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A Change of Perspective

As you know, small business is not immune to internal conflict. But no matter the size of your office, a change of perspective may help you see an issue in a new light and find the resolution you’re looking for.

Of course, we’re all naturally clear on our own perspective and how to assess a certain situation or conflict. Seeing that same issue from someone else’s point of view, however, is a skill. But where do you begin? Well, someone wise once taught me a trick to view things through another person’s eyes. Odd as it may sound, it involves physical movement.

Get Moving

Let’s say, for example, there is a disagreement in your office about where a new staff person is going to sit. In this situation, each member of the team may have a different perspective.

  • One staff member feels he should move to the open cube, which is slightly larger than his current space, because he is now the most tenured staff person in the office.
  • The hiring adviser would like the new support person to be in that cube since it is closest to her office.
  • Some staff members feel that, if the most tenured staff person moves, they all should move to be close to a particular adviser or to match space with tenure.
  • Other advisers in the office think, who cares? Whatever.
  • The office manager would like to take an approach that keeps everyone happy and productive.

Discover a New Point of View

While this scenario may seem a bit trivial, it is real life. I’m sure everyone has encountered a similar situation. Here, the knee-jerk reaction that all this is silly (can’t we just focus on work?) may not be valid. Instead, what if you were to physically sit in the open cube, the adviser’s office, other staff members’ cubes or other advisers’ offices? I think you just might discover that the issue is quite real.

The act of physically moving to a different space can help you see things from a new point of view. The issue you’re dealing with could be anything—deciding whether to spend more of the budget on marketing, coming to an agreement on the planning software that will meet the needs of all or even making the firm-wide decision about the best asset allocation for a client segment. You might not find the answer by sitting in your office and trying to understand it from the perspective of others. But you may find it by moving your body to a different location—any location. Physical movement is the tool to help you stand in someone else’s shoes.

Create a Powerful Solution

I was recently reminded of the value of changing space to gain perspective while visiting China. My perspective of the country was “off.” But as I stood in a new space that was 7,500 miles away from home, saw a few of the 1.4 billion people everywhere and breathed the air, I began to understand a different culture and left with a lasting memory of a country of building cranes. A change of scenery can do a world of good. And by truly experiencing a different perspective? You will have a greater chance of creating a more powerful solution.

Joni Youngwirth_2014 for web

Joni Youngwirth is managing principal of practice management at Commonwealth Financial Network in Waltham, Mass.


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Cultivating Emotional Intelligence for the Future of the Profession

Once upon a time, in a newsroom in the Southwestern part of the country, a crime reporter would frequently come into the newsroom in a rage—kicking his filing cabinet or throwing his reporter’s notebook.

Granted, constantly reporting on negative things isn’t good for a person’s mental health. But this particular reporter perhaps had problems with his emotional intelligence.

We’ve heard the notion before: emotional intelligence, or EQ, is likely more important than IQ when it comes to business success.

Emotional intelligence, a concept stemming from the 1995 Daniel Goleman book Emotional Intelligence, is a person’s ability to manage their emotions and relationships successfully.

According to Goleman in his 2004 Harvard Business Review article, “What Makes a Great Leader,” emotional intelligence has five elements: self-awareness, self-regulation, motivation, empathy, and social skill.

Emotional intelligence in both leaders and in new hires is key in keeping the financial planning profession one of high-quality client-first service, especially in an age where technology will only become more prevalent.

Forbes recently reported in the article, “You Value Emotional Intelligence, So Why Don’t You Hire for It?” that 25 percent of businesses say emotional intelligence is still undervalued in the hiring process, despite extensive research that having it among leaders and team members increases morale and motivation, improves culture, and
sparks better collaboration.

Examine yourself as a leader and see where you may lag and could improve, because unlike IQ, EQ can be learned if you’re motivated to do so. And, look for the traits of emotional intelligence in your new hires.

Self-awareness. Harvard Business Review reported that this is a person’s ability to realistically identify and understand their own emotions and how they affect their job and the people around them. Candidates will display this through self-confidence, self-assessment, and a good concept of their own weaknesses and strengths.

Self-regulation. The reporter in the anecdote didn’t have this ability—to think before you act on impulses and control how you exhibit your bad mood. Candidates will display this by showing that they are trustworthy, have integrity, and are open to change.

Motivation. This is a person’s passion for doing things for the sake of accomplishing
something. This is beyond doing their job simply for the money. Candidates will display a high energy, persistence, intrinsic desire to achieve, optimism and resilience, and a commitment to your firm.

Empathy. This is a person’s ability to understand others’ feelings and perspectives. Candidates will display this through service to clients, sensitivity to diverse thoughts and feelings, and expertise in building relationships.

Social skill. This refers to a person’s ability to successfully build and manage
relationships. Candidates will display this through making you feel comfortable, genuineness, and persuasiveness.

Ana TL Headshot_Cropped

Ana Trujillo Limón is associate editor of the Journal of Financial Planning and the editor of the FPA Practice Management Blog. Email her at alimon@onefpa.org. Follow her on Twitter at @AnaT_Edits.


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3 Steps to Open the Door to Opportunity

 In the financial services industry, advisers need to find all possible opportunities in order to take their business to its next level. I believe that opportunity can find you while you are busy working harder and smarter. In other words, your productive activities attract opportunities that can ultimately result in future successes. Conversely, hoping that an opportunity will fall from the sky is wishful thinking.

Thomas Edison perhaps said it best when he said, “Opportunity is missed by most people because it is dressed in overalls and looks like work.”

Edison is widely attributed to have said this, and if he did actually say it, it comes from a man who is reported to have unsuccessfully invented the light bulb some 10,000 times. However, most people remember him for his successes, not his failures.

Let’s take a look at a step-by-step approach successful advisers use to continuously generate opportunities:

Step 1: Know What You Want

It may seem evident but in order to get what you want you have to first know what you want. In Edison’s case, he wanted to invent the light bulb and he was willing to keep trying until he did.

Here is a real time example of how one financial adviser client of mine used this type of process:

Tom P. was a newer financial adviser with less than five years in the profession who was struggling to determine how to best build his business practice. Our coaching conversations first began with the end in mind, so we discussed what a successful business would look like to him. By doing this exercise he got clarity about his target market, yearly asset goals and type of investment products he wanted to provide.

Step 2: Know What to Do

The next step is to know what to do to get what you want. The key is to not try and reinvent the wheel. Having coached hundreds of financial advisers, I have a few solutions in my toolbox.

Tom and I mapped out a prospecting process for who to call, what to say and how to handle objections in order to get appointments. We also mapped out an effective referral dialogue. We role-played each of the two campaigns and soon after Tom quickly started setting appointments. Next, we continued honing his first appointment and closing script. He applied these processes and his pipeline started filling up.

Step 3: Know How to Track Progress

The final step is to know how to track your progress. Edison not only did this, but he changed his definition of success every time his experiments didn’t work by stating, “I have not failed. I have just found 10,000 ways that won’t work.”

Tom took every “failure” as an opportunity to learn by tracking his activities and results. We would discuss what was working and what was not until we refined his processes. Granted, this takes time and is an ongoing task, however I believe that all advisers with the right attitude can actually uncover their challenges, learn from them and discover and implement solutions.

So, what happened to Tom?

I recently received an email from him in between our bi-weekly coaching sessions that said, “Just wanted to check in and let you know that my pipeline is full. I opened two new accounts this week by both cold calling and asking for referrals. It is working!”

Why a Step-by-Step Approach to Success Works

Too many times, we as financial advisers lose sight of what it takes to get that big break. Instead, we see others landing a huge account or gathering millions in assets and find ourselves asking, “Why didn’t I?” The reality is that those who are successful do the necessary work in order to open doors. Opportunities sometimes walk through those doors unexpectedly and oftentimes don’t “look” the part; the reality is that in order to open the door to opportunity you must put in the effort and energy to approach them when they do show themselves.

If you would like a free coaching session, email Melissa Denham, director of client servicing.

Dan Finley
Daniel C. Finley is the president and co-founder of Advisor Solutions, a business consulting and coaching service dedicated to helping advisers build a better business.


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RIA Transitions: What Gets in the Way

We pretend that transitions are just financial transactions when, in fact, they are a highly emotional event for RIAs. The reality of any transition deal is that advisers must give up control as well as equity to transition successfully, thereby gaining freedom, peace of mind and time for the things that matter most to them. This is easier said than done.

Whether it’s a merger, a sale or an internal succession, transitions reveal a subconscious labyrinth between an RIA’s head and heart. Approximately 80 percent of RIAs say they want a succession plan, yet only 20 percent execute one successfully. A recent Schwab comment notes that in order to become part of that 20 percent, you need to be fully aware of the forces that will support you, or thwart you, starting today.

If you’re a fee‐based, independent adviser who’s been taking care of your clients’ portfolio management and financial planning activities for years, there’s now an entire industry of consultants, seminars and services vying for the opportunity to assist with your transition plan. Their guidance is overwhelmingly focused on the deal structure and the numbers. While finance is our comfort zone, let’s be candid: the basic math is mental cotton candy that can be worked out in a few minutes on a cocktail napkin. But if the math is so easy, why are there so few “successful” transitions?

RIAs don’t sell their firms for three reasons that are, for the most part, entirely subconscious:

  1. You don’t have financial freedom
  2. You can’t sell your kids to the devil
  3. You resist losing control

Any one of these things can blow up or ambush a deal, effectively delaying your ability to move on to your next chapter. Advisers frequently spend months dancing around the truth of these issues only to walk away at the eleventh hour. Alternatively, their discomfort may emerge months later, and they’ll unwind the entire transaction.

Transitions with positive outcomes are entirely possible. Becoming part of the 20 percent will require you to call subconscious beliefs out into the open before they undermine you, then handle them with skill, empathy and respect.

Reason No. 1: You Don’t Have Financial Freedom

Despite our training as financial professionals, many of us struggle with acknowledging the truth about our own financial freedom. Generally, if you are a state-registered advisory firm, the net proceeds after tax won’t give you financial freedom unless you’ve already built a big, fat nest egg. If you’re a federally registered firm, your net after tax may be large enough to give you financial freedom, but the rate of return on your liquid assets is probably well below the money that your firm was paying you both directly and indirectly. In other words, a transition is a far cry from the massive payday everyone imagines.

It’s tough for advisers who find themselves in this position since they must replace the relatively comfortable incomes they previously drew from their businesses. They have to keep working to achieve their financial goals, usually by joining the buyer’s firm. Many advisers react to this realization by retreating from any serious discussion of transition altogether. They go into hiding, both intellectually and emotionally, until circumstances beyond their control force them into action.

However, joining the acquiring team can be positive as well as profitable, especially if the cultural fit is strong. When a longtime adviser with a smaller practice joined our team, our dialogue was as much about the similarity of our “work hard, play hard” cultures as it was about the financial gain he would enjoy by continuing to work as an adviser with us. We both have observed that the additional revenue he generates is creating great value for our clients, for him and for the firm.

Reason No. 2: You Can’t Sell Your Kids to the Devil

For many RIAs the transition of their clients is a defining moment. It’s highly personal and eclipses the value of the portfolios. They see themselves as trusted, hands‐on managers who are concerned with details and decision‐making; something they’re able to do with the support of loyal staffers who are wired to care about their clients the exact same way.

These advisers are very protective of their client relationships and skeptical that anyone else can take care of those relationships as well as they can. Some openly question whether bigger is better, thinking that it means a loss of the personal touch they delivered so effectively. They may view their potential suitors with mixed feelings, or even a negative bias that casts an acquiring firm in an oppositional role.

Of course, not all transition partners are the devil, and clients are quite capable of moving on to new advisory firms. But we’re talking about the subconscious mind where perception is frequently mistaken for reality. These advisers are in a mental trap. They can’t move on because they believe they’re selling their clients out. Yet not going forward keeps them on a treadmill with no transition plan and no positive outcome in sight.

Transitions only work for these RIAs once they’re confident that their clients will be well taken care of and happy. This requires sincere effort to establish a shared set of values with the new firm. A veteran adviser who merged her practice with ours was a fine example of this. Integrating her practice was much like getting engaged and married, then learning how to live together. We laugh about it now, but it took commitment on both our parts to understand each other and be honest in our communication. That meant a tremendous amount of talking about financial as well as non‐financial issues. The outcome has been well worth it for our clients, for her and for the firm.

Reason No. 3: You Resist Losing Control

Of the three, this one is the most subconscious and complex. RIAs say they want to sell or transition. They want to move on to their next chapter, whatever that looks like for them. But it’s rarely that simple.

Independent, fee‐based, registered investment advisers are a special breed. They spend years building their firms and taking extraordinary care of their clients’ wealth. As self‐made individuals, they’re used to being masters of their own universes. They are brilliant at what they do and will sometimes partner up in business if they find the right match of skills sets. Call them mavericks, or specialty acts, or whatever you wish. It’s often a challenge for them to release their old identities and join a new team, especially one that might ask them to embrace different ways of operating.

To transition successfully, advisers must give up control and equity in order to gain freedom, peace of mind and time for the things and people they love most. This is especially true for RIAs who have enjoyed their advisory careers and simply haven’t given much thought to what they’ll do the day after the deal is done.

Consciously designing that next phase is the key to being happy with the entire process. When you’re conscious, it allows you to be confident in your decision-making process. When you’re not, the subconscious issues that are lurking in the background will complicate your plans.

The co‐founders of my firm (who also happen to be my father and older brother) both embraced the idea of an internal transition, and it occurred very intentionally. They ceded decision-making over time while doing what they each enjoyed; for my dad it was stock research and client relations, whereas for my brother it was pursuing a new career. Not all family successions occur so smoothly. This one worked because our values were aligned, and we shared a vision for the business that allowed them to give up control and experience freedom. This ensured the best possible outcome for our clients, for them and for our firm.

What Do the 3 Reasons Mean for You?

Transition is a deeply emotional process, not simply a financial one. If you want to move past the subconscious barriers that can undermine yours, then let your rational mind stay busy with the trade journals, while the rest of you considers the truth of why you’re not moving forward with a deal.

I urge advisers to listen to their hearts as well as their heads in order to do what’s best for both their clients and themselves. Doing so will effectively disarm the three reasons I’ve identified and create a new level of mastery for advisers who are ready to embrace their next chapter.

Ryan Kelly

Ryan Kelly is CEO of Spectrum Asset Management, Inc., an RIA in Newport Beach, California, that is a second-generation family firm. Since 2012, Kelly has successfully led Spectrum’s acquisition of three right-fit independent advisory firms and continues to look for similar opportunities.

 


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Investing on the Brain

The Behavioral InvestorEditor’s note: The following is an excerpt (edited for style) from Daniel Crosby’s The Behavioral Investor. Crosby, Ph.D., will present tomorrow, October 3, from 9 to 10:30 a.m., at FPA Annual Conference. See him in the Grand Ballroom A-D.

Since, Crosby says, we are now entering the “Era of the Behavioral Adviser” it’s important for your clients to understand how behavioral aspects affect their investing. This excerpt will help them—and you—understand a little bit more about that topic.

“I am a brain, Watson. The rest of me is a mere appendage.” – Sir Arthur Conan Doyle, The Adventure of the Mazarin Stone

Thales of Miletus was the founder of the school of natural philosophy, a contemporary of Aristotle and one of the seven sages of ancient Greece. Tasked with inscribing short words of wisdom onto the Temple of Apollo at Delphi, Thales was asked what the hardest and most important task of humanity was, to which he replied, “To know thyself.” He was then asked the inverse and replied that “giving advice” was the thing least profitable to humankind that came very easily. Unfortunately for investors, Wall Street has done a great deal of the latter and very little of the former, sometimes with disastrous consequences. Fortunately for you, we are going to make that right here and now. If knowing oneself is the sine qua non of successful investing, there is perhaps no better place to start than the seat of knowing—the brain.

Old, Hungry and Impatient

“My Very Educated Mother Just Served Us Nine Pizzas.”

“In 1492 Columbus sailed the ocean blue.”

“Thirty days hath September, April, June and November…”

Mnemonics were invented by the ancient Greeks and have been used by students of all ages ever since. Whether they take the form of an acronym (RIP Pluto!), a rhyme or visualization, their longevity is a testament to their usefulness. As we begin our discussion of the brain is it applies to investing, I’d like you to remember three important truths about the brain by visualizing a tweed-clad septuagenarian in line at a steak buffet at 4 p.m. Just like the person you’ve imagined your brain is old, hungry and impatient.

It isn’t entirely fair to say that the brain is old inasmuch as our species is not that old in evolutionary terms, but our brains are certainly old relative to the modern milieu in which we utilize them. As Jason Zweig says in Your Money and Your Brain, “Homo sapiens is less than 200,000 years old. And the human brain has barely grown since then; in 1997 paleoanthropologists discovered a 154,000-year-old Homo sapiens skull in Ethiopia. The brain it once held would have been about 1,450 cubic centimeters in volume…no smaller than the brain of the average person living today.”

Our brains have remained relatively stagnant over the last 150,000 years but the complexity of the world in which they operate has exponentiated. Formal markets like our stock market are just about 400 years old. It would be a gross understatement to say that our mental hardware has not caught up to the times.

Evolutionary vestiges are apparent in the way that modern (wo)man invests even though the reasons for doing so have long since vanished. In ancient times, our ancestors would have stored excess food supplies from the spring and summer to be relied upon in the colder fall and winter months. Oddly enough, it would appear that saving and investing behavior ticks up today in the spring and summer months too, even when controlling for the impact of seasonality, past performance, advertising and liquidity needs. These effects have been observed in the U.S., Canada and even Australia where the seasons are nearly six months out of sync with North America. Although none of the ancient rules of living apply, modern investors inexplicably take risk in the spring and summer to be able to ride out the harsh fall and winter.

One consequence of our old equipment is that the brain can end up doing double duty, with primitive structures tasked with parsing risk and reward now charged with a job foreign to their design. Emotional centers of the brain that helped guide primitive behavior like avoiding attack are now shown by brain scans to be involved in processing information about financial risks. These brain areas are found in mammals the world over and are blunt instruments designed for quick reaction, not precise thinking. Rapid, decisive action may save a squirrel from an owl but it certainly doesn’t help investors. In fact, a large body of research suggests that investors profit most when they do the least.

The fund behemoth Vanguard examined the performance of accounts that had made no changes versus those who had made tweaks. Sure enough, they found that the “no change” condition handily outperformed the tinkerers. Behavioral economist Meir Statman cites research from Sweden showing that the heaviest traders lose 4 percent of their account value each year to trading costs and poor timing and that these results are consistent across the globe. Across 19 major stock exchanges, investors who made frequent changes trailed buy and hold investors by 1.5 percentage points per year.

Perhaps the best-known study on the damaging effects of our brain’s action bias also provides insight into gender-linked tendencies in trading behavior. Terrance Odean and Brad Barber, two of the fathers of behavioral finance, looked at the individual accounts of a large discount broker and found something that surprised them. The men in the study traded 45 percent more than the women, with single men out-trading their female counterparts by an incredible 67 percent. Barber and Odean attributed this greater activity to overconfidence, but whatever its psychological roots, it consistently degraded returns. As a result of overactivity, the average man in the study underperformed the average woman by 1.4 percentage points per year. Worse still, single men lagged single women by 2.3 percent—an incredible drag when compounded over an investment lifetime.

In an effort to understand how the brain processes patience, McClure and colleagues measured the brain activity of participants as they made a series of choices with either immediate or delayed monetary rewards. When the choices involved an immediate reward, the ventral stratum, medial orbitofrontal cortex and medial pre-frontal cortex were all used, parts of the brain implicated in drug addiction and impulsive behavior.

The prospect of an immediate reward provided a flood of dopamine that respondents found hard to resist. Choices among delayed rewards, on the other hand, activated the pre-frontal and parietal cortex, parts of the brain associated with deliberation. The results of the study suggest that our ability to control our short-term impulses toward greed are limited and that we are more or less wired for immediacy; bad news for the informed investor.

Your brain is primed for action, which is great news if you are in a war and awful news if you are fighting to retire. Scariest of all, there seems to be a causal relationship between activity in the emotional centers of our brain and making risky investment decisions. Researchers who evoke strong emotions in their subjects show consistently that their subsequent investment decisions are poorer and riskier.

Adding insult to injury, your brain is not only outdated and impatient, it is also the hungriest part of your body. Like an out-of-date iPhone your brain simultaneously manages to have limited functionality and even worse battery life. Although the brain accounts for just 2 to 3 percent of total body weight, it consumes as much as 25 percent of the body’s energy, even when we are at rest, according to the book Sapiens by Yuval Noah Harari.

As a result of this outsized appetite, your brain is constantly searching for ways to go into “energy saver mode” and not work quite so hard. And while this is a natural and even beautiful manifestation of the body’s harmony it also means that we do a lot of coasting off of the ideas of others and relying on cognitive shortcuts. A vast majority of the time these shortcuts do us no harm—you can drive home from work and barely notice—but they can be profoundly damaging when making investment decisions.

Your brain is a miracle unrivaled by even the most sophisticated technology, but it is a miracle equipped for a different time and place. After millennia of fighting famine, war and pestilence, we now live in a society of greater and greater ease that is increasingly left to fight psychological battles. Obesity will kill more people this year than hunger. Suicide claims more lives annually than war, terrorism and violent crime combined. Your brain is still fighting a war won eons ago and you must steel it for a new battle that rewards patience and consistency over speed and strength.

Daniel Crosby

Educated at Brigham Young and Emory Universities, Dr. Daniel Crosby is apsychologist, behavioral finance expert and asset manager who applies his study of market psychology to everything from financial product design to the creation of behavioral FinTech. In the summer of 2016, Dr. Crosby released his book, The Laws of Wealth, which was subsequently named the best investment book of the year by the Axiom Business Book Awards. His latest book, The Behavioral Investor, is available here.

 


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Diverse Talent Retention Starts in the Hiring Process

Katie Augsburger Episode9Retaining top, talented female and diverse individuals in the financial planning profession starts with the hiring process.

That’s what Katie Augsburger, SHRM-SCP, said on the last episode of Season 1 of the 2050 TrailBlazers podcast with Rianka R. Dorsainvil, CFP®.

While many people are still trying to figure out how to bring in diverse talent, Augsburger said focus on diversifying your own network in attracting them, and then focus on the hiring process in order to better retain them.

“Retention is so critical because we want to keep this good talent that we’re bringing in,” Augsburger said.

Augsburger recommends accomplishing that with the following:

Look honestly at your network, then diversify it. Look at your friends list on Facebook and your connections on LinkedIn and be completely honest with yourself about the demographics. Seventy-five percent of a white person’s network is white, Augsburger said, so chances are if you’re relying on your network to provide recommendations for a job listing you’re about to send out, the candidates are not going to be from a diverse background.

“If your network is all white, you are already a barrier to helping your company becoming more diverse,” Augsburger said.

Really focus on authentically expanding your network to include people of color, LGBTQ individuals and more women, Augsburger suggested.

“That’s the first entry to an organization—who you know,” she said. So get to know more people.

Some ideas? Share your job posting with representatives from Quad-A, Association of Latino Professionals for America, FPA PridePlanners or the CFP Board’s Center for Financial Planning’s WIN Council and Diversity Advisory Group.

This goes for people of color also, Dorsainvil said. Diversify your network if you only ever network with other people of color.

Focus on perfecting your job listing. Diverse individuals know how to find jobs, Augsburger said. We know all about LinkedIn and Indeed. The problem isn’t where you’re posting, it’s likely in how the post is written. Beware of gendered words or words that could be inadvertently turning off women and people of color.

Create a supportive environment for your new female and diverse hires. You have several female planners on staff. Say one of them has a baby and your office isn’t conducive to pumping or nursing. Create a private space where she can pump or nurse her baby. Or if your young professionals can’t afford to live near your office, offer them some flexibility on remote work and hours. For example, don’t expect them to stay in the office until 7 p.m. then schedule a 7 a.m. meeting the following day.

“This is not 1970 where most young professionals lived in the city and could walk to their businesses,” Augsburger said. “Cities are so expensive now that almost all young professionals are having to live outside of those cities, so we are measuring them by a yard stick that is no longer applicable.”

Move beyond training to integrating. Augsburger said oftentimes organizations will hold unconscious bias training and put a few people of color in marketing materials and call their inclusion efforts good.

“It’s really about integrating diversity throughout the organization and it shows up in who is represented in leadership,” Augsburger said. “That is a really great way for people to see visually that you have invested the time and effort.”

That takes time, she added, but for organizations that put time and resources toward that effort, it is worth it.

“There is so much research out there that says and shows, from a data and dollar perspective, that having more women, having more people of color in leadership positions brings cognitive diversity to the leadership and it permeates throughout your entire organization and in effect increases your bottom line,” Dorsainvil said.

Strive for economic diversity as well. It adds an extra element to have planners and staff who didn’t come from wealth.

“We do not have enough economic diversity in our organizations,” Augsburger said. “If you do not have economic diversity in your organizations—people who have not had that lived experience of wealth—you are missing a huge knowledge base.”

Staff who have had different lived experiences economically will bring unique perspectives to the firm and to clients.

There Is No Business Case for Not Having Diversity

Diversity brings about the diversity of thoughts and ideas in your organization. Since studies show the landscape of the United States is changing such that minority groups will continue to grow, it only means positive things for financial planning firms to have planners and staff of color on board.

“People of color are … making up a larger and larger share of the population and if your organization is not reflective of that, then you have no visibility on how best to serve those populations,” Augsburger said. “If you want your organization to be relevant, your organization needs to reflect the communities that they’re serving, and those communities are going to be predominantly a mix of races.”

About the 2050 TrailBlazers Podcast

Dorsainvil began streaming episodes of 2050 TrailBlazers in March 2018. FPA is one of the sponsors of the podcast that is sparking conversation on diversity and inclusion in the financial planning profession and attempting to address issues of recruitment and retention of professionals of color. Season 2 launched earlier this month.

Listen to the podcasts by a previous FPA Diversity Scholarship winner during your commute and check out the show notes for more information about the people and topics covered. Subscribe on iTunes and Google Play or visit the website.

 

 


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Why You Need to Market Irrationally

As a financial planner, you likely work hard to make sure you give your clients the objectively correct answers based on strategic, logical thinking. You probably remind them that acting on emotion is what gets them into financial trouble; that they need to build smart, rational financial and investment plans to keep them on the right track.

In other words, you spend a lot of time trying to think rationally and reasonably. Doing that within financial planning is one thing. When it comes to marketing, however, the rational line of thought won’t get you very far for the very same reason it’s so critical in helping clients reach investment success: people don’t make rational decisions.

The Problem with Trying to Make a Rational Argument in Content Marketing

What motivates people to act—to buy, to hire, to pick one service over another—is not rational. We think we make rational decisions and we’re very good at justifying our behavior as reasonable even when it’s not.

We don’t choose based on what’s objectively “better.” We’re motivated by a number of other factors. But then, when we look back on our choices, we do mental backflips to justify why our decision was logical.

The truth, though, is that we all make decisions based on things like:

  • Our emotions, intuition or how we feel
  • Our beliefs, values and worldviews
  • Our stories—what we tell ourselves about ourselves—and the stories we create about other people

Good marketers are also good amateur psychologists. They understand that what motivates people to act is not necessarily data and facts, but stories. They know that a number of cognitive biases get in the way of people’s ability to make the objectively “best” decision.

And therefore, good marketers don’t try to appeal to reason—and you should follow their example. When it comes to your marketing content, consider appealing to what actually drives our decisions: our emotions, our beliefs and our stories.

How to Market Irrationally to See More Conversions

Deepak Chopra delivered the opening keynote of a conference I attended in Boston recently. He shared something that speaks to this fact, saying, “The best businesses are also the best stories.”

If you’re not telling your story, you’re probably not achieving the real goal of marketing: to communicate the value only you can offer to a specific group of people. If your marketing content isn’t driving conversions or making an impact on the bottom line of your business, then ask yourself: am reciting facts that are easy to find in primary sources, or am I telling stories? Am I appealing to someone through reason, or am I exploring themes that trigger emotions?

To do this and to start “marketing irrationally,” you have to know what motivates other people. And the answer to that depends on the group of people you’re talking to (or your audience). You need to understand how they tick and think; it’s not enough just to know how old someone is or their level of household income.

While that’s also useful information, it doesn’t tell you anything about what keeps someone up at night. It doesn’t explain what’s going on subconsciously, or tell how this group of people may be extremely motivated by status and respect and that group is motivated by entirely different things, like community or contribution.

Get familiar with the most common cognitive biases, too. If you do, you know humans are more motivated by the risk of loss than the promise of gain, for example, so you can create content that appeals to that bias in our thinking. Talking about preventing loss might be even more compelling than explaining how to gain something, but you might not get that if you approach content creation in a rational way.

Here are some other examples of cognitive biases that, if you understand, can help inform the kind of marketing content you create to take advantage of these glitches our brains throw into the decision-making process:

  • Ingroup bias, which causes us to be fearful of others or perceived outsiders—so your marketing content should demonstrate that you are “in” with the group of people you want to serve. How can you show you understand them and that people like them work with people like you?
  • Status quo bias, which makes us naturally adverse to change. Your marketing content should soothe fears about how much change is necessary to do something like hire you or work with you. (Talking a lot about how much life will change, even in a positive way, by working with you can backfire.)
  • Bandwagon effect, which makes us follow the crowd. That’s why social proof needs to play a role in your marketing.

Resources for Better Understanding How Irrational Thinking Impacts Us All

Not sure where to start with all this? I suggest learning a little more about how humans in general tend to think—and how our features of our brains that used to serve important functions (like keeping us safe and alive) now tend to introduce more glitches into the system than they provide value.

Check out some of these resources that can give you a quick but powerful education not just in marketing, but in how people think, and what kind of content really sticks with them:

Books:

Blogs and Videos:

If you dig into these topics to better understand how people think and make decisions, you’ll be able to improve your messaging and better persuade people to respond to your calls to action in your marketing content.

KaliHawlk
 Kali Roberge is the founder of Creative Advisor Marketing, an inbound marketing firm that helps financial advisers grow their businesses by creating compelling content to attract prospects and convert leads. She started CAM to give financial pros the right tools to build trust and connections with their audiences, and loves helping advisers find authentic ways to communicate in a way that resonates with the right people.