How well do you know your clients?

Do you know their interests and hobbies? More to the point, for financial advisors the question is how well you know your clients' families, observes Patricia J. Abram in Research Magazine. Do you know the names of their children? Their parents? Their pets?

Financial advisors seeking business success need a systematic discovery process, she says, but too few are acting consultatively enough even to know the basics about their clients' families. This is not only shocking — it's bad business.

Abram lays out a process from CEG Worldwide that consists of five client meetings, including three initial meetings and two followup monitoring meetings. The idea is to learn about children, grandchildren, parents, pets, interests, and "everything else that is important to their financial lives." The takeaway is this: a recommended minimum of twenty-four non-investment focused client contacts a year. This system has the potential to generate a great deal of knowledge that most advisors simply do not have. Advisors are coming up short in their personal willingness or their professional capacity to know their own clients on a basic, let alone an in-depth, level of effectiveness.

Instead of "systematic discovery process," I would like to think of this approach as common sense and empathy. But it's true that the scale of business has grown to the point where personal contact is at a premium and that new ways are needed for the client to share personal information in a sane and safe way, and for the advisor to receive it and use it to help the client achieve his and her dreams.

Good News Bad News

While enjoying my 4:30 a.m. coffee, a story came on my local news about the new definition of retirement. Fewer people are taking a tropical retirement and more are staying put in suburubia. Why? Well it's a good news bad news story. The good news... Boomers are living longer and are earning more than the previous generations. The bad news, they also working longer-- some because they don't want to leave the workforce, others because they can't. The the oldest boomers are turning 62 next year and become eligible to collect Social Security. But many will continue to work. The article suggests one reason that many will continue to work is that fewer employers offer healthcare to retirees. I guess I'll be hearing that 4:30 alarm for longer than I thought.

A tale of 27 trillion dollars

It is the best of times, it is the worst of times. All the rules of client-advisor relationships are about to change, says Moss Adams guru Mark Tibergien (InvestmentNews):

Along with the increase in demand for financial advice, clients have more power in the relationship with their financial consultants, who are competing in a small talent pool, said Mark Tibergien, principal of Moss Adams LLP of Seattle.

Mr. Tibergien, who spoke yesterday afternoon in Hollywood, Fla. at the annual financial products and services conference held by Pershing LLC of Jersey City, N.J., noted the sweeping changes in demographics and said that “boomers and their children are extraordinarily demanding.”

“There’s an oversupply of clients and an undersupply of talent,” he said.

“Seventy percent of the industry is made up of sole practitioners who don’t want to grow.”

The changes range from the amount of money clients will have and the competition from new advisers, he said.

Currently, households have $22 trillion in investable assets, with another $5 trillion likely to be added to that by 2012, he said.

Over the same period of time, the number of advisory firms registered with the Securities and Exchange Commission will increase to as many as 20,000, up from the current figure of 14,000, he said.

This is news to me. Tibergien predicts that the number of advisory firms will grow by almost 50% in the next five years. Will they all be sole proprietors?

Because we are seeing more and more consolidation in financial services, it would be interesting to know the expected growth in the number of advisors, as opposed to firms. Then we would have a better idea of whether or not the industry is truly equipped to serve the needs of aging boomers and their trillions.

Regulators Take a Closer Look at Retirees

Regulators are have expressed concerns over retirees and structured products. With the shifting mountain of money in retirement plans and anticipated inheritances, retirees are turning to a "new generation of packaged products" designed to suit income needs. However, most do not understand the products and rarely read prospectuses. Do retirees need regulation or education?

For details take a look at Regulators see risks in new products article in Investment News.

Financial blogs, vol. 1

The world of financial blogs is rapidly expanding as both blogging professionals and those playing the home version jump into the fray.

Today Praxiomatic takes its first look at just a few to try to get a sense of how wide their range is and of what they offer to the reader.

PFBlog, subtitled "My personal finance journey," is written by a 31-year-old man who positions his blog as "Personal finance observation, musing and decisions in a journey toward financial independence by 36 with at least $1 million." You can watch him chart his progress as he tallies up his cash, brokerage, retirement accounts and stock options (totaling over $723,000 so far — not bad). Overall the layout is cluttered and overstuffed with ads and sponsors, but the appeal of PFBlog is that it is always fun to spy on other people's decision-making processes and especially their financial statements. Recently, nearly a thousand people per day were reading PFBlog. That's a lot of spying.

Similarly, another guy at 2millionblog has set his sights on — you guessed it — $2 million. He describes himself as "a 30yr old IBM engineer and live in Raleigh, NC," and claims to have over 700 readers a day. I liked this blog better because the guy seemed more about the reality of tracking personal finance and less about the cluttering of his blog with an ocean of ads and sponsorships.

Here's a much more thorough overview of personal finance blogs than what you're reading now. It appears to be affiliated with SeekingAlpha, which calls itself a "leading provider of stock market opinion and analysis from blogs, money managers and investment newsletters, and a provider of its own high-value, complementary financial content," noting also that "'Alpha' is a finance term referring to a stock's performance relative to the market; it's used more loosely by fund managers to describe beating their index, so every stock picker is 'seeking alpha'.)"

At over 1,400 readers a day, All Financial Matters features posts like the Top 5 reasons to pay off your mortgage. Author JLP appears to be fond of money "laws" and "rules," such as the rule of 72, which estimates how long it takes to double your money at an assumed rate of interest.

Got any favorites we missed? Post them in Comments.