D.N.A of the 3G Financial Advisors

Published in Financial Planning Association of Singapore (FPAS) magazine (Feb 2015)

by Derek Liang, CFPTM, STEP? / Ryan Yeo, ChFC?, CLU?

If you saw the recent blockbuster, X-men: Days of the Future Past, then you saw how Professor Charles Xavier team up with his nemesis, Magneto, to lead the X-men to face the all-powerful new threat, the sentinels. More spectacularly, to survive the extermination of the mutant race, the DNA of many of the mutants in the movie had transformed at amazing speed (from previous installments of the franchise) to adapt to the new threat.

This is so with the local financial advisory industry.

As Singapore readies itself to be the ‘Switzerland of Asia’, the financial advisory industry is dealing with changing and tightening regulations and policy shifts. In order to keep up with the changes, there is a need for a new class of financial advisors – the 3G Financial Advisors.

The 2001 Financial Advisers Act (FAA) had successfully created a new financial advisory landscape. The first generation of insurance product-peddlers has evolved to the second generation of needs-based financial advisors, whereby the correct financial planning process involves the understanding and analysing a client’s financial needs and life goals before recommendation. Those who were not able to adapt have been forced by these changes to leave the industry.

A decade on, the combination of the Financial Advisory Industry Review (FAIR), Do Not Call (DNC) Registry and Personal Data Protection Act (PDPA) in 2013/14 has the potential to create a new class of third generation financial practitioners. These regulations, alongside the influx of social media in recent years, have added immense pressure on the financial advisor to change and adapt. The third generation probably needs much more than just mettle to stay competitive and to be prepared for the continuous regulatory changes in years to come.

Who are the 3G Financial Advisors?

The ability to change in an ever-changing consumer market is a given. In the past, the consumer lacked information and just relied on the advice of financial advisors. Consumers today have access to a slew of information and often get the information first before meeting a financial advisor. Due to widely available information on the internet, consumers suffer from “information overload”. There are often a lot of misleading and conflicting information, and without proper context, it may result in them making wrong decisions.

Let us examine the three key attributes (D.N.A.) you will need to become a successful 3G Financial Advisor:

Differentiation

Differentiation is extremely important in an ever-changing, competitive environment. You need to position yourself with a different value proposition in order to stand out from the crowd.

 You are highly encouraged to choose a niche area. It is never just about the products and services you offer, but rather, why the client needs to work with you. Your niche is developed through a combination of your expertise and domain knowledge and this helps you understand your clients’ needs better than others. This boosts your clients’ confidence to entrust you to carry out your work for them. Therefore, it is critical to be an expert in a certain niche market.

 The next part to differentiating yourself is to create a unique value proposition. Work hard on delivering this value and allow it to become part of your personal brand that belongs uniquely to you.

You need to harness technology to differentiate yourself. With clients becoming more tech savvy, a financial calculator alone might not be sufficient to prove your worth anymore. It is important to start exploring online financial planning software and tools to create more value in educating the clients. Find a tool that suits you and delivers instant results.

Being able to differentiate yourself on the very first meeting is important. Your prospects may not give you a second chance.

Network

Your network plays a huge part in your success as a 3G Financial Advisor. Networking is a ubiquitous trend in any kind of businesses today.

In today’s complex and broad-spectrum market needs, the need for financial advisors to provide more than just holistic financial planning is pressing. You would need to be able to collaborate effectively with other professionals to expand your external network. As consumer needs become more sophisticated, having a network in other industries like the legal, banking, taxation, medical and accountancy industries, will enable you to provide more value to your clients. In return, it will definitely bring more business in your direction, in particular with High Net Worth (HNW) individuals and families.

Before you find your own network, it is important to know your distinct value and that of your potential partners. This will allow proper handshaking between partners and knowing when and how to utilize the specialized skill-sets of the different partners in the network.

There are dozens of ready business networks (Business Network International, Young Entrepreneurs Organization, LinkedIn?) and also networks formed within your own contacts. Networking skill is a soft skill the 3G financial consultants have to be equipped with, both in setting up and maintaining. Because the collaborators are often separate business entities, it is often challenging to align all parties’ interests, in areas of referral fees, representation and contractual obligations.

A network would collapse if the interacting forces are unequal. Maintaining an effective and productive network requires that each collaborator open up their clientele base and help to promote their partners’ business whenever applicable in an open and trusting manner. Nobody wins by always taking and seldom giving. The best way to start is by giving first.

Attraction

The game of prospecting has changed due to the implementation of the DNC Registry and PDPA. Unlike how it was done in the past, it is going to be increasingly challenging to grow your leads. Therefore to ensure sustainability in a long term business model is to start attracting your prospects.

Reputation forms the foundation for attracting new business. A good reputation goes a long way towards helping you connect with others. The world is getting smaller over the years, due to the rapid growth in technology and influence of social media. It might take years to build a good reputation, but all you need is one mistake to destroy your reputation. Ensure that you maintain a good reputation in your existing clientele base.

However, building your reputation alone is a very passive approach. You need to create a strong “referral” strategy. This is to ensure that your clients talk to their friends about you. The problem is that if they have qualms telling their friends about you, the process of attracting will be too slow. Most clients are actually willing to refer, but are just unsure about how to broach that topic with their friends. To make it more effective, teach them how to start and how to say the right things about you.

Another effective way is to use marketing tools to create your personal packaging. Do you have a personal brochure, a personal website or a LinkedIn profile? If you do not have any of these, you probably are not spending enough effort in packaging yourself. The old saying “first impression lasts” still stands, even in today’s context. The only difference is that this first impression is no longer about the first face-to-face meeting, but is now about the first thing you read about the person on the internet. If you take out your smartphone now and search for your own name, what kind of results would you get?

Once you learn the art of attracting clients, you will realise that finding new clients has never been easier.

 Do you think you have the D.N.A. of the 3G Financial Advisor?

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About the co-author

Ryan Yeo is an Associate Director with finexis advisory Pte Ltd. He joined the company in 2007 and his niche expertise is to provide financial advice for foreigners and expatriates. He has attained the ChFC? and CLU? designation by The American College of Financial Services, and has qualified for six consecutive years of membership of the Million Dollar Round Table, The Premier Association of Financial Professionals?. He believes in providing holistic financial planning[C1]  and he has been working with referrals only since the day he started his financial advisory career.