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How Advisors are Stress Testing their Clients’ Retirement & Financial Plans

We know that right now inflation, interest rates, talk of bear markets, and declining portfolio values are top of mind for nearly all Canadians — in particular, those who are either approaching retirement or are already there.

Our users have been telling us that they need more tools to facilitate these conversations in order to provide their clients with the peace of mind and level of service they need.

This is why we have recently built and released a brand new feature called Stress Testing. This feature is an add-on that allows you to apply historical or randomly generated rates of inflation and investment returns to your projections.

Stress tested projections aren’t meant to replace your original plans, so we always recommend starting with your base expected returns, and then making a copy to facilitate the stress testing discussion with your clients. When you’re having these types of discussions with your clients about what the sequence of returns risk is and how it may impact them, there are many variables to cover. We need to consider both sides of this – if we’re seeing negative returns during the contribution years, this will materially change the value of the portfolio come retirement time. If we’re seeing negative returns during the decumulation phase, perhaps we’re experiencing early market losses and later market gains, the portfolio may be depleting faster than expected.

There’s no way to know for sure how the sequence of returns risk could impact actual retirement portfolios, but we can model both randomized and historical data to get a good idea of potential outcomes.

You can watch a quick video overview on it here.

​Why we created Stress Testing:

During the interview process, there was consensus among users that the current uncertain economic environment was a top concern for advisors and their clients. There was a clear appetite for tools that enable purposeful discussions about the downside risk that can impact the success of the client’s financial plan. The usefulness of modelling the variability of returns and ranges of outcomes was evident.

How Advisors tell us they plan to use this new tool:

There are plenty of use cases for the new stress testing tool, which provides both historical and randomized return options, but here are the most common ones:

  • Show a range of potential future market returns and inflation rates so your client is comfortable with and prepared for more than a base case outcome. This can be combined by running a sustainable scenario to establish a more realistic after-tax spending target that considers the impact of lower than expected returns.

  • Model sequence of returns risk to demonstrate that the timing of when your client receives strong or poor performance on their investments matters, in addition to their overall returns. For instance, you can model a period of negative returns following retirement to show that selling investments to fund withdrawals in a bear market can have significant and negative impacts on the client’s likelihood of success.

  • Model strategies that can help minimize this risk such as a cash wedge or rebalancing into a more conservative asset allocation.

  • Model the first two use cases mentioned above by using their own (or their firms’) market assumptions — think customizing expected returns and standard deviation — to show the potential impact on their projections in context with their investment portfolio assumptions. This is especially useful for planners that support portfolio manager types of advisors.

What current users of this new functionality are already saying:

 

… “This is so fitting for the current times as economic and market conditions are uncertain, and not like any time in history” …
… “I love all the new features added in Snap. Also, love all the sessions and webinars offered by your team” …
… “This is a great tool for client education … the ability to look at the potential worst scenario and make changes accordingly to adjust for sustainability” …
.… “Snap gives a concise 1-page summary that I can use to show clients what their life will look like if they take different paths. And it’s easy for them to understand. It’s also flexible and quick. I’ve tried all the others and they were not as good. The new tool is the best resource we could have been given to have discussions with clients about the current market situation” …

Want to try it for yourself?

Sign-up for your 14-day free trial now and activate the Stress Testing feature. It’s free for 14 days, too!

How Financial Advisors Can Easily Provide Transparent Recommendations for Retirement Planning

As a Financial Advisor, you already know that your clients continue to demand more value in each and every client meeting. To facilitate this, Advisors rely on information, speed, and simplicity from their financial planning software during retirement planning discussions. Most likely, your clients are not coming to you, asking for a financial plan. They are, instead, coming to you with financial questions. As the expert, you know that these questions can be addressed through the financial planning process.

As you work through the financial planning process, what happens if you determine that retirement goals are either over or underfunded? What can you do to help, and how can you provide transparent recommendations to your clients?

This is why we created Recommendations. This new feature will empower Advisors to quickly illustrate to their clients their retirement spending goal, what they are on track for already, and what options they have to close any gaps. This means that now, Advisors can run more “what-if” scenarios in less time and with less effort. As a result, they can spend more time creating value for their clients through meaningful discussion and less time is spent on manual (trial and error) software operations.

The Recommendations feature is ideal for clients who are either pre-retirees or younger clients who are starting to plan for their futures. With Snap’s new recommendations feature, you can now instantly help your clients explore what actions they can take TODAY to ensure their future retirement goals are met.

 

We know that one of your clients’ most important questions is: how much can I afford to spend during retirement?

But what happens when that number isn’t enough? What happens next if you determine that your client can’t afford to spend what they need or want once they retire? That’s when the next round of questions start.

  1. How much MORE do I need to be saving each year in order to reach my goals?
  2. What age can I afford to retire at?
  3. How much do I need to reduce my annual spending by to ensure I don’t run out of money?
  4. Or, how much do I need to save from the sale of this business or property to ensure my retirement goals are fully funded?

Why we created Recommendations:

During the interview process, there was consensus among users that automating the recommendations process would be highly valuable, for several key reasons. Advisors tell us that their clients continue to demand more value and service from each and every meeting, and expect to receive answers quickly to their most important questions.

If the answer to “how much can I afford to spend” is not what the client was hoping for, the next line of questions will be around what can be done now to impact that number.

What our Advisors have told us they need:

After an Advisor meets with a client and inputs all required data to produce a base financial plan, Advisors say they then want the software to auto-calculate how much retirement spending their client is on track for and what options they have to close any existing gaps. Advisors tell us they also want the ability to make swift plan alterations and then have the software re-calculate these areas. Finally, they want the option to have the software implement the recommendations for them, creating transparency behind the recommendations and saving valuable time.

This is exactly why we built the new Recommendations feature.

How Advisors tell us they plan to use this new tool:

Here are the most common use cases for the Recommendations feature.

  • Identify gaps/vulnerabilities between clients’ retirement goals and their current situation.
  • Illustrate how the timing of retirement can affect the achievement of specific retirement goals.
  • Illustrate how additional annual savings can help to achieve retirement goals.
  • Establish whether some of the client’s capital assets can be repurposed toward goals other than retirement, such as purchasing a second property, supporting a loved one, or budgeting for an annual trip.
  • Explore ways to increase estate value, such as funnelling a portion of capital assets into an insurance estate strategy or investing into a business.
  • Illustrate how much money a client needs to put away today to achieve their retirement plan in the event of a windfall due to something like selling a business/land or receiving an inheritance.
  • Present how unfavourable market conditions [by using the Stress-Testing module] can affect retirement funding strategies by combining stress testing with recommendations.

 

What current users of this new functionality are already saying:

…. “Recommendations will save me time on calculations and quickly allow me to generate client-facing what-if scenarios” …

… “This will save me time because it eliminates the need to produce multiple stand-alone what-if scenarios. I can now do it on one page” …

… “Recommendations will allow me to quickly produce high-level recommendations with little effort. It enhances the client-facing experience”…

… “It looks awesome! The automatic savings feature that optimizes where to save and is showing the before and after tax required savings is exactly what we need. Thank you.”

Want to try it for yourself?

Sign-up for your 14-day free trial and access the new Recommendations feature today.

How Financial Advisors Easily Provide Tax Planning Advice with Snap Projections

As you help your clients work through the many stages and phases of retirement income planning, financial planning, and creating long-term projections, the importance of tax planning undoubtedly remains a top priority and focus throughout these discussions. Whether you’re a Financial Planner, Advisor, or an Investment or Wealth Manager, chances are that your clients are coming to you for financial and retirement planning advice. 

At its core, a solid tax planning strategy will have invaluable long-term benefits for your clients. It will ensure that there are no unnecessary taxes being paid during the asset decumlation phase, help to keep investments efficient, provide ample opportunities and insights for charitable donations, maximize both your clients after-tax spending and estate value …  I could go on, but I think you get the picture so I’ll stop there. 

Likely, you already know all of this – the real issue here is how to facilitate, implement, and execute these tax planning conversations without creating additional work in your already jam-packed schedule. The good news is that this is the very objective of this blog post — to help you provide tax planning through your financial advisory process in an efficient and streamlined way. 

I’m going to focus on how you can do these things within Snap Projections, a leading Canadian financial and retirement income planning software for Financial Advisors, Planners, and Investment Managers. We’re designed specifically to help small to medium Advisory teams and Independent Financial Advisors serve their clients effectively and efficiently. 

So, let’s start with asset decumulation.

Asset decumulation is a major component of retirement income planning and it rarely gets the attention it deserves. Everyone talks about saving and investing but no one ever talks about the best way to spend during retirement.

As a financial planning tool, Snap’s primary objective is to maximize the longevity of your client’s portfolio by minimizing or deferring tax liability, thus providing them with the highest possible amount of after-tax spending throughout their retirement. 

Snap’s default logic to maximize your client’s cash-flow during retirement is to first drain the non-registered accounts, followed by the TFSAs, and then the registered accounts, outside of any RIF or LIF minimums. This will keep marginal tax rates as low as possible during the early years of retirement. 

In some cases, this strategy won’t align with your clients’ objectives so it’s simple to create your own decumulation strategy by setting your own default (we call this the cash flow management logic). Additionally, you can make manual overrides to the default withdrawals.  

But you may still be wondering, what is the best way to decumulate the assets in a projection?  

This is a simple question on the surface, but the answer isn’t always obvious. We would need to define the client’s goals first. 

For instance, are we optimizing for the

  • Highest retirement income?
  • Highest estate value?
  • Lowest estate taxes?
  • Short-term liquidity?
  • Long-term growth?

We suggest using this Financial Planning Questionnaire with your clients to ensure you fully understand their needs, goals, dreams, and desires. This knowledge is what will put you in the position to truly help them. Plus, it makes your data entry much easier. You do not need to be an existing Snap user to take advantage of our questionnaire. 

 

Between the default CFM logic, and the pension income splitting, Snap Projections does perform initial optimizations on the order of withdrawals, and for 90% of cases, the defaults work very well.

However, you can modify the default algorithm (to essentially create your own default logic) and achieve even more desirable results. You can use the CFM Order column to change the order around and see if that results in either a higher cash flow or higher estate value, depending on the goals of the client. As well you can change the conversion age for RRSPs and LIRAs, and see whether drawing the minimums sooner or deferring them until later creates a better outcome.

In most cases, the defaults work great for quick planning. However, if you want to invest some time optimizing for a specific goal, you can create copies of the base scenario and see if changing the default settings yields a more favourable outcome for your client.

What about charitable donations?

Planning for charitable donations is an essential part of both tax and estate planning modelling the impact of any potential decisions for your clients not only provides them with a massive value with respect to tax planning, but will help ensure their legacy dreams become reality. 

In Snap Projections, you can easily plan for assets, insurance, and cash donations and have the associated tax credits applied to your projections. You can see the guide on that here

What about tax credits, deductions, & taxable benefits? 

In Snap, entering these critical pieces of the tax planning pie are simple. You can see the step-by-step guide here in our help section that will help you set those things up to ensure each plan is totally customized for your client. 

What about maximizing RRSP & TFSA contributions?

Unused RRSP and TFSA contribution room is tracked and shown easily in Snap to ensure your clients are leveraging those opportunities. You can see the breakdown of how those calculations are done here and what assumptions the software starts with. 

If extra funds are being invested or saved during the decumulation phase, Snap’s default logic will be to maximize for tax efficiency, automatically maximizing first the RRSP and then the TFSA. The software does the calculations for you, and you can easily modify the default logic and create your own decumulation and contribution strategy as well. 

What about spousal situations?

When you’re dealing with spousal scenarios, Snap is going to do all the heavy lifting for you. You have all the advanced options you need to optimize the situation with easy access to elements like pension income splitting and even basing the minimum RRIF withdrawals on the age of the younger spouse

You can easily set up a spousal RRSP or model a surviving spouse scenario (that includes asset rollover) by simply modifying the projection length for one person. It really is that simple to show your clients what their financial situation could look like if one spouse passes away earlier than expected. 

You can watch a live event recording here where we work through a case study, showing how to model a surviving spouse scenario in Snap. 

What about transparency & compliance?

We spend a lot of time talking with our users, as our product truly is a user-led design. Our product team works continuously to improve, iterate, and build the new features our current users are requesting. 

One thing we know first hand is that lack of transparency and hidden calculations is an absolute deal-breaker for Financial Advisors, especially when it comes to tax planning. If your client pushes back or asks a question, you need to be confident with what you’re presenting and you need to know you’ll be able to not only answer their questions but explain how the numbers were generated. If you’re a CFP or a QAFP, your designation requires that you understand how the software you’re using for financial planning works. You can read more on those rules here.  

This is exactly why you will find tax charts to show you what is under the hood and behind those high-level numbers on the main planning page. You can see what those look like and how the calculations are generated right here. And, we make it easy for you to export these tax tables and entire spreadsheets into Excel, should you need to pull the information out of the software for your own verification purposes. 

With respect to compliance, we provide multiple resources to help cover you. Our Financial Planning Questionnaire can help you satisfy your KYC requirements, and our reports provide a full summary of key values for the plan (including our Life Needs Analysis tool) to share with your clients. All assumptions are included within the report for complete transparency and documentation purposes.

What about updating last year’s plans?

Updating old plans can be cumbersome, but it doesn’t have to be. With Snap, you’ll be able to rebase and update your plans with the click of a button. Upon accessing an outdated plan in the New Year, you’ll be prompted to rebase your scenario. You click the button, and that’s it — you’re done. The rebasing will cover all annual updates for income amounts, asset values and costs, RESP grants, debt balances, government benefits, contribution rooms, tax settings, charitable donations, and more. You’ll just want to confirm and validate that all the projected new year values are accurate before proceeding with your plan. 

What are the key elements of the plans to compare for opportunities to make improvements?

One of the biggest challenges Advisors bring to us is that they can’t create multiple what-if scenarios for their clients in real time. In Snap, it’s, well, … a snap. You can see how quick and easy it is to create multiple what-if scenarios here

Once you’ve built out multiple what-if scenarios to compare various strategies and potential outcomes, there are some specific areas where you will want to look for tax information and any potential opportunities for improvement. 

To compare the scenarios here are a few areas to look at:

  • An Estate Summary is available for any year of the plan by clicking the Estate Before Tax value on the Planning page and for the final year of the projection in the report.
  • The Marginal and Effective tax rate columns on the Planning page, or on the Cash Flow Summary page of the report.
  • The Total Tax paid during the projections, not including estate tax (click the blue icon at the top of the Total Tax column).
  • The Estate after Tax column in the Net Worth Projections page of the report for each year for all scenarios.

What about tax planning for clients with corporations?

Snap integrates both personal and corporate financial planning seamlessly with an optional corporate planning model (available in our Advisor Business plan) that can be layered onto your personal projections. You can get a brief overview of the module in this video here, it’s about 8 minutes long. 

You can review the basic corporate assumptions we use here, and learn more about how we handle and track the refundable dividend tax on hand and how to customize your fixed income and equity return allocations here

Snap understands the importance of having those tax planning conversations with your clients. This aspect of financial planning is extremely important to your clients’ overall financial success and health, especially during those retirement and decumulation years. Our goal is to make it as simple as possible for Advisors to model and demonstrate these scenarios effectively in order to help their clients reach their financial goals.

Snap User Spotlight: Meet Renee Hawk

Welcome to Snap’s first ever user spotlight! Today, we’re doing a deep-dive with Renee Hawk. You can download the full case study down below if you want the numbers and business impact information. Let’s start with some questions.

What is your background?

I’ve been working in the industry since 1990. I started with one of the big banks and followed my desire to have a greater impact on people’s lives by making the switch to independent and personal financial planning in 2002. In 2018, I created Innovate Financial Group, formerly Hawk Wealth Management. I’ve held my securities, mutual funds, branch manager, and insurance licenses and most recently received my Responsible Investing Certification. I started my business just like everyone else in the industry did back then, with phone calls and knocking on doors — not a format typically used these days! Almost all of my clients come through referrals now, for the last 8 years my business has grown strictly through referrals. Even through the pandemic, I’ve been able to grow thanks to my happy clients sending their friends and family my way. With the adoption of more technology, I’ve been able to continue to serve my clients virtually and still connect through video meetings and screen-sharing.

What’s your process?

We co-create plans for each client’s unique future.  We believe co-creating the plan with the client is the most effective approach as each person has unique goals, dreams, and aspirations.  We develop investment strategies designed around the client’s specific risk tolerance and time horizon, as they expect to earn a competitive rate on their investments as well as preserve their capital. By following our planning process, as developed by the Financial Planning Standards Council, we help minimize tax, protect assets, and build wealth.   We believe this planning approach meets the client’s unique needs, keeps them on track, and maybe even more important, provides peace of mind.

But what does working with you look like? How do you really help your clients?

We’re turning dreams into numbers which brings reality to those hopes and dreams of my clients. With my clients, when I sit down with them, the first thing that we do is have a discussion about their goals and dreams. It’s a very client-specific approach that always starts with understanding their goals and aspirations.   Afterwards, we move into the numbers and product, which at the core are nothing more than tools to help us accomplish those goals. We’re taking their goals, quantifying them and then modelling those numbers and products to show my clients what their dreams look like.   ​​When I show my clients what their dreams look like in numbers, they are simply blown away. Because I am able to produce a financial plan that my clients can genuinely understand, it’s a very different conversation — right on the spreadsheet you can say, “See? This is what your retirement looks like.”   One recent story that comes to mind is a long-term client that I recently had the opportunity to work through my process with. He came in and said he wanted to retire early, so we got to work seeing what the possibilities were. When he first asked me if he could retire earlier than planned, I really didn’t know, but once we looked at it and modelled what it would look like to sell his property and invest, plus account for everything that comes along with that, including tax implications, it become clear what the optimal solution for him was.

What do your clients have to say after working with you?

As a dual-licenced, independent Financial Advisor, I have a well-established practice and client-base. The cornerstone of my success and growth has been the fact that my happy clients continue to send me new business.   It’s phenomenal to have the kind of impact on a client where they talk about our co-created plan with their friends and family. I’ve noticed a substantial increase in referrals, this year in particular, which I can attribute in part to my adoption of newer technologies and processes that are aligned with the new ways we all need to work. For example, the client in the above story sent me two referrals after that meeting.   It is so rewarding when happy clients walk away from our meetings and are excited to tell their friends and family about what we created – really, the best compliment I can receive.

Renee has a true passion and drive to help her clients establish a solid financial plan.  She takes the time to understand people’s goals and dreams and doesn’t take a one size fits all approach that you sometimes see.

Blair Greenwood, Debt Consultant | 4 Pillars

As a public servant I feel secure knowing I have a great job that allows me flexibility and provides security for my future.  As a working woman, wife and mom, I need to have that same flexibility and security for my future where my investments are concerned.  Renee Hawk has provided that peace of mind for me and my family.  She is a dedicated professional, she keeps us informed and most importantly, she ensures we understand every element of how our investments are handled.  I would – and have – recommended her to many friends and family.

Lisa Marie Seeger, Public Servant

Grab the full case study now to learn about the real business impact Renee has experienced since using Snap Projections.

FP Canada Standards Council’s New Tech Rules

Did you know that there are new technology rules for Financial Planners?

 


In July 2021, the FP Canada Standards Council added two new rules to their Standards of Professional Responsibility.

 

Certified financial planners (CFPs) & qualified associate financial planners (QAFPs) have some new expectations and requirements pertaining to the technology they use as part of their financial planning process. We’re going to break these two new rules down for you and demonstrate how Snap Projections helps to satisfy these requirements. We enable planners to easily comply and meet these requirements, so if you’re a Snap user, we’ve got you covered for these changes.

 


 

Let’s start with Rule 28, which you will find on page 16 of the updated set of standards.

It states that:

 

(28) When relying on or using technology in the financial planning process, a Certificant:

a) Must take reasonable proactive steps to gain a general understanding of the methodologies underlying the technology that have a direct impact on financial planning projections and recommendations;

b) Must have an understanding of the financial assumptions underlying the technology that have a direct impact on financial planning projections and recommendations;

c) Must validate that the inputs and assumptions used are reasonable and appropriate based on the client’s circumstances; and

d) Must validate that the outputs generated are reasonable and appropriate for the client before relying on them, or presenting the final recommendations or strategies to the client.

In laymen’s terms, this new rule simply means that Financial Planners need to understand what data goes into a financial planning software, and whether or not the numbers that go both in and come out, are reasonable. It means that you need to understand how things are calculated, and be able to validate that the assumptions and outputs are reasonable. The other layer here is that all of this pertains to what is reasonable and appropriate for your individual client, which means you really need to “know your customer”. If you use financial planning software that you don’t understand because it isn’t transparent, or don’t invest the proper time in client discovery and awareness, you may find yourself in breach of these new rules.

How does Snap Projections help with this new expectation?

Snap Projections takes great care to document and share the methodologies and assumptions that underlie the software. We believe a thorough understanding of these inputs is important to ensure the outputs of the software are as intended for your needs. We use current government-provided inputs where available (e.g., tax rates, CPP benefits) and use reasonable and customizable assumptions where required (e.g., inflation, portfolio holdings). Where possible, we use industry-recommended inputs (e.g., the FP Canada Projection Assumption Guidelines (PAG) for the rate of return assumptions). Additionally, our data entry flow encourages the review and validation of many of these assumptions as the plan is initially being created. In addition to the resources you’ll find below, it’s worth mentioning that we have a stellar Customer Support team that is available to answer any questions you have. If you’re wondering where a number is coming from, or how something was calculated, all you need to do is ask. You won’t be left in the dark and we will ensure you have the information you need to be confident in the numbers and plans you present to your clients. Articles outlining our methodologies and assumptions can be found throughout our Help section of the website. Some of the most relevant articles are included below:

Once we cover the data and numbers, we also need to consider the human element here, which is the responsibility to know your customer, and to know what is reasonable and appropriate for each individual. We provide you with a Financial Planning Questionnaire to obtain the relevant information that you need to not only serve your clients but remain compliant.

Next, let’s cover Rule 29, which you will find on page 17 of the updated set of standards.

It states that:

 

(29) In all cases, irrespective of the data used, the material assumptions used as well as the rationale must be documented, and clearly communicated to clients.

This one is a bit simpler to digest, and is essentially stating that you must be able to both demonstrate and document your assumptions and reasonings, and also show you’ve shared this information with your clients in a manner they can understand.

How does Snap Projections support managing this requirement?

Snap Projections includes a dedicated page in the Report section for assumptions used in the projection. In addition to these values, advisors can add their own comments in this section for any other material details not captured in the default tables. If assumptions are more appropriate in reference to specific figures (e.g., tables, charts) you can add comments to any section of the Report. Assumptions currently included are listed below:

  • Start year
  • End year
  • Inflation rate
  • Province for tax purposes
  • Rate of return on capital assets
  • Appreciation rate on real assets
  • Retirement age
  • CPP start age
  • OAS start age
  • CPP % of maximum
  • OAS % of maximum

 

Other assumptions may be included depending on additional functionality added to the projection (e.g., education goal, insurance). There is also the option to export the plan as an Excel file, which documents 100+ different assumptions/parameters used in the plan. Our reports are simple and easy to understand for clients. For sharing the plan and communicating with your client, you have several options. You can present the plan and charts in real-time, either in-person or through screen-sharing, and then download a PDF of the report to email or print and provide it to your clients.

 


 

At the end of the day, even though this may be a lot to digest, these changes are good. These new rules, which are timely and relevant to the changing environment, are designed to protect not only the clients but the Advisors as well. And in the spirit of complete transparency, these resources and features in Snap are not new and were not built to accommodate these new rules. For us, this is business as usual because we fundamentally believe in having a tool that advisors/planners and clients alike can understand. We believe in transparency, and ensuring everyone involved understands the assumptions and methodology.

The Referability Quadrant: How top financial advisors grow their advisory practices

The Referability Quadrant: How top financial advisors grow their advisory practices

Over the last few weeks, I decided to take a deep dive into the practices of our top clients in order to distill their approach into a simple framework for what makes them referable.

I always take meticulous notes when I see something that works, so I went over my notes from several hundred conversations with advisors from the past three years to see if I could discover something useful. It turns out that some of the best advisors consistently focus on 4 key areas of their business that determine everything else and significantly impact referrals.

You have likely heard that 20% of activities generate 80% of results. This is called the Pareto Principle. Pareto noticed that 20% of the pea plants in his garden generated 80% of the pea pods and later showed that approximately 80% of the land in Italy was owned by 20% of the population. When you really start to look, you can see other examples of this principle almost everywhere. The 4 areas I’m going to share with you today make up the 20% of the work that generates an overwhelming 80% of results in your businesses. We started referring to these key principles as the Referability Quadrant.

Some advisors think a referral strategy consists simply of a tagline in their email signature like the one below.

That’s insufficient at best and dangerous at worst. It won’t actually drive sufficient volume of referrals and it is dangerous to make your business growth dependable on a single tactic that simply doesn’t work.

The Referability Quadrant is a systematic approach to structuring your business so you become more referable.

It all starts with elevating your game and ends with evaluating your systems. Here’s how it works.

Elevate Your Game

Great advisors constantly improve their business. Period. They improve their systems and processes by designing useful workflows. They ruthlessly prioritize and apply technology to eliminate waste anywhere in the process. This instantly leads to more efficiency and time savings not only for the advisor, but also for their team and, most importantly, for their clients.

Here are two quick wins you can implement today to elevate your game.

First, schedule meetings online. Jason Pereira, an award-winning financial planner and senior financial consultant and partner at Woodgate Financial, Inc., recently shared an anecdote with me that perfectly exemplifies how this can have a huge impact on your practice. One of his staff members was spending nearly 70% of her time booking, rebooking, and confirming meeting times with clients over the phone. When they moved to an online solution to automate the process, they saved his staff and his clients a lot of time. In fact, he estimates they got that time spent booking appointments down to 20% of his staff member’s day. Suddenly, she had half of her day back that she could now spend on more productive tasks, significantly improving the firm’s efficiency. Similarly, his clients can now easily choose a time that works for them without having to play phone tag with anyone.

Another way to elevate your game is to use face-to-screen technology to meet with prospects and clients. Face-to-screen technology has been said to be one of the most disruptive forces sweeping through the financial advisory space for several reasons. You’ll be surprised that not only do your out-of-town clients want to meet online, but that even some who live in town prefer it because it saves them time, too. After all, who wants to be stuck sitting in traffic?

Clients appreciate advisors who value their time. As an advisor, if you’re easy to work with, you become way more referable.

Engage Your Prospects

Top advisors optimize for client engagement rather than for customer experience in their financial planning process. According to Paulo Sironi, one of the most prominent minds in FinTech, customer experience can be copied or purchased and therefore quickly commoditized, so it isn’t a sustainable competitive advantage. Instead, you need to provide something of value. Show prospects what you can do for them in a way that clearly shows them the value you provide.

Financial planning is a tremendous way to engage clients. In fact, in the quickly changing landscape of financial services, with at least one major shift underway (which we wrote about here), it is one of the few areas where you can predictably add value to each of your clients.

Advice has to come before products. Financial plans should be the core of your client relationship. Do you understand the biggest financial worries of your clients? Are they thinking about a new roof or saving for their children’s education? What are their biggest questions about retirement?

If you don’t know the answers to the above questions, you’re missing a great opportunity ‒ and your clients are missing out on a lot of value. Ask good questions and listen. There is really no magic about it. It’s just listening empathetically and trying to help your clients make better financial decisions. If you focus on their life, what matters to them, and their financial goals and challenges, you become an important and even integral part of their life and build a long-lasting relationship. This naturally leads to referrals.

Educate Your Clients

The recent research by Credo Consulting shows that “the likelihood a client will provide a referral to his or her advisor gradually grows with that client’s increasing levels of financial literacy.”

The key takeaway here is that investing in educating your clients pays off. Education is key not only when it comes to serving your clients and retaining them, but also in growing your practice.

Don’t even think about a textbook approach to financial planning or 50-page financial plans, though. Rather, be practical. Educate clients about the specific impacts of their financial decisions and answer their biggest questions about their finances. What happens if they stay the course vs. following your advice? How long will their money last? How much can they spend without running out of money in retirement? When should they take their government benefits? Which of their assets should they spend first?

Quick and meaningful what-if scenarios increase the level of understanding, which builds trust that then helps drive referrals. When clients understand what is going on in their financial plan, they’re actually excited to tell other people about what they know. This is how you generate referrals.

Evaluate Your Systems

In order to continue elevating your game, you need to create a feedback loop so you can see what is and isn’t working. Peter Drucker famously said “What gets measured gets improved.” See how that brings you back to elevating your game? Measuring results and identifying areas for improvement should be a regular activity, and collecting feedback from clients is a big part of that.

However, that’s only half of the story. What you might not realize is that by creating a client feedback system, you receive referrals. Yes, the referrals can be a byproduct of your feedback gathering process if you implement it correctly.

We have interviewed a multitude of experts on the topic of referrals ‒ here’s a short list of some links you can check out to learn more about great processes that can help you gather referrals almost automatically:

Grant Hicks recommends building an advisory board that includes your top clients so you learn directly from your best clients, and suggests having six centres of influence completely integrated with your business.

Julia Chung and Sandi Martin show how they integrate working with other professionals and how referring out to the professional they think is best for each individual is a cornerstone of their business.

John Page has a process that gathers referrals without the advisor ever having to ask. Seriously! He stresses that this process “needs to be systematic.”

It starts with laying out the ground work during the first meeting, creating an advisor evaluation form, reviewing the evaluation with the client, and creating a system to reach out (if you want to listen to him lay this process out in detail, you can listen from 13:00 to 22:00 of this podcast episode).

By building feedback and referrals right into your evaluation process, you capture a big opportunity that many advisors miss.

Bottom Line

Focusing on these 4 areas will help you organize your advisory practice to maximize referrals and ultimately help more people achieve their financial goals. And I think this is what we all are here for ‒ to help Canadians make better financial decisions.

If you’d like to learn more about how we approach addressing the 6 most common financial planning questions, here’s a quick video ‒ or you can always request a 1-1 demo with us here.