The advisor as personal CFO

Total cost reporting has arrived. If there was ever a time for financial advisors to question how clients perceive the value of their services, this is it. What do they want, and how can advisors deliver?

Those questions are existential. Advisors who have answers — who can communicate and demonstrate their value clearly — will thrive. Those who can’t will increasingly find themselves commoditized.

A few years ago, Accenture’s Wealth Management Consumer Report: The New State of Advice gave us a definitive answer to the first part of that question. Consumers want holistic financial advice — not fragmented product conversations.

They want advice that integrates:

• banking and lending;
• investments and portfolio management;
• tax planning;
• insurance and risk management;
• retirement planning; and
• estate and legacy planning.

In short, they want help with everything having to do with their financial lives.

More importantly, they want one primary advisor who can coordinate everyone and everything involved — a central point of accountability.

Consumers don’t expect you to personally deliver every solution. But they do expect you to know what needs to be done and who should do it. They want you to bring the right experts together and ensure they work in concert.

They want orchestration, not referrals — leadership, not transactions.

For many advisors, this creates real tension. Investment advisors might feel boxed in. Insurance advisors may feel siloed. Even accredited financial planners can struggle to credibly deliver the entire spectrum of advice that consumers now expect.

And if we’re being honest, what clients are describing sounds less like traditional wealth management and more like the family office experience historically reserved for high-net-worth and ultra-high-net-worth families.

Family offices exist to coordinate everything related to a family’s wealth: investments, taxes, estate planning, risk management, governance, education for the next generation and often concierge-level services.

How can an average financial advisor compete with that?

The personal CFO

The solution for most advisors is not to build a family office. It’s to operate like one. Position yourself as your client’s personal CFO. This starts with a simple but powerful reframing.

In Are You a Stock or a Bond?, author Moshe Milevsky, a finance professor at the Schulich School of Business at York University, encourages consumers to frame their personal finances in a kind of corporate structure, recognizing the value of making long-term financial decisions in conjunction with risk management best practices.

In this model, the consumer accepts the roles of CEO, CFO and chairman of the board. It’s perfect for the DIY enthusiast.

In practice, however, most Canadians will openly admit that they do not have the time, knowledge or inclination to assume all these responsibilities. That’s where the opportunity lies.

Your role is twofold: Help them clearly qualify and quantify their financial goals; and serve as the central conduit to every professional partner, strategy and solution required to achieve those goals.

Once those goals are defined, your value compounds through coordination. You introduce — and quarterback — the appropriate experts where necessary, whether new or already part of the client’s world:

• lawyers (estate, family law, tax, employment, commercial);
• accountants (tax, corporate, cross-border, business consulting, forensic);
• money managers (securities, pensions, real estate, alternatives);
• insurance specialists (life, disability, critical illness, health, general); and
• lenders (mortgages, lines of credit, business and investment lending).

You lead the process. You connect the dots. You ensure alignment. You highlight the areas in which you are licensed and have expertise, but you also make one thing abundantly clear: there is no area of personal finance you can’t help them navigate.

As one top advisor puts it when onboarding new clients, “If you’ve got a question, and it’s got a dollar sign in front of it, give me a call.”

His clients quickly come to understand that they never again need to hunt down answers to their worrisome questions — the kinds of questions that sometimes put them into the hands of one of your competitors.

The personal CFO model excels on three critical dimensions:

1. Advisor confidence. You’re never stuck. No more, “That’s outside my scope.” Your network becomes your capability.
2. Client confidence. Clients feel supported by a coordinated team, led by someone who understands their entire financial picture. They see value where previously they might only have seen disparate strategies and products.
3. Practice growth. Your expert network becomes a powerful cross-referral engine — driving introductions, credibility and new ideal clients.

Today’s consumers may not be able to articulate it clearly, but they want family office-level advice and coordination.

Total cost reporting will raise questions about the value that advisors provide. Those who adopt the personal CFO model can be confident that they’re delivering — without having to change their license, firm or core expertise.