WHILE MOST OF US ARE already well on our way to breaking our New Year's resolutions to lose weight, exercise more or declutter our desks, here are some ideas for resolutions that financial advisers might want to consider — and stick to — for 2012.
Resolution No. 1: Create a succession plan. Unbelievably, only 40% of registered investment advisers have a formal succession plan in place, according to a recent survey conducted by TD Ameritrade Institutional. That is unacceptable. No matter how big or small their practice, financial advisers have a moral, ethical and fiduciary obligation to make sure their clients' assets are protected in the event of an emergency or their planned exodus from the business. Having a succession plan in place also makes good business sense. That's because building an ensemble practice with equity partners of different ages and skill sets will go a long way toward reassuring potential buyers of a firm's long-term viability without its founding partners.
Resolution No. 2: Communicate more frequently with clients. Given the turmoil going on in Europe — not to mention our own country's economic woes and the dismal state of affairs in Washington — the U.S. stock market is likely to be at least as volatile in 2012 as it was in 2011, if not more so. For clients, that means yet another year of hand-wringing over the fate of their hard-earned retirement savings. For an adviser, however, it represents yet another opportunity to remind clients that he or she has got their backs. In times like these, it is more important than ever that advisers actively reach out to clients through regular e-mails, telephone calls and face-to-face meetings. Advisers who do will be richly rewarded with the trust and loyalty of their clients.
Resolution No. 3: Incorporate social media into your marketing plan. Like it or not, LinkedIn, Facebook and Twitter are here to stay, and all three are well on their way to becoming powerful tools in helping advisers prospect for new clients and strengthen relationships with existing ones. While some of the hype surrounding social media is just that — hype — financial advisers cannot afford to sit on the sidelines and wait until social media's popularity reaches some sort of indistinct tipping point that won't be recognizable until long after it has passed. At the very least, they should have an updated profile on LinkedIn and a company Facebook page.
Resolution No. 4: Do something to pave the way for the next generation of advisers. Considering that the average age of financial advisers is now above 50, it is abundantly clear that the industry is doing a pitiful job of replenishing its ranks. What's more, the lack of effort is coming at a time when retiring baby boomers want more from their advisers. Advisers need to be more proactive at recruiting, training and assisting the next generation. One way of seeking out well-prepared recruits is to create formal internship programs. Those recruits should then be paired with more-experienced advisers and shown the ropes over a period of many years. Firms that take the time to groom younger advisers — and not just those that show potential for becoming top producers — will likely be rewarded with a more diverse client base, one that will produce a steadier stream of revenue for generations to come.
Resolution No. 5: Don't ignore the women. Considering that about 70% of widows leave their financial adviser in the first year after their husband's death and that the number of widows outnumbers widowers by a ratio of almost 4-to-1 in the over-55 age group, advisers who fail to earn the trust and respect of their clients' spouses are doing themselves — not to mention their clients — a grave disservice. In 2012, advisers should insist that both husband and wife attend most — if not all — client meetings. At those meetings, advisers should go out of their way to make sure that the spouse is actively engaged in the discussion and that his or her questions and concerns are addressed respectfully.
While these New Year's resolutions may not slim advisers' waistlines, they may help improve the overall health of their practices. That is, of course, if advisers can stick to them.
