Transferring Intimacy

Journal of Financial Planning: March 2011


Rick Adkins, CFP®, ChFC, CLU, is president and CEO of The Arkansas Financial Group Inc. in Little Rock, Arkansas. He served as the 2003 chair of the Board of Governors of Certified Financial Planner Board of Standards. You can write to Rick at

The future existence of the financial planning profession is not heavily dependent on the founding generation’s ability to transfer computers, software, staff, systems, processes, technical expertise, and all of the other pieces of a business for some multiple of revenues. Rather, the future existence of our profession is totally dependent on our ability to transfer relationships—to transfer client intimacy from one generation to the next. Unfortunately, I haven’t noticed many continuing education sessions on that topic!

For some of my friends, this isn’t a challenge because they’ve proudly told me that they only want to know enough about their clients to manage their money. They don’t want to get involved in the messy business of “hands on” financial planning, helping clients manage their irrational tendencies and think through their decision-making process to improve the quality of their decisions. Their value proposition is earning a competitive rate of return, period. They’re relying on inertia and systems to retain clients so that the next generation can afford to buy them out of the firms. Unfortunately, this trend of low or no intimacy is leading those firms back toward commoditization, which ultimately lowers their firms’ value.

For those in our profession who are solo practitioners, this is an even greater challenge. At the planner’s retirement, what would cause clients to just move—lock, stock, and barrel—to another firm of the practitioner’s choosing? The transition would be infinitely more unpredictable in the event of the solo practitioner’s death. There’s simply no meaningful relationship with the new firm.

This is not an academic problem; it’s a demographic reality. Almost 50 percent of current CFP certificants are age 50 and older. You’re going to see a growing number of practitioners choose to retire in the next five years. Having become a routine reader of obituaries, I’m shocked at how many people who are younger than I am show up each day. In either event, planned or unplanned, client transitions are going to start happening in increasing numbers.

The “Adviser Is Dead” Spreadsheet

In our own firm we’ve had all of the normal agreements in hand for some time. Yet, the clear vision of what might actually happen had not reached a practical level until recently. Previously, it was conceptual and formula-based, which looked at financial information in the aggregate. As a result, there was no face to the numbers. This recently changed with the creation of a new spreadsheet entitled “Rick is Dead.”

The concept of this spreadsheet was quite simple: I had to go through the clients for whom I have primary responsibility and reassign them to the planner that I felt had the best rapport, relationship, and overall ability to retain the client at my death. Wow, what an eye-opening, emotional, and yet liberating exercise! From a relationship-transition standpoint, this had three important results:

  1. It got us away from a generic, estimated percentage of client loss at my death. Instead, each professional had to ask himself or herself, How strong is my relationship with these clients today? What do I need to do to develop a stronger relationship with them in the future? It allowed my colleagues to view each client as an individual with whom they needed to work to build a relationship and develop greater professional intimacy.
  2. Each person could also see what their income would be once they were responsible for these clients. This made their ability to fund the buy-sell agreement more real and doable.
  3. To make this tangible, not just theoretical, each client is now assigned a primary adviser and a secondary adviser (in my case the secondary adviser being the planner taking over my assigned clients in the “Rick is Dead” spreadsheet). This allows us to incorporate the concept into our systems and make sure that there’s regular involvement with the secondary adviser. This minimizes surprise when (not if) the unexpected happens.

Transferring professional intimacy requires acceptance from three parties: (1) an experienced professional who is willing to “let go,” (2) a client who accepts the transfer, and (3) a next generation planner who thinks and behaves as a professional and who has credibility with the client. Professional authority (the second element of a profession) is not anointed merely because one possesses degrees and letters after one’s name. While it starts with the basic mastery of a systematic body of theory (the first element of a profession), as evidenced by a degree (M.D., D.D.S., J.D., etc.) or certification (CPA, CFP®, etc.), that only gets you on the team; it doesn’t get you off the bench.

Gaining Professional Authority

Here are my personal observations as to what’s necessary to get off the bench.

Exhibit Professional Decorum. Dress, look, talk, and act like the professional you wish to become for the client you wish to serve. My first job was in a very casual office environment where the clientele was primarily “blue collar.” My second job was in a highly professional downtown, high-rise office building that housed the state’s leading law firm and accounting firm. I was fortunate to have a boss who helped me shift cultures. One of the first things he did was give me a copy of John Malloy’s Dress for Success. While I’m not sure all of Malloy’s research is still valid, I believe his concepts for acceptance by peers and clients are still on target.

Finally, spend time with the professionals you want to become, particularly the ones in professions that support your firm, such as tax attorneys and CPAs. Not only can you learn from them, they can get to know you and they might even become comfortable enough to introduce a client at some point.

Exhibit Professional Judgment. There’s no better place to begin demonstrating sound professional judgment than with your own finances. Have your own financial plan prepared. Apply to yourself the advice you’re giving to others. Get out of debt; develop your own cash reserves; own adequate insurance; have a sound estate plan with proper documents; regularly fund your retirement plan; invest your money the same way you invest client funds. Don’t give advice to others that you’re unwilling to implement yourself. To do otherwise makes you a fraud—you’ll feel it and the client will sense it.

Yet, in spite of the advice you practice yourself, your client isn’t you. So as you have the opportunity to offer advice, first put yourself in the client’s shoes. Try to understand where they’ve been, the mistakes they’ve made, and the dreams they hold dear. Know the context of their questions and learn to read between the lines. What are they not asking or telling you? What are their unspoken hopes and fears?

Ultimately, financial planning is about decision-making. Over time, if a client makes more good decisions than bad ones, they’ll be okay. A good decision is a balance between how well it works both in the short term and long term. My rule of thumb for a good decision (and therefore good advice) is, whether I die tonight or live 100 more years, I could live with the results of my decision. Each time you have an opportunity to counsel clients about key decisions they must make, even if the decisions appear small, you build credibility of good judgment that enhances your client relationships.

Exhibit Genuine Compassion. Here’s a news flash: clients come to you often having made some really dumb decisions, and without your help they’ll continue to do so. That’s life in a profession. Ask any doctor who regularly tells clients to eat less, sleep more, lose weight, or stop smoking. You have the specialized knowledge that can help them, but past, present, and future client mistakes are all part of life. The key is not to think any less of the client because they don’t immediately behave the way you think they should. Most clients are looking for an adviser who will care as much about their financial success as they do, who will accept them even when they don’t follow our advice, and who genuinely cares about their quality of life.

In addition to being in the decision-making business, we’re also in the change business. Here’s one of the most profound sayings I’ve heard about change: change happens when the pain of staying the same exceeds the pain of change. Clients will change when they’re ready, not when you are. In many respects our job is much like Dickens’s Ghost of Christmas Future. We simply show clients where their current course of action is likely to carry them and let the pain of an undesirable future nurture the need for change today.

Exhibit Relationship Success. Ultimately, a professional succeeds or fails based on his or her ability to build and maintain relationships. A technically sound but relationship-impaired professional has limited value to a financial planning firm. Most seasoned firms have developed a consistent flow of new clients through years of relationships. Yet if not nurtured that flow can dwindle to nothing.

Sharing Client Values

Early in my career I was told that my income would ultimately reflect the income of the people with whom I built relationships. Frankly, I found that to be a turn-off at the time. I really didn’t want my future income to be the basis for my relationships. The advice of a consultant has proven to be even more true, yet complementary to the earlier advice. His advice was that “clients gravitate to shared values.” When I look at our existing clients, most of them are long-term relationships of people with shared values or one degree of separation from them. And yes, my income has ended up being pretty much what their income happens to be.

If you are a younger planner in your firm, now is the time to begin cultivating relationships, not just because it’s good for business but because it’s good for a richer life. Plan ways to spend time with people whose values you admire; that creates a virtuous circle in your life that will help you weather the difficult times. I hope you’re in a firm that doesn’t pressure you to bring in business immediately, but one that pressures you to spend time with people with values and culture similar to those of the average client in your firm. Look at the top 10 percent of your firm’s clients and ask yourself, What were they like when they were my age? With whom did they spend time?

Don’t wait until you become a partner in your firm to begin developing sound relationship skills. If fact, you’ll probably never become a partner if you wait to develop those skills. Find ways to serve your church, your community, and other organizations about which you’re passionate. Along the way, get to know and spend time with “people of values.” Over time, the business part will take care of itself.

I have great hope for the financial planning profession as a source of great good for the people who realize the value of our services. It is vital that firms continue to develop, grow, and transition to the next generation. Yet, transferring a business doesn’t automatically transfer relationships and certainly doesn’t transfer the client comfort that comes from professional intimacy. I’m hopeful that we can all work to make this a reality.

General Financial Planning Principles