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The Value of Vulnerability

Over the past two years, I have had the pleasure of working with a very successful team of financial advisers. As their success has increased so has the amount of advisers that were added to their team. Currently they have nine team members.

Each week we focus on a specific exercise to increase their sales skills that I have designed for their weekly coaching session. The advisers learn the exercise, role play it and I, along with the two principal partners, would critique them. We continue to utilize the same exercise for weeks or even months (if need be) until each team member can do it seamlessly.

During a recent team coaching session, one of the principal partners told the group that they were not making a good connection during their role plays because they were not opening up and sharing their feelings about the subject at hand. In other words, they were not allowing themselves to be vulnerable. He went on to say that the value of vulnerability is that the prospect makes the realization that you have been in their shoes; consequently, in many cases, you are then able to make a connection.

The following is a simplified step-by-step process in finding the value to be vulnerable.

Ask Great Questions: Once you determine that the subject you are talking about is something that is very important to the prospect, it’s time to ask additional questions to uncover how they feel about the subject. Try something as simple as this:

Adviser: “What concerns you most about losing money now that you are retired?”

Uncover the Prospect’s Story and Feelings: At this point, it is important to listen, acknowledge what you heard and ask more questions so you can uncover the prospect’s story and feelings. Here is an example:

Prospect: “Well, I don’t really want to lose anything. In fact, I’m not sure what I would do if I did lose some of my retirement investments.”

Adviser: “I completely understand, but how do you think you’d feel if we had another 2008 and your current portfolio reacted like your portfolio did back then?”

Make a Connection: Next, we need to make a strong connection by talking genuinely about how you feel about the subject.

Prospect: “I would feel sick! I wouldn’t know what to do if I lost 20, 30 or 40 percent of my money. I lost a lot of money back then and it took years to get it back.”

Adviser: “I would feel sick too!”

Get Vulnerable: At this point, you need to explain why you feel this way by telling the prospect what you have experienced in the past. Here is a brief example:

Adviser: “My dad retired in late 2007 and I asked him the same type of question that I asked you about how he would feel if he lost money. He said he wouldn’t be able to handle even a 10 percent loss. Since I knew the market had had a great bull run, I recommended that we get very conservative and reposition a good percentage of his assets into something that wasn’t tethered to the market. We did that and he missed the bear years.”

Ask for the Order: In this example, if the prospect is giving you indications that they can relate by smiling, nodding or agreeing that you did the right thing! Try this close:

Adviser: “We have had a seven-year bull market; how would it help you most if we at least take a look at some alternative strategies so we reduce your risk to the stock market?”

Prospect: “I think that would give me some peace of mind. Let’s do that.”

Why Genuine Vulnerability Works
As the saying goes, “It’s simple but it’s not easy.” The “simple” part is opening up and telling the prospect what you or someone you know has experienced around the subject matter. The “not easy” part is having that topic be something that you genuinely care about. In other words, if it’s not from the heart, you are not going to make a connection. Conversely, genuine vulnerability works because you are discussing something that is important to you and if it’s also important to them then you have the foundation to form that connection.

If you want to learn more about the value of vulnerability, schedule a complimentary 30-minute coaching session with Dan Finley of Advisor Solutions by emailing Melissa Denham, director of client servicing at Melissa@advisorsolutionsinc.com.

Dan FinleyDaniel C. Finley
Advisor Solutions
St. Paul, Minn.

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What We Can Learn from Career-Changer Advisers

Do you know a career-changer adviser or have one on your staff? They bring a certain skillset that many lifelong financial advisers may benefit from.

One individual I know retired from the military and began his career as a financial adviser when he was in his 40s. He was quite comfortable in his role as leader of a growing ensemble firm. He was adept at enhancing efficiency through the use of consistent processes, attending not only to the firm’s top line but also to margin and profitability, delegating to staff, focusing on teamwork, mentoring young advisers and building a culture of camaraderie. These aren’t usually the responsibilities advisers say they excel at; instead, most say they much prefer spending time with their clients than managing the business.

Can we assume, then, that some career-changer advisers are better business managers than financial advisers who have spent their entire careers in this industry?

What Career Changers Bring
There is no actual data to validate my hunch, but if you think about it, there are a few reasons why an adviser who came from the military, engineering, health care or some other industry would find success as a business owner. Let’s look a little closer.

Lifelong financial planners often have no formal business training; after all, you don’t get CE credits for learning how to be better businesspeople. In fact, at conferences, there’s a built-in incentive to go to the sessions offering CE credit and a built-in disincentive for the practice management sessions. Consequently, developing or enhancing leadership and management skills or business acumen in general plays second fiddle.

When an individual starts a second career, however, there is an opportunity for a do over. You get to assess the new industry you are joining and learn best practices to apply from the get-go? (if you had the chance to start your financial planning career over, wouldn’t you do some things differently?) Plus, those who change careers have often learned from their earlier experiences and know how to avoid certain bad habits the second time around.

Of course, career changers are often older and more mature. That maturity may also be accompanied by greater financial stability than a newbie adviser just entering the industry would have. For example, instead of taking on every client to make ends meet, the more established individual can select the clients who best fit his or her niche and how he or she wants to present the firm to the public.

Last, there is something to be said for bringing external knowledge into this industry. That’s probably true for any industry. It’s not a leap to suggest that prior experience leads to increased wisdom.

If This Is True, What Difference Does It Make?
If you have a career changer in your firm, perhaps that individual has insight that could be useful to you as the leader of the firm. If you are considering a career changer as a successor, that individual may possess some valuable skills less commonly found in the financial services industry. Consider also that, as our industry shrinks, perhaps we need to recruit from non-traditional niches.

If it’s logical to assume that career-changer advisers often possess better business management skills, then it follows that financial planners who switch industries might be observed to have exceptional relationships and, of course, financial planning skills. It’s just that financial planners seldom move on to a second career. Why would they, when this one is so gratifying?

Joni Youngwirth_2014 for webJoni Youngwirth
Managing Principal of Practice Management
Commonwealth Financial Network
Waltham, Mass.

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How to Make Buckets Work for You

In light of the recent fiduciary ruling by the Department of Labor, you may be wondering how using a bucket strategy can help you act in your clients’ best interest.

Investment research firm Morningstar defines the bucket approach to retirement planning as a strategy that funds cash-flow needs while the client maintains a diversified portfolio of stocks, bonds and cash. Morningstar offers this helpful video interview with Harold Evensky that further dives into the bucket strategy.

Basically, buckets provide a way for you to ensure that your clients’ short-term income needs are safe from market ups and downs while meeting their long-term growth objectives with market exposure. Buckets provide a way for advisers to create personal plans specific to their clients’ financial goals and needs while helping them understand that plan regardless of their previous financial experience.

Weathering Market Storms
One of the greatest benefits of bucketing is the safety net it casts for when the market inevitably rises and falls. When the market isn’t performing, clients may panic and be inclined to abandon the plan they had previously made for one that will make them feel safe and secure in that moment. Buckets, however, give them a clear picture of their retirement plan down the road. Seeing that they meet their income needs and that their investments will have time to recover from a downturn will help them stick with their bucket plans, which will greatly benefit them down the road.

In addition to bringing peace of mind by providing a visual for their income down the road, buckets provide clients with a steady cash flow in the present. Buckets are a systematic way for a steady income because each year is planned, as opposed to scrambling to liquidate assets so that they have enough money even while the market is struggling. Having that steady, certain income ensures that clients will be able to give great thought to when they sell investments and that ensures that they are selling them at the optimal times. This way, investments are serving at the greatest benefit to bring in the most income.

A Personalized Approach
Bucket strategies can be personalized to each client. Based on their risk profile and financial goals, you and your client can generate strategies with any number of buckets and any lengths of time. The flexibility of buckets even after the plan has been set is an added security because assets and investments can be adjusted, or have time to adjust, while the market weathers its ups and downs.

One of the most traditional methods of retirement income planning, Monte Carlo simulation, does not allow for personalized strategies, and yet, they produce the same rate of returns with the same amount of risk. There is no one-size-fits-all in retirement income planning, and clients forced into such a mold can feel anxious about their funds in retirement. Creating a strategy specific to each client will inspire trust in you and bring them peace of mind knowing that their retirement income plan was created with their unique circumstances and needs in mind.

Seeing is Believing
Bucket strategies can give clients a simple visual. With their personalized strategies, clients will have a better understanding of how their assets and investments will be used during their retirement.

In addition to the simple visual that a bucket strategy offers your clients, buckets create a plan that is easy for clients to understand. They will be able to see exactly where their money is, how it is being invested and how their plan will support them throughout retirement. With this simple, easy-to-understand approach to retirement income planning, clients will be confident in themselves, their finances and, in turn, you.

As your clients approach retirement, it’s important for you to provide them with an income plan that can give them financial security in a volatile market, a simple, understandable approach and a strategy that has been created with their unique needs in mind.

FPA partners with Last Advisor to offer “Bucket Bliss,” a software tool that offers a robust, state-of-the-art financial application designed for advisers to build individual bucket strategies while implementing a comprehensive retirement income plan for their clients. FPA members receive a special rate which can be accessed here.

Madison Taylor
Clearfield, UT
Social Media and Marketing Director
Last Advisor

Editor’s note: A version of this post originally appeared on the Last Advisor blog on August 15, 2016.

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5 Steps to the Agreement Close

Have you ever noticed that one of the most amazing moments is when one of your prospects comes to the conclusion that they want to buy? What a terrific feeling to know that they are in agreement that your recommendations are the solutions to their financial challenges.

At some point in your career you will realize that prospects and clients alike enjoy talking about themselves. And why shouldn’t they? It’s a subject that they are very familiar with. During these moments of revelation, you may make a realization that they have a real challenge and that you have the solution. However, just telling them this is not an effective strategy to making a good connection.

A method that may be helpful to close a sale or secure setting an appointment is one I call “The Agreement Close.” In order to utilize this tactic, you must know the steps to get a prospect to that point by using the following steps:

1. The Prospect’s Key Closing Phrase: One of the most important things to remember when using The Agreement Close is to know when to begin. The prospect will unknowingly tell you when that is by making a statement or using a phrase that indicates they are a little lost, frustrated or unsure about something you know you can help them with. The following is an example:

Prospect: “I’m not really sure how I’m doing with my portfolio.

2. Empathy/ Acknowledgement: At this point, just taking the time to empathize or even acknowledging what they said can go a long way in building a connection because it helps the prospect know that you truly and genuinely understand. Try something as simple as this:

Adviser: “I completely understand; most people don’t know how their portfolio is doing.”

3. Agreement Close: Next, we need to strengthen the connection by agreeing with them. This is a very important step because the prospect will find it very difficult to disagree with you for agreeing with them. The following is an example:

Adviser: “And, that’s exactly why we should get together.”

4. Benefit Statements: At this point, you need to add to the statement above and clarify why you said what you said so that the prospect understands what the benefits are to them. Once you do, they will soon be agreeing with you. Here is a brief example:

Adviser: “You don’t want to realize that you are taking too much risk after the market goes down and you lose a lot of money.”

5. Final Close: All you need to do now is ask for the order. Try this alternative close:

Adviser: “Do you have time to meet Tuesday at 3:00 or Wednesday at 4:00, which time works better for you?”

Prospect: “Tuesday at 3:00.”

Why The Agreement Close Works
The reason why The Agreement Close works is because you are agreeing with the prospect and explaining to them how moving forward with you will help them most. In other words, you are acknowledging their challenge, agreeing that it is a valid challenge and that is exactly why they need your solutions.

To learn more about The Agreement Close, schedule a complimentary 30-minute coaching session with me by emailing Melissa Denham, director of client servicing, at Melissa@advisorsolutionsinc.com.

Dan Finley

Daniel C. Finley
Advisor Solutions
St. Paul, Minn.

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The Value of Time and Experience

I recently visited an adviser whose business had grown very quickly. In a five-year period, he went from one employee to five and his production tripled, easily putting him in the seven-figure range. In comparison with many other advisers with similar businesses, this adviser is 15 years younger, on average and has a commensurate 15 fewer years of industry experience. Listening to his business challenges—especially those having to do with human resources—gave me pause. Did this adviser have more people problems than most or was something else going on?

Getting Better Vs. Getting Used to Things
In considering this young adviser’s situation, I believed one of two things was going on:

  1. He had not yet developed the skills necessary to manage staff, which was actually contributing to his issues.
  2. He had not yet recognized that people issues are an ongoing component of managing a business.

For example, the adviser felt that he needed to revise job descriptions and re-create a compensation system that would more specifically motivate the behaviors he desired. He wanted his employees to take more responsibility for producing error-free work, instead of depending on him to review their work and catch errors. The issue extended beyond his support staff. He had recently brought on a staff CFP® and discovered that the process of guiding and mentoring the young woman required a significant investment of time to help her understand how to apply financial knowledge and theory to clients’ reality. That’s not to mention the time he was spending helping her evolve business development skills. When I asked how much time he was investing in managing the business, he said 50 percent.

But is that really too much? Comparing his story with that of other advisers with similar business scale and capacity, I found that they were far less verbal and seemed less frustrated with their human resource situation. What was particularly thought provoking was that the young adviser had assumed he must be doing something wrong or that there was something wrong with his organizational model.

We’re Never Done
There is no doubt that if we make the effort to improve, we get better over time. We learn how to manage resources—time, money and people—more effectively. What this young adviser had yet to learn was that he was doing just fine as a manager. The reality is that just when we have things lined up to achieve the perfect organization, a lot can change—someone gets sick, leaves for a different job or needs to implement new technology or procedures, which actually causes him or her to be less effective and may even lead to performance issues.

The longer we spend in a leadership position, the more we learn that when things are going well, all we have to do is wait a bit—they’ll change! The good news is that the reverse is also true. When things are not going right from an HR perspective, focusing your attention on the issue can help improve it. The fact of the matter is that we are never done managing our people. And that’s the real value of time and experience.

Joni Youngwirth_2014 for webJoni Youngwirth
Managing Principal of Practice Management
Commonwealth Financial Network
Waltham, Mass.

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Do You Want a Business or a Practice?

Many authors and publications, such as Mark Tibergien, Forbes and FP Transitions’ David Grau, have written about the difference between a practice and a business.

We’ve been privy to the inner workings of many advisory firms so you might find it helpful to see the subject from My Virtual COO’s operations point of view. Our COO top 10 list of differences has helped advisory firm owners restore their business health or more quickly realize they would rather be a practice than a business.

The truth hurts, but here it is: owners with clarity manage a more profitable, enjoyable enterprise and attract the right staff. Owners lacking clarity are losing clients and AUM, quality staff and experiencing declining profit margins.

If you need proof, reach back to Top 100 Firm listings in 2010 and 2011 and compare their ADV statistics to now. Numbers don’t lie.

COO’S Top Ten Differences Between a Business and Practice

  • Practice is the repeated exercise in or performance of an activity or skill so as to acquire or maintain proficiency in it. A business is making one’s living by engaging in commerce
  • A business has systems. A practice does not.
  • A business treats staff and outside providers as one cohesive team. A practice does not.
  • A business works to automate and eliminate work. A practice does not and may even enjoy the busy work.
  • A business continuously improves the client experience to attract more clients with less effort. A practice does not.
  • A business actively monitors sales, gross revenue and net profits. A practice does not.
  • A business owner can take a vacation and the business continues with no slow down. A practice’s owner cannot take a vacation without slowing down business activity.
  • A business has a higher valuation. A practice has a lower valuation and might not have a value at all.
  • A business calibrates the staff as the business evolves. A practice does not.
  • A business continually invests in systems and people. A practice does not.

Clarity Trumps Reality
While our list of differences may seem harsh or full of generalizations, the list comes from our years of experience working with many advisory firms. While we will never share specifics of any firm, we can assure you that we have seen the inner workings of firms that look grand, yet are floundering due to lack of clarity.

Don’t flounder. Don’t scorn those that give you a reality check. Instead, answer this one question with conviction and enjoy the success that clarity brings: what do you want—a business or practice?

Jennifer Goldman


Jennifer Goldman
My Virtual COO
Boston, MA

Editor’s Note: FPA members receive a $500 member discount on a My Virtual COO consulting engagement. You can find more information here


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Embrace Investor Decision-Making Preferences

The respondents to the 2016 Fidelity® Millionaire Outlook Study’s hit the bull’s eye for what most advisers would consider to be ideal client characteristics: entrepreneurs; $1,750,000 in median investable wealth; $125,000 in median income; 62 percent debt free. Although the study’s theme emphasized the worthy goal of making clients loyal advocates (see my Journal of Financial Planning article, “How to Deliver Empathetic Client Service and Gain Client Loyalty”), a significant strategic implication sat unattended.

When clients engage an adviser in this market, they are focused on an advisory relationship that shares decisions instead of the adviser taking the full-on discretionary lead. What’s even more threatening is that self-directed investors (i.e. do-it-yourself) represent the biggest segment.


Advice, Yes; Control, No
There are three important conclusions to make from these segments:

  1. Advice is desired across all segments. Expertise is needed and valued, but the key issue is: where does it come from, an adviser, online or both?
  1. Investor involvement drives the go-forward market. The relationship model wherein a family would turn over their investments on a fully discretionary basis is extinct for all but an adviser’s oldest clients (i.e. the “delegators”). With much at stake, many threats, and still-fresh bad investing memories, investors want to be involved and watchful.
  1. The toughest advice competitor is no adviser. A plurality believes “I can do it better myself,” and this is difficult to argue against in rising markets when combined with many online services encouraging self-sufficiency.

Building Bridges to Joint Decision Making

If 42 percent of the market (“validators with a digital adviser” and “self-directed”) is adviser resistant and 25 percent are mostly locked into existing adviser relationships (“delegators), it seems that “validators with an adviser” is the only segment through which an advisory business can grow. Or, what does this suggest about a firm’s growth prospects if 67 percent of the market is structurally resistant to a fee on AUM model?

Market segments shift, sometimes quite dramatically. For example, the 39 percent “self-directed” may be in a very different mood for help when the next marketing downturn occurs and/or as life becomes more complicated. Or, as the “delegators” transfer wealth, the recipients of that wealth—millennials and gen Xers—will find the prospect of managing a lot of money more complex and the failure risk more daunting.

Any business seeking growth must commit to establishing as many marketing relationships as possible. Flexibility, when market shifts occur, guides business sustainability.

Planting Seeds for Long-Term Sustainability
An integrated marketing program applies the expensive resources—an adviser’s time—to prospective clients in the decision-making mode; what would right now be the “validators with an adviser” segment. Scalable marketing resources (i.e. low cost per relationship) such as website content, webinars, seminars, educational material and editorial outreach are used to seed the other segments for a later harvest.

Here is a marketing game plan to position an adviser for long-term business success.

Be an Expert Resource. Few “self-directed” investors are wealth planning and investment experts. Instead, these investors search out expertise and, upon acquiring sufficient knowledge, act upon it themselves.

Distribute educational material via the firm’s website, centers of influence, local gatherings and local publications. Tip: A well-designed and written document carries gravitas and promotes itself; consider an advice subscription service.

Price Services for Involvement. Even with a desire for self-sufficiency, there are certain topics too complicated, time consuming and/or important for surface-level learning.

Be willing to engage in short-term projects by offering a one-time consulting fee for complex planning or second opinions; at a minimum, the adviser is able to demonstrate capabilities that can turn into a referral source.

Tip: Illustrate the dollar benefits received not just the project fee in the proposal, and show the ramifications if self-directed execution were to fail (see my blog “Clients Buy Benefits not Features”).

Distribute Advice through Technology. Call it what you want, but technology-delivered advice is happening and the market wants it.

Commit to a robo solution that provides for an adviser’s advice and investment choices in portfolio design (i.e. don’t outsource investment advice, an adviser’s core differentiation). Tip: Minimize business risks by using robo offerings with low breakeven costs.

Listen to the Market and Respond
Sustainable businesses adapt to a market’s dynamics. For high net worth investors, the shared and independent decision-making models are currently the preferred engagement methods. An advisory firm able to generate revenue from these segments—even if it means doing things differently—gains long-term sustainability.

Kirk LouryKirk Loury
Wealth Planning Consulting Inc.
Princeton Junction, New Jersey