Becoming Your Clients’ Personal CFO: Part 1

Last week, while thumbing through my local newspaper, I came across something totally unexpected: advertisements from two real estate agents of competing firms, both referring to themselves as “Your Trusted Advisor.”

Up until last week, I had never heard the term used outside of the financial services industry. And, quite frankly, it’s never been a term that I’ve been particularly fond of. I feel that it is too ambiguous and too nebulous. What are we to compare it too: “Your Untrustworthy Advisor”?  It’s not even a term that I would have expected to see made public, but there you have it, splashed across the pages for readers to see. Perhaps real estate agents are feeling sudden pangs of inferiority and need a confidence boost. I don’t know. 

Can you imagine your CPA using the term? “Can you really trust those other accounting firms? Here at Godham, Godham and Needham, you can trust us...we really know our stuff! We’re your trusted advisor!” Sounds more like the proverbial used car salesman. Come to think of it, I haven’t heard of any law firms using the term either or doctors for that matter. Perhaps they assume that the trustworthy aspect of their professions is to be expected.  

Until now, it seems to have been the silent purview of financial advisors to think of themselves as a trusted advisor. But that was then, and this is now. Thanks to our competing friends in real estate, our silent nomenclature has been outed...and to that I say, good riddance!

We used to have stockbrokers – very specific – but that term has pretty much been relegated to the dustbin. Investment advisor – good, but very singular in its description, much like insurance advisor. I’ve always liked financial advisor, but the public is left guessing as to what part of financial advice you dispense. Financial planner is good if you have the appropriate accreditation and actually do the full planning...but studies show that the public still doesn’t understand exactly what planners do.

Here’s the thing: research tells us that consumers of financial services want their financial advisor to provide holistic advice in a seamless manner (Accenture, Wealth Management Consumer Report: The New State of Advice, 2021). They don’t, however, want to be the ones facilitating the recruitment of all the necessary experts to manage their financial affairs; they want their advisor to do that. 

So, recognizing what it is that consumers really want, perhaps it’s time to present ourselves in a far more professional, confident manner; one that aligns exactly with what consumers, our clients and prospective clients say they want. And, to meet this exact requirement, I recommend we begin to promote the use of “The Personal CFO” or “The Personal Chief Financial Officer” model; a model whose name represents exactly what it is that holistically inclined financial advisors really do. 

The Personal CFO is a concept that I became acquainted with over two decades ago and one that I wrote about in my first book, The Financial Advisor’s Guide to Excellence, that I’ve trained and coached advisors to within the industry, that I’ve lectured to in my MBA course, and that I’ve spoken to in public seminars and webinars, ever since. Notably, the response that I’ve received to this model – from all parties – has been nothing short of extremely positive. And why shouldn’t it be? As noted, it’s exactly what the public wants from their financial advisors. 

Imagine sitting with a potential client, outlining the services you offer. You have a notepad and pen in front of you and start to sketch the model as it appears below, while simultaneously stating something akin to: 

“So, Mr. and Mrs. Smith, I help my clients run their family finances much like a company would run its finances...looking to be as effective and efficient as humanly possible. You, as co-CEOs of the company (write their names in place of “CLIENT”) are obviously in charge. Your job as co-CEOs is to establish your goals and make sure you have the right professionals working for you to ensure those goals are achieved.   

My job, as your Personal Chief Financial Officer, (write your name in place of “FINANCIAL ADVISOR”) is to help you qualify those goals and then quantify them, putting time and money to each goal so that they can be mathematically understood. Once we have those goals on paper, I will build a plan outlining how we will achieve those goals – basically, your financial roadmap – illustrating the strategies and structures, as well as the timelines, required. 

Wherever we need to bring in experts – lawyers, accountants, money managers, insurance specialists, lenders (you’re writing these terms in their distinct places) – I will work with your existing experts or can refer these individuals to you. Either way, I will ensure that every question you have gets an answer, promptly, and that we achieve your goals as outlined (You can also speak to the area(s) you are licensed to handle).

How does that sound to you?

How do you think it sounds to them?  Notice that throughout your dialogue, you keep saying “we” and talking about their future and the attainment of their goals, and how you will be with them in their future, partnering with them to ensure the success of their financial goals. You are providing them with hope and confidence in their goals. 

So, which is it: “Trusted Advisor” or “Personal CFO”?  To me, as long as you believe in providing holistic advice, the Personal CFO model wins hands down. The Personal CFO, in name and diagram alone, tells your clients and potential clients exactly how you operate and what you bring to the table; Trusted Advisor does neither. 

Here’s what I’ve found personally (as an advisor) and what I’ve seen in the advisors that we’ve coached into the model: (1) your confidence in your ability to do exactly what the model promises grows exponentially and immediately, and (2) the confidence that your clients and potential clients have in you grows exponentially and immediately upon hearing of how you operate within this model. Win/Win.

In Part 2 of the Personal CFO discussion, we’ll take a deeper dive into the structure that will make you the advisor of choice. We’ll also show those advisors who choose to remain within their specialist lane (investments, insurance) rather than assuming the Personal CFO role, how they can make the Personal CFO model work for them, and by doing so, build bigger and better businesses quickly. 

About the author:

Daniel Collison is Co-founder and Managing Partner with Advice2Advisors, which trains, mentors, and coaches growth-oriented financial advisors of all tenures.

To learn more, contact us at: www.advice2advisors.com or 1-833-226-2242.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.