founding principal of
Financial Group, LLC
How are you preparing
for potential changes
the DOL legislation
might bring? Go to
to share your ideas.
It’s an eerie feeling, and maybe you’re feel- ing it too. With all the discussion about he Department of Labor’s (DOL) pending legislation set to reshape much of our
industry, things seems to have been talked
out, ad nauseam. Now we wait.
Will commissions on annuity products
be slashed in favor of a flat fee? Will broker
dealers find themselves receiving a fraction
of current revenues? Will advisors who are
not dually licensed quickly become unable to
sustain their business models? Will clients
find themselves out in the cold, wondering
where their advisor has gone?
Back in November 2007, I alerted all of our
clients to the fact that the stock market was
going to crash. Phone calls and emails were
received with mixed reactions; some said I
was crazy, others looked to me for next steps.
I share this because the feeling I had just
prior to those conversations was a similar
eerie feeling to the one I have now. I looked
around and said to myself, “Boy, things are
going to be a lot different for a while.” In fact,
when I called people, one of the first things I
said was, “I hope I’m wrong, but I don’t think
I am.” I wasn’t.
With the DOL legislation coming soon,
there’s a quiet sense again that things are going to be very different for a lot of people for
a long while. Revenues are likely to shrink,
marketing budgets will probably be reduced,
and staff cuts may be a strong possibility
for a lot of advisors. That beautiful building
you may own could begin to feel like a noose
around your neck. I hope I’m wrong.
With change in the air, what steps might
you consider taking to weather the storm?
Here are a few suggestions:
1) Get out of debt now. Use current cash
flow to reduce your fixed costs. Whether the
actual changes are severe or not, you’ll be in
a better financial position either way if you
lessen your debt load.
Is this the calm before the fiduciary storm?
2) Ramp up your planning process. If you’re not
doing actual financial planning for your clients,
consider starting. If you’re doing planning, find
a way to charge for that expertise. Reliance on
product commissions may become a fool’s game.
3) Become Series 65 licensed. Whether or not
commissions go away, having a comprehensive
wealth management practice better positions
you to be the trusted, complete advisor your
clients desire. By deepening your expertise in
the markets, you’ll likely find more opportunities with each client, which increases the return
on your marketing investment while creating
multiple streams of revenue.
4) Look around for strategic partners. Maybe
you and another advisor can pool your resources
or form a working alliance. In addition, consider
opportunities to work more closely with other
professionals such as attorneys, accountants
and insurance agents. In some cases, they may
be interested in sharing office space with you
and working more closely on shared client
5) Schedule a time away from the office to
brainstorm and dream. Consider how the coming
changes may be the best thing to ever happen to
your business. How might a uniform fiduciary
standard benefit you and your clients alike in
ways you may not have considered before?
Change is coming
Of course, I’m not sure how drastic the changes
will be. Nobody is. But what you can do is get
yourself ahead of any forced changes by building
your business as if those changes are imminent.
Waiting to see is one strategy, but moving forward intentionally is another.
Just as the markets crashed in 2008, things
got better eventually, but they were not the
same. Use this moment to propel yourself to a
better position regardless of what happens “out
there.” Do the tough work now, by getting clear
on who you are “in here” as an advisor. You’ll be
glad you did. RA