Investment professionals are keenly focused on generating positive alpha – performance of assets above their benchmark. But there is actually more value to be had in quality advice as it affects the area Morningstar has termed “gamma” – the services advisers perform to improve outcomes for clients, including asset allocation choices, withdrawal rate strategies, tax-efficient planning, and Social Security claiming strategies to name a few. In the Retirement Management Analyst® (RMA®) course you learn many things that will help you generate gamma for clients who are planning for or living in retirement.
But moving from an approach that focuses on asset management to the holistic and highly-customized approach necessary for retirement planning can seem overwhelming. Morningstar has identified six services advisers can provide to create gamma for their clients, but RIIA’s Procedural Prudence map identifies 86 levels of service! At RIIA’s 2016 Summer Conference, Kerry Uffman, CPA/PFS, CFP®, CFA®, RICP, RMA, with TWRU CPAs and Financial Advisors, introduced us to the seven-step process he developed after he earned his RMA.
Step 1) Align with your clients based on their aspirations
This important first step, which guides all the other, is discovering what your client hopes for and identifying the challenges to resolve in order to turn hope into an expectation. This is much, much more than a number-crunching exercise.
Step 2) Create your value proposition
Once you know the challenges for your client, make this the centerpiece of your value proposition. You will rise above your competition.
Step 3) Create a memorable client service experience
Customize your approach to your client and their needs – don’t use ‘canned’ planning software outputs. Your client gets one chance at retirement and you should be showing them that you understand what success looks like to them.
Step 4) Establish repeatable systems and processes
Spend the time necessary to develop and document your advice process so that it becomes repeatable. One great technique is the use of mind mapping software. Mind mapping is a way to organize and think about complex topics like retirement, particularly when many pieces of the topic are related to one another.
Step 5) Use a Consultative Client Management process
Treat your client in a way that fosters trust and grows your relationship with them. Multiple meetings, each with a definite and pre-defined purpose, helps your client know they are part of a well-thought-out process.
Step 6) Engagement agreements and fee arrangements
All the previous steps have laid the groundwork for this one. The engagement agreement specifies the scope and value-add of the deliverables, and the fees are specific to those deliverables. Fees are not based on product selection or commissions, but fixed or hourly rates based on level of service.
Step 7) Build your reputation
Take advantage of the great work you do for your clients by making sure you have a plan for leveraging the connection you’ve built with them. Identify a target market of friends and family members in your client base who are also planning for retirement. Prepare a series of articles on topics of interest and which lay a groundwork for communicating the credibility of your firm in the area of retirement planning. Send the articles out over a period of a few months and end with a call to action.
This framework is a great example of how an RMA can move beyond Morningstar’s six levels of service and embrace the full 86 levels (and counting) of RIIA’s Procedural Prudence map. It shows a business model that has been proven very effective in action, growing the retirement planning aspect of an RMA’s business while bolstering the clients’ confidence in their vision of retirement.