Evolution of the Facilitator

By Ray Sclafani

August 1, 2006 – In the 1980s, the stockbroker was a symbol of American success. Brokers were held in high regard by baby boomers, who were out-earning their parents and transforming the economy in the process. But, during the 1990s the boomers discovered the Internet, and many started trading online. Suddenly, brokers became financial advisers, offering a more consultative and needs-based approach. Yet many newly minted advisers were still essentially salesmen, identifying their clients’ needs in order to position products for sale.

Today, boomers are transforming our industry once again. Approaching retirement in large numbers, these individuals are leading increasingly complex lives. They need advisers who can not only help them achieve their financial goals, but also aid them in reaching their life goals. They expect better service with lower fees. They’ve been through the ups and downs of the market and are skeptical of sales pitches.

In response to boomers’ greater expectations, a new type of investment professional is being born. Enter the facilitator.

So What’s a Facilitator?

Webster’s defines a facilitator as someone who “makes things easy.” As investment professionals, we need to move away from a transactional sales approach and form even deeper relationships with clients. We need to change the way we charge for our services while redefining the value we provide. And we need to develop an intimate understanding of baby boomers’ needs as they approach retirement and seek to balance competing financial goals. While sales will always remain a part of our job, being facilitators means spending less time selling products and more time marketing ourselves as trusted advisers.

One investment professional who has undergone this transformation is Christopher P. Jordan, founder and chief executive officer of Tarrytown, N.Y.-based Lexco Wealth Management. Prior to founding Lexco, Jordan worked as a partner in an advisory firm that placed a heavy emphasis on sales quotas and selling mutual funds and other commission-based products. Interested in taking a more holistic approach to wealth management, he started his own firm that focused on service. “With high-net-worth clients, you’ve got to offer something more than just a product,” says Jordan. By taking a comprehensive approach to meeting his clients’ needs, he has created a highly successful practice.

For Jordan, being a facilitator means bringing together a team of people to help his clients achieve their goals. He communicates regularly with a network of estate planners, insurance specialists, certified public accountants, attorneys, mortgage experts and other professionals. “In today’s marketplace, you’ve got be different,” he says. “Our team-based approach is one way in which we differentiate our firm while helping our clients simplify their financial lives.” Because Jordan makes it easier for clients to reach their goals, they see him as a trusted adviser, rather than simply as a salesman.

Inside the Boomer Mentality

Because boomers are creating profound changes in the industry, being a facilitator requires an understanding of their attitudes, needs and challenges. “The boomers have a different relationship with money than their parents did,” says Jim Winkelmann, a principal at Longrow Holdings in St. Louis. “They’re more demanding, and they want things now.”

Winkelmann notes that while the previous generation tended to save and spend, the boomers tend to buy and borrow. As a result, many boomers aren’t prepared for retirement because they’re saving less and living longer. They’re also trying to pay for their children’s education and are often caring for aging parents–creating a labyrinth of financial goals.

Winkelmann adds that while the boomers have access to a wealth of information about the financial markets, they need someone to interpret that data and create financial plans that meet their specific needs. “A big part of my job is helping my clients cut through the noise,” he says. “Clients are bombarded with data and need someone who can help them distill the information they need from the hype.” By helping his clients understand the market and make smarter investment decisions, Winkelmann has established himself as a trusted adviser. He helps his clients set realistic expectations via regular communication and portfolio reviews. He also creates an investment policy statement for each client that outlines the individual’s goals.

The Ball’s in Your Court

While retirement remains a big concern for boomers, the very notion of it is changing. Many retired boomers will continue to work part-time while remaining highly involved with their communities and families. They’ll also rely more on their personal savings than their parents did. Today, people who retire at age 65 can expect to live another two to three decades. And that means higher healthcare costs.

The boomers’ multifaceted retirement needs are changing the way that advisers do business. As such, retirement planning must be an essential component of the services you provide. You’ll need to become a more effective communicator about retirement issues while finding a way to charge for advice on the subject. You’ll also have to spend more time with each client to create personalized retirement solutions.

Here’s the Opportunity

As boomers increasingly view asset management as a commodity, sales and management fees are being compressed. At the same time, their accounts are expected to get smaller–not larger–as they draw down for retirement. So in the future, relying on sales and asset-based compensation will be a challenging proposition.

Fortunately, if you’re a facilitator, there will be new ways of being compensated for your expertise.

First, you’ll need to attract new assets by being viewed by your clients and prospects as their No. 1 provider of financial services. Second, you’ll need to explore reasonable ways to charge clients for financial planning and advice.

For many advisers, this will require a new paradigm for organizing and managing their businesses. While change can be scary, maintaining the status quo is no longer an option.

To assess your personal way of doing business, ask yourself this simple question: Do your clients see you as a salesman or as a trusted adviser who makes it easier for them to achieve their goals? The answer will play a big role in your continued success, as the future of the investment professional belongs to the facilitator.

Ray Sclafani is President of ClientWise LLC, an organization founded to support the financial advisory practice of the future. Delivering unique practice management strategies focused on client acquisition and retention, ClientWise provides coaching and training for leading financial advisors. For more information, e-mail ray@clientwise.com or call 1-800-732-0876.