Because of the new fee arrangement, you will probably need to prune your current client base for unprofitable relationships. You'll look toward wealthier clients or develop a system for managing multiple small accounts in order to keep up your income levels.
Further, you'll need to get smarter about using technology and integrating many of your back-office activities as profitability takes center stage. Standardized processes could help you streamline both service and support.
If you want to be considered independent, you'll need to ensure that you have access to all investment solutions that would fit your client base. That means you will probably want to develop an optimum client description and focus your marketing efforts on those prospects.
You would also need a platform that would allow you access to all the products you'd need. For certification, you would need to prove to an organizational body that you truly give independent advice.
Don't have a college degree? That could be a problem. Also, 35 hours of continuing education is a high bar: Even if you are already a certified financial planner, that's more than double your current requirement.
REALITY CHECK
Now think about this: The United States has been a leader in the development of financial planning and investment advisory services, but it isn't any longer. Given the global nature of the financial services industry, I don't believe we can sustain our current advisory services system into the future.
I believe that change is coming and we'd be wise to take an active role in helping to design our changes, rather than having them developed by people who don't know our business models or our clients.
Look back now at the picture I've painted for the future. Most of these changes would actually be good business practices for today, independent of the way you get paid. These strategic decisions will help you create value for your clients, demonstrate your professionalism and improve your bottom line.
I believe that professionalism is paramount; we're no longer sales-driven but solution-driven. We're advisors, counselors and planners who develop sound financial futures for our clients. Aren't we?
Deena Katz, CFP, is a Financial Planning columnist and an associate professor of personal financial planning at Texas Tech University. She is also chairwoman of Evensky & Katz, an advisory firm in Coral Gables, Fla.
