Being a successful financial planner does not require the understanding of rocket science, but there are some golden rules and observations that must be applied.

Who are you? Financial planner, financial advisor, financial consultant, financial counselor, wealth manager, wealth advisor, investment advisor, fund manager, asset manager... the list goes on. The question really is: What are you?

How much do you know your clients? The first answer I get when asking that question is always, they are male, in their 40's, mid-management, private sector, and that is it. It is a labeling process and it is a status quo.

Sometimes, I even get answers that describe customers by products; that they are $2,000 customers. Most financial institutions could not describe their good ideal clients, what they like and their wants. Imagine every person walking along the street crossing the same road carrying the same baggage. Does that make them the same?

Knowing your customers is far beyond learning about their common attributes or their buying patterns; it is about the financial planners taking their clients passions and interests at heart, helping them protect, accumulate and distribute their wealth properly, not only within this generation but also extending into the next.

What dives your clients? According to a recent report published by AC Neilson, it was found that quite contrary to popular opinion; the prime motivators for emerging affluent investors, the upwardly mobile elite in Hong Kong, are more likely to be feelings of independence and control, and a focus on the family. About 18 percent of the survey had primary intent on wealth creation to secure the family's future while 20 percent wished to see investing allow them to do the things they want and when they want. A substantial 28 percent said that increasing wealth was an end in itself, with an equal number wanting to enable comfortable early retirement.

Every customer has a unique set of needs, whether implicit and explicit. Implicit needs are features of a product or service, and explicit needs are benefits that they perceive of a product or service. Factors affecting their perceptions towards trusting you as their planner could well be psychologically, filtered by their good or bad memory of an event, their knowledge and beliefs and their values of life. Other determining factors could be physical filtering, such as touch, feel and sight and sound, the colour of your brochures, your voice, your handshake, or even the way you dress, which could reduce or enhance the level of reliability of the clients towards you as their planner. You can help motivate clients to address their shortfalls and financial deficiencies once they are driven to trust you as their life planner.

True wealth manager

All strategies start with a purpose and are driven by sets of objectives and concerns, whether they are for child education or for living life to the full. Throughout life, clients typically go through four stages: creating wealth, accumulating wealth, protecting wealth and distributing wealth. Planners need to know at which stage the client has arrived and the different desires at each stage. For example, a client with much liquidity but with no desire distributing this to the next generation, and had wanted to die broke, may not see wealth accumulation as a high priority. To that client, it may be leaving behind a legacy to help charities as one the biggest accomplishments in life.

A true wealth advisor/planner addresses the client's immediate concerns and then plans for the longer term. An effective planner knows where the client is today, where he wants to be and how does he get there. In the holistic financial planning universe, clients can get access to various protection products, accumulation products such as savings and investment products and estate planning products such as trusts and will planning, with or without the planners help. An effective wealth advisor will add value to the process by first building a strategy, designing a portfolio to accomplish this strategy and finally selecting the products to fill the portfolio.

Investment vs wealth

Investment is a mean to its end. It is the planners' job to help build the right investment strategy, which is the start of intelligent planning that sets the strongest foundation. Planners then help design a portfolio to accomplish this strategy, and then select specific products to fill that portfolio. Many investments fail to accomplish clients' financial goals because they were done the other way around, focusing on product selection then trying to pull together the foundation later.

Perception of "risk tolerance" and its analysis is the beginning of the whole process. Without going through a thorough risk tolerance profiling session, clients cannot live the investment life they desire. Typical factors that affect clients' investment decisions are the time horizon, inflation - where their goals are to be implemented, volatility, risk and reward, perseverance - the ability to stay the course and loss aversion. The main objectives of the planner is to facilitate this process and compile solid evidence that supports client decisions that best serve their interests. To advise effectively, advisors must gain a full intellectual capacity of the clients' accurate picture of the cognitive and emotional weaknesses of investor: dreams, purpose in life, wishes and concerns, the ability to accept advice and the ability to live with faulty investment decisions they make.

Before understanding the clients' current financial status and financial priorities, one could not jump to conclusion of product mapping. Planners need to map out their clients' wealth creation route carefully, and realistically, before any action plans are proposed. Planners who go the other way around could be quite negligent. Never forget that risk measurement covers, to a large extent, clients' emotions such as biases of judgment, over-confidence, optimism, over-reaction to rare events and constant changes of values.

Finding the tools

An effective planner uses effective tools that are impartial and objective, tools those are able to assist the planner to support the client's decisions. For example, effective financial planning needs analysis tool guides that the planner and the client can run on a track of financial planning process, which does not miss any part of client's important life events. The tools should objectively analyse client risk tolerance and be able to map the results to various investment asset classes that are suitable for the client's interests. Planners may find the results being biased or overweight in certain asset classes, which may present an immediate threat to the client's overall risk profile, and certainly make accomplishment of the client's life goals more remote. A responsible tool should have embedded research and test methodology to facilitate reliable recommendations to be churned out. But even an effective tool does not eliminate the planner's job completely, it will however, dramatically upgrade the planner's capability when making recommendations, as the results are generated by an impartial and objective engine.

Of course there are other specialized tools that help planners to express their specialization effectively. There are analysers that specialize in risk analysis, financial planning needs analysis, insurance analysis, estate planning and distribution analysis that could help planners focus on their core competence. Million dollar tools will not eliminate the planner's work totally; it will only dramatically change the way they work.

Redefining service

Service is about making the promise, fulfilling the promise and keeping the promise. If you break the promise you lose the customer, it is that simple. For the average company, customers defect at a rate of 10 to 30 percent per year, and over time, this disloyalty stunts corporate performance by 25 to 50 percent. It takes six times the cost to acquire a new customer than to retain one according to researcher HBR, and it takes US$6.8 to market to existing customers, US$34 to acquire a new one according to BCG. McKinsey thinks a 10 percent spike in repeat customers could add 10 percent to the bottom line.

As such, client expectations have to be managed properly. An admirable customer centric culture, introduced by Citibank, was to focus around balancing the three voices: voice of the customer - delivering a branded customer experience by benchmarking and measuring against best-in-class standards, behaviours and management practices; voice of the employee - creating a high performance environment by sharing management's values, visions and purpose and the voice of process - focusing on critical business issues by making teams to focus on end to end processes and to promote cross functional processes.

Measure your success

The minute your client walks you out to the elevator is the beginning of respect and trust. Every relationship starts wit respect and trust, without that, there is no foundation You can also judge how well you do by looking at your assets under management: how much assets have you wrested away from another advisor, and have you grown on assets through new money injection or through enhancements of client portfolio value?

Also, how willing is your client to introduce you to his colleagues and friends for new business? And, are your clients rewarding you with profit sharing on portfolio success and will they allow you to manage a big part of the assets?

A successful planner continues to self-assess, always having a clear vision of goals, concerns and objectives.

The planner should look at consultancy practice as a profession and a business he passions for. He will always have his client interests at heart, as the primary driver of his successful practice.

Elsa Pau as Chief Editor of Benchmark Magazine, a Hong Kong financial magazine.