7 Reasons For American Advisors To Consider Setting Up An NIFP SME

Why should I set up an NIFP SME?

(Non-intermediating Financial Planner Small & Medium Enterprise)

1. The NIFP - is a new type of financial professional emerging globally.

·        The NIFP is the ultimate financial lifestyle planner.

·        They are a financial planner, but not advising on or selling securities (so not SEC registered).

·        Some markets, prefer the term Non-intermediating Financial Planner (NIFP).

·       Markets such as UK, Europe, Middle East, Far East, South Africa, Australia, Canada, Brazil (6 continents).

·        The wall between advice and product improves market integrity, places blue water between planning and distribution, eliminates transaction bias. Establishes a true fiduciary relationship between client and planner. Planner is the regulator of transactions.

·        Fee-only. Not contingent on transactions, or asset related outcomes. Completely independent of product industry bias.

·        Needed because the financial industry is least trusted of all industries globally (reference Edelman Trust Barometer). What matters least to the industry, matters most to its clients. Trust.

·        Levels the playing fields of information asymmetry.

·        Outcome for planner is higher levels of client satisfaction, higher conversion rates, higher perceived value for client, and more willingness to pay fees, plus greater longevity in client relationship.

2. The scope of advice is a lot broader than the traditional advisor.

·        All wealth and assets are planned, not just securities. Includes real estate, defined benefit pension plans, business assets, physical assets, other financial assets such as savings plans.

·        Plans for creating assets (typically through real estate schemes or business plans), not simply saving assets that have already been made.

·        The concept of intangible asset management is included. Assets like brand value, network of personal connections, software, intellectual property, licenses, etc. These can be owned and leveraged to create future tangible assets. All of these are strategies to be invested in to create future economic benefits.

·        Plans for the client, not simply plans for their money. Planning the client before planning the money. Treating the client as the customer, not just the money.

·        Consider the client. Considers the four pillars of client wellbeing and the foundation on which they are based. The four pillars are mental wellbeing, physical wellbeing, emotional wellbeing, spiritual wellbeing (whole-person paradigm). The foundation is financial wellbeing.

3. Why? Because existing models are far too limited, securities form just 5% of total wealth. And people need to be shown how to make money, not simply save money they have already made.

·        The old advisor paradigm is limited and a product of bygone times, when advisors were told what to do by insurance companies and asset managers (the security providers).

·        This new paradigm is customer-centred and holistic (whole of wealth), and much needed in these uncertain times. People need strategies for leveraging all their assets, not just securities.

·        Today, due to advances in tech there is little value add in security transactional services. Investment markets and distribution channels have been commoditized by innovations, from the likes of Vanguard, D2C platforms, retail multi-asset strategies, robo-advisers, financial planning apps, Open Banking apps, etc. AI can do in 15 seconds what a human takes 15 hours to do.

·        The value add is on the human side of services, what AI can’t do easily. Behavioural coaching. Financial Planning. Life planning. Purpose coaching.

·        This is the safe space away from advances in automation for the future ready advisor.

4. Fully scalable therefore accessible.

·        When specific advice on securities is removed from the process the process changes. Advice become generic and educational.

·        Strategies such as increasing income, reducing expenditure, extending income, deferring expenditure, creating tangible assets, etc come to the fore, as possible solutions, as security transaction bias falls away as a motive.

·        Advice becomes generic and financial educational. It can be delivered to groups of people all at once, and on a subscription Netflix-style model without the need for a planner to be present. The planner exchanges know-how for money, instead of time. Using apps, video courses, podcasts, planning is fully scalable.

·        Ability to plan multiple users concurrently reduces cost significantly and proportionately for end users. A thousand users planned at once, and can be planned by one planner at one-thousandth of the cost without adversely impacting advice quality or planner margins.

·        Cutting out the regulatory red tape of SEC compliance costs removes overheads, streamlines sales processes, significantly improves planner margins, and simplifies communications to the client.

·        Lower cost of entry for the consumer makes financial planning accessible for everyone. Plugging the global advice gap.

5. Addresses real issues in America today.

·        70% of Americans have less than $1,000 dollars in savings.

·        One quarter of US children live below the poverty line.

·        Asset creating strategies are much needed for these communities, particularly in BAME communities.

·        Community groups such as churches, potentially supported by co-sponsor brands, can sponsor such financial wellbeing and planning programs, to lower end-user cost to zero.

·        Covid driven great resignation/ reset is hapening. Planning can help workers navigate the cash flow valley, by everyone knowing their numbers, and knowing how to improve on them. It can assist the forgotten over 50s on the scrapheap of unenployment get back into economic activity by creating and leveraging intangible assets.

·        Financial wellbeing programs are easily included in worksite wellbeing programs, to help workers better mange from pay check to pay check through this cost of living crisis, and beyond.

·        Pressure from inflation driven pay demands are eased by offering financial wellbeing programs in the workplace that can significantly increase spending power for workers.

·        Governments are also expressing an interest in the emerging programs as solutions to macro-economic challenges, e.g., the UK’s mid-life MOT, named after the Ministry of Transport test car inspection.

6. Financial wellbeing programs improve wellbeing.

·        Money is a means to an end, not an end in itself. Wellbeing is the end we all must seek. Planning should be aimed at delivering wellbeing outcomes for consumers.

·        There are four pillars of wellbeing. Like four legs on a table. Remove one, and the table falls. These are: physical wellbeing, mental wellbeing, emotional wellbeing, spiritual wellbeing. Body, mind, heart, spirit (reference Stephen R. Covey whole-person paradigm, in the 8th Habit 2006).

·        While money may not be the path to happiness it is an important foundation in supporting a good life. Financial wellbeing is the foundation on which we build wellbeing. There can be no wellbeing, without some financial wellbeing in the Western world.

·        Wealth and wellbeing go hand in hand, combined programs are becoming increasingly popular globally.

7. Planners must build a future ready platform.

·        Whilst we expect financial advisors will have a job in the future, what it means to be a financial advisor will change as you shift roles and undergo transition impacting the choices you make. Inevitably AI will take over. If roles and tasks you perform are less valuable, you are likely to be paid less.

·        The more tech assists you, the less you earn. If the tech upgrades your skills – we become the controller of highly sophisticated tech – the more you earn.

·        Abrupt endings are problematic. If you make the switch it would make sense to make it earlier rather than later. To benefit the most.

·        Invest in qualifications or experience. You need to gain insight now on where decisions might lead.

·        Think about different possible future selves. Then ask, what is the likelihood that any of the paths you have sketched would end abruptly?

·        Have you invested sufficiently in productive, vitality, and transformational assets to cope? If you want to know how, then read this series of articles.

·        Only one path is best for you … use your intuition to decide your next step.

To find out more about NIFP SMEs book a Discovery Meeting with me.