The DOL rule: moving your thoughts from implication to opportunity

August 3, 2016 by Tom "Tater" Roberts

Two women sitting in on office talking about the DOL rule

About the author:

Tom "Tater" Roberts

Vice president, enterprise accounts

Tom focuses on procurement of new enterprise relationships at Advicent — helping them identify solutions and develop strategies to maximize advisor profitability and efficiency. Tom has worked in the financial planning software side of the FinTech industry since 2005 and has focused on helping advisors build more profitable practices through effective financial planning.

A few days ago, a friend of mine with whom I play golf asked me about the DOL rule. He said, “I keep hearing about it on television, how it’s changing the financial services industry, but I honestly have no idea what it means.” I replied, “They have essentially decided to make ‘The Golden Rule’ law for financial advisors.”  He smiled and said, “I like that! It’s about time!”

It is about time. In February of 2015, Barack Obama said of the proposed legislation, “It’s a very simple principle, you want to give financial advice, you’ve got to put your client’s interests first.” 

Moving from implication to opportunity

The DOL rule – there is no topic more discussed in the financial services world today. From online discussion boards to keynote addresses at broker-dealer conferences – the pundits, gurus, and industry experts all conspire to weigh in on the impact of the coming legislation.

Our social media feeds offer us daily updates regarding the implications to financial advisors. How will it impact commissions and fees? Will it change how we do business or render advice? Many posts resemble updates from The Weather Channel ahead of a coming hurricane – offering warnings and tips on preparation, as well as cautionary advice on how to brace for the storm.

In lieu of a warning, I would like to challenge you to look at DOL legislation through the lens of opportunity. What if I told you that, in addition to protecting clients with new fiduciary standards, the DOL rule presents advisors a fantastic opportunity to generate significantly more revenue from their existing books of business, sell more products, find more held-away assets? Oh, and get more referrals. What if the DOL rule was actually win/win?

How could the DOL rule do all that? Today, let’s shift focus from implications to opportunity.

How to make the DOL rule a win/win for you and your clients

Proudly let your clients know you are a fiduciary.

Let every one of your clients know that, with the passing of DOL, acting in their best interest with every recommendation is now a requirement. Our industry now requires the absolute highest levels of integrity. You should want clients to know that; therefore, proactively bring it to their attention. Of course you have always acted in their best interest, but now they have the added protection of knowing you are bound by a higher standard – this builds their trust. Let your prospects know as well. It just may make the difference in deciding to become your client.

Commit to offering comprehensive financial planning to every client.

Every client deserves a financial plan and it is the key to doing more business. The DOL rule is the best reason to start offering financial planning services to all your clients if you do not already. Not only is it profitable, but it shows your good-faith effort that you act in the best interest of your clients. You cannot justify any product recommendations without first understanding what your clients want to accomplish. Every client has goals, so every client needs a plan. Not only is planning good for clients, it is good for your bottom line. Begin with understanding their long-term goals and objectives and a clear understanding of their risk tolerance.

How is financial planning good for my bottom line?

Planning generates fees and product sales.

Want more client follow-through? Charge for plans – your time is valuable. A quality financial plan is worth it to many people. Clients who pay a fee for their financial plans follow advice on product recommendations more than 85 percent of the time. So when you uncover a need for fixed income in retirement or a life insurance gap, a client who paid you for the advice is very likely to follow through with that annuity or insurance product purchase.

The planning process finds held-away assets.

The very process of building a financial plan uncovers client held-away assets. You must know what they have in order to build an accurate plan. Once you are aware of the assets, you have a better chance of managing them. The stats are compelling. Advisors who do the client’s financial plans manage the client assets in 90 percent of the cases. Want to grow your AUM this year? Make sure you are the advisor who does your clients financial plan. You will get the assets, uncover the product needs, get the sale, and help clients reach their goals.

Good planning leads to happy clients and referrals.

Financial planning is the work we do every day to help make our clients dreams a reality. Planning is really about relationships and reaching these goals together – winning together.  You can be sure – when we help clients win, they will tell others.

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