When this person rang with "another inane query".... well, you guessed it. Katz said it took her personal secretary to suggest that maybe there was no point in keeping on a client, no matter how lucrative, that caused her such grief.
In a workshop at the recent FPIA conference in Wellington, Katz spoke on "Managing to grow your practice in the new global paradigm" from her perspective as a US based, fee-only financial adviser for the past 20 years.
She had some timely reminders for financial planners and advisers that the nature of their business was changing.
"In the US, if you have a crayon and a nice big piece of cardboard, you can be a financial planner," Katz said.
"But the big companies are coming: the likes of AXA, American Express, Merrill Lynch …globally we’re seeing a shift from commission to fees, from product sales to giving advice. We're seeing a focus on long-term relationships and superior service.
"Because of the Internet, a client can get access to information that was our edge. However, we can use that to our advantage, because information is not knowledge."
Katz said that most people in the financial services industry held themselves out for what they did primarily.
"You need to figure out what your core service is and build around that. It’s likely you’re going to be adding a lot more service to your product."
In her address, Katz took a quick trip through fashions in financial advice. She started out in the 1970s when comprehensive financial planning was all the rage and her first-ever plan ran to 103 pages.
The client’s reaction? "Oh my God - you published!"
From comprehensive in the 70s to focussed in the 80s: plans revolved around specific goals such as a college fund for the children, a retirement plan for the seniors. In the early 90s her practice adopted the Markowitz Optimiser and it was all risk and return, efficient frontiers and so on.
"We latched onto this like the Holy Grail and we all went into managing assets. But then everyone started getting into the asset planning business.
"We used to send clients out to accountants and lawyers and now they’re not coming back. We always used to get business from referrals and now we're not getting that any more.
"What we've figured out is that we need more holistic planning. So it's back to comprehensive financial planning - without killing any trees."
Katz took time out to attack a number of sacred cows, including:
If you’re breathing, you can be my client.
"My partner used to give seminars to two drunks in a bar. However, in this age of competition, you want to be able to take clients that meet your qualifications and criteria."
Katz said her firm "pre-qualified" its clients with a range of questions "including some type of question that tells me whether I’m going to be able to meet their needs".
"The truth is, this is an ongoing relationship. You need to know what’s uppermost in their minds so you can meet their expectations."
She also said it was OK to fire clients if things weren't working out - " you need to free up their future" - because you were unlikely to be able to satisfy them. Katz's firm even goes so far as pre-qualifying clients for other financial planning firms.
Maybe they know someone rich.
"We've all taken on possibility clients. What you really need to concentrate on is concentric marketing. A friend of mine in Chicago wanted to be the best financial planner for printers....and focussing very carefully on one kind of client worked for him.
"Clients are not just people that fall in the door."
You can have any colour car as long as it’s black (Henry Ford) – you can have any kind of report as long as it’s the one I’ve designed.
"When I go into Amazon online, the homepage says 'Welcome, Deena.' There's a list of books picked out that I might like, and that's different than the books picked out for someone else. It makes me feel special."
Katz said that, thanks to the Internet, clients are now going to expect more personalised and customised information. She suggests providing choices and that it wasn't a big deal given the software available (she offers her clients 20 different forms of reports to choose from). Services also can be customised: "we can structure their mortgages, lease cars, help with travel plans, with family counselling… I think that’s where we’re going to go in the future, is to dig deeper into their lives."
"However, watch for unplanned exceptions as they are time-consuming and unprofitable. If you're starting to do one-offs, you may find it hard to stay focussed."
I must meet my clients quarterly.
As above: it's about what the client needs and wants, Katz said, rather than what the planner thinks is appropriate. She said that relationship manager software made it easy to record a whole bunch of information and preferences about each client.
I’ll be right over.
"Be professional. I think that business will be done in your office and clients will begin to see you differently in the way you support them."
Performance is paramount.
"In our practice, our success is measured not by performance but success in helping clients to achieve their goals."
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