The One Change You Can Make to Your Financial Planning Practice to Really Put Clients First
Everyone says they put their clients’ best interests first, but what’s the best way to set yourself up for success in this regard? By introducing portfolio management companies into his business model, today’s guest has structured a financial advisory practice that allows him to focus on his clients first.
Peter Cishecki started Everything Financial Group in 1996 after working for many years at one of Canada’s leading insurance companies. He has created an all-in-one financial experience for his clients where he built trusted, long-term relationships by providing complete financial strategies and solutions for financial peace of mind.
Listen to the episode to hear about how Peter came to work with portfolio management companies on a referral basis and how it’s affected his business.
What You’ll Learn in This Episode:
- Why more advisors don’t work with portfolio management companies (9:30)
- Why your clients wish you worked with a portfolio management company (14:35)
- How Peter structures his fees – and how he provides enough value to earn them (18:55)
- How Peter’s work culture transformed when he began working with portfolio management companies (27:30)
- The biggest challenges Peter has faced in his career (30:40)
- Three misunderstandings about wealth management (33:50)
- How Peter gets in front of prospective clients (35:20)
Links and Resources:
Quotes by Peter Cishecki:
“When I can get people to change their outlook on life and start to enjoy their money while they’re young and healthy, that’s huge satisfaction.”
“If you’re going to collect a fee, do something for the person.”
“Truly look yourself in the mirror every day and say ‘What am I gonna do today to make a client’s life better?’”
In late 2010, Peter noticed he was already running his practice like a portfolio management company – offering six different model portfolios and spending all his time on administrative work. He realized that by working with an actual portfolio management company, he could let other professionals handle that work while focusing his efforts on what he really wanted to do: building financial plans.
Since making the switch, his practice has grown by at least 500%, and his entire office culture has changed into less of a team and more of a family.
Below, we’re sharing three key ideas from this episode:
- Why your clients wish you worked with a portfolio management company
- Why more advisors don’t work with portfolio management companies
- How Peter makes sure he provides value and earns his pay
For the rest of the episode, find the podcast on iTunes or Stitcher, or hit the link above.
Why your clients wish you worked with a portfolio management company
Peter realized that working with a portfolio management company came with enormous benefits for his clients. Here are the four main benefits:
A true fiduciary
Legally speaking, portfolio management companies are the only true fiduciaries within the Canadian financial services industry. Their responsibility is to the client, never to the advisor, so the client can rest assured that their best interests are always being considered.
Active management
Portfolio management companies provide active management of portfolios – someone is working daily to ensure the client is reaching their goals and nothing is going off the rails. Imagine trying to do all that by yourself.
Fee transparency and tax deductibility
Portfolio management companies provide 100% transparency and disclosure on the fees they charge.
Hint: This one can be tricky because a client who is used to working with a mutual fund salesperson, for instance, likely doesn’t realize the fees they were paying before because they weren’t being disclosed. Learn about properly articulating the value of financial advice in our previous episode with John Page.
Additionally, unlike commissions, management fees on non-registered investments are 100% tax-deductible, so clients are already saving money before the market even does its work.
Personalized portfolios
Portfolios are designed for the financial plan and not the other way around, meaning that a client’s portfolio is perfectly suited to their situation. For example, if according to the plan the client only needs a 4% return to stay on track and meet all their goals, there’s no point in having a portfolio that chases a 7% return. This results in less risk and volatility, which in turn means the plan is more accurate and realistic.
Why more advisors don’t work with portfolio management companies
Ego
Some advisors think they can do a better job than a portfolio management company. In truth, they can’t possibly succeed at advising clients, creating great financial plans and managing portfolios better than a company with hundreds of staff whose job it is to actively monitor and manage portfolios.
Money
Earning a deferred sales commission is easy and quick. A referral fee from a portfolio management company, on the other hand, may not end up in your bank account for up to a year and a half after you start working with a client. A lot of advisors aren’t willing to give up on that comfort by changing their business – and compensation – structure.
Lack of knowledge
In the end, Peter believes that most advisors just don’t realize the opportunity exists. For example, they think there are regulatory barriers, or that portfolio management is only for their wealthiest clients – not the case at all!
How Peter makes sure he provides value and earns his pay
One objection financial advisors may have to working with a portfolio management company on a referral basis is that it feels wrong to earn the referral fee (usually around 1% of AUM) when it seems that the company is the one doing the work.
In short – does Peter ever worry that he’s not delivering enough value to justify his pay?
Not at all, he says, because the value he does deliver is clear to him and his clients.
Sure, it would be wrong to just earn a referral fee and then do nothing else for the client. Simply put, “If you’re going to collect a fee, do something for the person.”
And since Peter outsourced all the administrative work behind portfolio management to someone else, he’s had far more time to actually do things for his clients. His firm offers its own Omni Formula financial plans, a proprietary system that has undergone significant revision (and still gets tweaked once in a while). They update the plans annually to make sure they’re still meeting clients’ needs.
For clients over $2 million, they also provide some legal and tax services to make sure those clients get their money’s worth.
Peter – and perhaps more importantly, Peter’s clients – are confident in the value he provides them.
For more helpful advice from Peter, make sure you catch the full episode where he talks about his fee structure, how his work culture changed after transitioning to this business model and more. You can find the show right here on this page or subscribe on iTunes or Stitcher so you don’t miss any episodes.
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