Guest post: How Facet Wealth helped my client achieve greater efficiency and profitability



By guest contributor: Jen Goldman

As a business transformation consultant, I help financial advisory firms evolve by designing and implementing a multi-year plan that targets realistic growth goals and completion of staff and business improvements.

These firms often arrive at a crossroads where they must choose whether to off board clients or hire additional advisers and support staff. Letting clients go can be a difficult decision, but a firm that creates capacity by continually hiring new employees could reduce compensation for current staff, experience soaring payroll expenses, and unknowingly replace business development time with staff management duties. For all these reasons, I craved a solution that would allow firms facing this dilemma to make peace with the idea of off boarding clients. I believe Facet Wealth is the answer.

Facet Wealth provides financial planning specifically designed for households with less than typical minimums in investable assets. They work with firms to segment their clients, transitioning those that no longer fit their ideal profile, and agree to terms on revenue replacement for a period of time. They also work with firms as a referral partner. The clients get the planning they need and firms get the capacity to grow. You can find more information in the advisor section of their website or on their referral page.

Ideal example

Since discovering Facet Wealth last year, I’ve recommended it to all of my planning-centric clients. One such client is using their partnership with Facet to fundamentally change the sources of revenue.

Previously, this firm adhered to an insurance and investment business model that derived about 70 percent of revenue from non-recurrent sources (insurance sales) and 30 percent from AUM. Comprehensive planning services were provided as part of the fee received.

The firm sought to reverse that ratio by focusing on clients with more substantial AUM and emphasizing its expertise in comprehensive wealth management. Although this restructuring plan was just instituted during the fourth quarter of 2018, it has already produced eye-opening results.

Steps to success

The firm now fully integrates Facet Wealth into its strategy for both prospects and clients who don’t represent an ideal fit for the new business model. Prospects without sufficient assets to meet the firm’s preferred client profile are referred directly to Facet Wealth, offering an appealing arrangement for all involved:

  • The firm stays true to its desired new revenue structure.
  • Facet Wealth is introduced to promising prospects.
  • Prospects discover another firm that values planning and personalized investment strategy but represents a better fit from an affordability standpoint.

Facet Wealth also provided a viable alternative when the firm decided to raise its fees to reflect a higher level of client engagement. The firm encouraged any clients who felt uncomfortable with the new structure to seek alternative financial counsel, with suggested options including their local bank, insurance company, or Facet Wealth.

Recognizing results

Since then, more than 150 clients have transitioned to Facet Wealth while providing almost universally positive feedback. Several other clients elected to stay with the firm and now pay higher fees for more comprehensive engagement. The firm will next present a similar set of options to its second-lowest tier of clients, as part of a progressive streamlining campaign designed to fully implement the new business model.

In less than six months since restructuring began, the firm’s profit-and-loss statement already reveals a drastic decrease in operating expenses. The previous dependence on non-recurrent revenue demanded significant spending on advertising to bring in new business. By implementing an improved structure and off boarding clients, the firm recognized it could cut back greatly on marketing costs. The new model has thus freed up significant time and resources while eliminating expenditures.

Going forward, my client plans to continue offering investment management, and financial planning services, and insurance, in that order. And thanks to the structural changes, it is experiencing a more predictable revenue stream, enhanced efficiency, higher-quality relationships and increased referrals to affluent and high-net-worth clients. The partnership between this firm and Facet Wealth has already produced impressive outcomes, while barely scratching the surface of potential revenue growth.