The “Law of Compensation” states that your income is directly related to number of people you serve and how well you serve them.1 Notice that the law does not claim one business model is better than the next. In fact, business model, e.g., fee-based, commission, etc., is irrelevant to how much compensation you earn.
The key to your success or failure isn’t your compensation. The key is focus. It’s about your focus on your clients, and prospective clients.
No matter your business model, you will dramatically increase your compensation by focusing on the number of people you serve and how well you serve them.
Let’s look at the first part: the number of people you serve. Common practice will tell you that less is more. You need to work with a smaller number of clients with high net worths. That’s a business model. That model can be scaled to new heights through the investment of para-planners, support staff, and additional planners (which makes a great succession plan for the firm). By reinvesting in your business, you can serve more and increase your compensation.
The next part is about maintaining value in your service. As you increase your number of clients, it’s important not to lose sight of their individual needs, desires and planning objectives. Again, investments in technology, people, and infrastructure can make a huge difference.
Your clients hire you to look them in the eye and solve their most complex issues – retirement and longevity. The level of service you provide is more important than the model you use. In fact, rarely do clients ask about your business model. They care about your expertise, how well they will be served, and how much they feel their goals and objectives are a priority.
It’s inappropriate to choose a solution for a client based on your business model. You have to change your mindset to focus on your clients and what risks concern them the most. If their concerns are longevity and income, you owe it to them to look at guaranteed income options, even if that is against your business model.
Maximize your compensation and revenue by looking at how you can help more people and increase the level of service you provide. Both will elevate your business.
Mike McGlothlin is a tireless advocate for the retirement planning industry. As executive vice president of retirement at Ash Brokerage, he heads a team providing income planning solutions focused on longevity and efficiency. He’s also a thought leader who provides guidance and assistance for advisors and broker-dealers navigating marketplace and regulatory changes. You can find a collection of his blog posts in his book, “Above the Clouds … Winning Strategies from 30,000 Feet.”
1Bob Burg and John David Mann, “The Go-Giver: A Little Story About a Powerful Business Idea”: https://thegogiver.com/
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