After about 15 years in the investment advice business, Malcolm A. Makin knew, more than ever, that his practice had to evolve in order to remain profitable.
A few things stood out. He needed to move away from the mindset of a broker making the next sale and embrace the outlook of a financial adviser paying attention to the continuing relationship with his or her client. He also knew that adding to his staff and investing in technology were keys to increasing the firm's bottom line.
In 1976, Mr. Makin launched his firm, Professional Planning Group in Westerly, R.I., which now has $503 million in client advisory assets.
He spent the first 15 years or so of his career establishing his credentials as well as building a group of clients. He finished his certified financial planner designation in 1981, served on the Certified Financial Planner Board of Standards Inc.'s board of ethics during that decade and focused on working with local schoolteachers on their retirement plans.
That changed in the early 1990s, when he reached out to a couple of local corporations to work on the retirement plans of their executives and employees, said Mr. Makin.
“I would present the company benefits in a financial planning format,” he said. “It was about helping people understand the individual impact those corporate benefits would have for them — for example, an annuity that could be rolled over. For the most part, people didn't have a clue of how to use those benefits or integrate them with Social Security.”
Building those financial planning relationships helped the profitability of the firm, he said.
“The 1980s was a time for selling stuff,” he said. “You didn't talk about asset classes and asset allocation; you talked about a variety of products you could sell to help your client meet goals.”
That changed in the 1990s, he said.
“All of a sudden, I wasn't selling my own wares, but I became the guy to see. And I had to become educated in basic economics and investments,” he said.
“I saw my future in doing fairly sophisticated portfolio work, and doing it in a financial planning mode, for individuals,” Mr. Makin said. “If you're selling things, you go from one account to another. The client says yes and signs, and then the broker moves on. That doesn't mean I lose interest in you, but I have to move on to the next person.”
As a CFP, you need to find a way to maintain contact with the client, and you don't just sell and move on, Mr. Makin explained.
“In other words, I have to find a way to get your financial house in order and move on with you,” he said.
ASSEMBLING THE TEAM
Mr. Makin also knew he needed to build his team in order to increase his firm's profitability.
“In early 1990s, I recognized that I had to surround myself with people who could fill in my gaps,” he said. “I didn't need more salespeople or financial advisers, but people to help run the business. I hired my accountant, my own CPA, and all that happened in the early to mid 1990s. I tried to run my business in a businesslike way.”
He also bought his first IBM computer around that time, and he figured that buying a few new suits couldn't hurt the chances of increasing his firm's profits.
“I went to a tailor and had some suits made,” he said. “I thought it put me on a different level. I can't say I had a clear vision of where I wanted to go, but had a clear vision of who I wanted to work with and the kind of style I wanted to show.”
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