Would it be valuable if we reviewed your tax return to see if we could help save you tax this year and every year in the future? When was the last time your financial advisor or accountant reviewed a copy of your tax returns to uncover any future tax planning opportunities?” Every wealthy client was to minimize taxes because it is their largest expense. How much tax have they paid over the last 10 years and how can you help them pay less over the next 10 years?
Start by asking clients great questions in your meetings. Start by asking this question next meeting. " What are you looking forward to in the next 12-24 months? " Have your goals changed in the last few years? Is it time to update all of your goals and put them on paper? Then revisit all of their goals, short and long-term. Planning focus, not market or outlook focus.
Less is more
The second common mistake that financial advisors make is trying to help everyone. I get it. You feel good when you help people, but to the detriment of your team, your family, and your practice. There are only 168 hours in a week, and whom you choose to help, changes over time. We all started out in the financial services industry by helping everyone, but eventually learn that that doesn't work. Then we segmented our practice and figured out groups of people and how we were going to spend our time, and with whom. But that didn't work well either. Finally, we decided to hire more people to solve this problem. It seemed to work in the beginning, but slowly advisors revert back to old habits. Finally, advisors decide whom they want to spend their time with, and only then do financial advisers start to feel in control of their practice. Whom do you want to spend your time with and what does that look like every week, every month, every year?
Ideal clients or ideal families?
The third mistake advisors make is talking about ideal clients. Let me ask you two questions. What is the revenue you want to generate each year from an ideal client? Write it down. Now, what is the revenue you want to generate from an ideal family including sisters brothers parents, etc? Typically when I ask financial advisors, this is three times more revenue in working with ideal families. Isn't this where you want to spend your time working with ideal families? You cannot service 500 ideal families. Think of the ideal families you have now, and the revenue you generate from them. Isn't this where you want to spend your time? Fewer clients and more ideal families?
Are you going to correct your mistakes?
Build processes. Practice management is about three things. Process, process, process. Start by getting tax returns as a process. Then decide whom you want to spend time with. What does an ideal family look like to you and your practice? Get clarity on whom you want to spend time with. Clarity is the number one thing financial advisors want. Get a deeper sense of clarity around ideal families. Is it ideal clients or ideal families? Imagine a practice of 50-75 ideal families generating revenue of $20,000 to $50,000 of ideal revenue each year. Finally, you can feel better delivering more value to fewer people. Find someone who can help you avoid these mistakes in your practice. I would be happy to help and have a conversation, but I am not taking on any more financial advisor clients until 2022. I only work with ideal advisors who want an ideal practice and clearly defined ideal families.