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Business Mediocrity or Business Mindset?

In true entrepreneurial fashion, most financial advisers excel at the technical side of their business, financial planning and investment management and other areas. Yet, there still exists a bastion of mediocrity where excellence has yet to take hold in the financial profession: running a business.

In my experience, there are two kinds of advisers: the “great business owner” (GBO) and the “great financial adviser” (GFA). Too many advisers, including successful ones, are leaving opportunity—in income and lifestyle—on the table as a result.

Engaged team members need to know how they influence the success of the business. (1)When speaking, the hallway conversations are dominated by common culprits: creating and managing growth, existing in the operational equivalent of Groundhog Day (same issues repeated with no real resolution), frustration with financial results (common among advisers with the highest incomes), a lack of time to do what needs to be done, reactive client service, poor scalability, staffing challenges, a desire for a better quality of life and a burning desire to “get it right” because the potential for what could be is so great if only these challenges could be overcome.

The greatest obstacle I see to advisers running more successful practices is their business mindset. For all practical purposes, you are the CEO of your practice (or your client base if you work for a firm). Whether you are a solo or two-person practice, or a partner in a larger firm, your mindset determines your level of business mastery.

Many advisers don’t have the time, talent or temperament to develop a business owner mindset on their own, so it is no surprise that intentions are better than execution when it comes to running a firm. This begs the question, what can advisers who wish to be GBOs as well as GFAs do to develop a business mastermind? Here are some simple steps to get you started on the process:

  • Mapping: You must be able to clarify and define your vision in order to achieve it. Defining a clear vision of your ideal firm and experience (running your firm or working in one) is an essential step in achieving your desired outcome. This is as true for strategic issues (e.g., double in the next three years, grow through acquisition) as it is for tactical ones (e.g., have a service model that delivers value and profits, develop a path to partnership). It’s not just about goals, it’s about mapping the path between your current practice, income and lifestyle and the one you want to create.
  • Mindset: Neuroscience and performance psychology have concluded that success is 80 percent mindset, with environment and skills contributing the remaining 20 percent. If you keep plugging away trying to improve your situation and find yourself facing persistent and seemingly invisible forces, mindset is likely involved. Einstein said, “No problem can be solved with the same consciousness that created it.” With the right mindset, you start to think like a business owner, then then act like a business owner. The results will follow.
  • Methods: How you run your practice day-to-day, the strategies you engage, your decision-making process, plus the tools and techniques you use to address client services, sales and marketing, staff management, operations, analyzing capacity and profitability, systems to ensure a seamless client experience, (and many more) are essential to running an efficient, profitable and satisfying practice. Best practices aren’t the driver of success, but they are the high-octane fuel in the car that helps you reach your destination. A good idea poorly implemented is no better than no idea.

Having a business mindset isn’t intuitive to many advisers, but the information and insights gleaned by challenging and expanding your mindset has the ability to expand your success in ways that empower you to achieve greater levels of focus, fun, freedom and financial success in your firm.

You had a vision for your practice when you began and, regardless your levels of success and satisfaction, the odds are that you have a bigger, better one percolating in your mind. The question is, are you prepared to expand your business mindset in order to radically expand your success?

Stephanie Bogan

Stephanie Bogan is a nationally recognized CEO Coach and Business Consultant with 20 years coaching financial advisers and institutions. The founder of Quantuvis Consulting (sold to Fortune 200), in 2017 she launched her new firm, Educe Inc. To learn more or inquire about speaking, email learnmore@educeinc.com. Bogan is also a coach of the “Financial Planner’s Mindset” Coaches Corner from the Financial Planning Association.

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Do Labels Contribute to Ageism?

I recently experienced an eye-opening moment at a seminar about a common yet perplexing issue facing many firms today: how can multiple generations successfully work together? The big eye-opener came when the facilitator introduced a few familiar terms—the Silent Generation, baby boomers, Gen X, millennials and the emerging Gen Z—and the words were met by resounding resistance. None of the participants wanted to use the age-related labels in the exercise.

But why? These words are used all the time as we work to figure out how to deal with one another and our differences, as employees in the workplace and as business owners trying to reach potential customers in the marketplace. Yet the seminar participants were adamant about not using labels that, in their view, led to ageism.

This was a surprise to me. Using such words has helped me organize information in my head and in my work. The tension between generations in advisers’ offices can be palpable, and it’s become particularly divisive over the past few years. A new set of advisers has started to settle in while more tenured advisers are continuing to work through some of their most productive years. Each group has its preferred way of working as well as expectations about how the other group should operate. Productivity and even firm growth can be hampered when different generations can’t find a way to work well together—or make wrongheaded assumptions about others just because of their age.

The labels, however, are hard to escape. The day after the seminar, I was working with an internal group at my firm to pull together a white paper on what future clients will want from their financial adviser. One of the first steps is researching what has been written about the topic. Every report I came across used those same age-related words to sort the data. As I continue working on this project, I still find the labels more useful than not, and I’m clearly not the only one. If I have been contributing to ageism by using all the labels, so has everyone else in our industry.

Focusing on the Individual

I like to think we all know that words like millennials, Gen-Xers and baby boomers broadly define the characteristics of a group but don’t automatically apply to everyone within it. But are we abiding by this understanding?

In some instances, maybe the distinction isn’t clear. When it comes to ageism, perhaps we have gone overboard in stereotypes. Perhaps we take the words too seriously. Perhaps we forget that an individual is an individual. I’ve certainly heard a number of people assume every millennial needs a trophy or every boomer is overly slow in adopting new technology.

At this point, I’m deeply sunk in an “aha” moment. Some of the conflict between generations may well come from assumptions that stem from stereotypes. That said, I’m not sure how else to go about studying the needs of future clients without the use of labels. The labels are a starting point to understanding where buckets of certain people are in their financial and personal lives, what their needs are and how advisers can help them. It’s a way to begin to reach out to those people and attract them to your practice. It’s then when you can get to know them better, at the individual level.

Perhaps one way to overcome the label issue is to focus on the characteristics of a certain age group and drop the negative connotations that come with a particular term. Looking at “those born between 1946 and 1964” results in the same information as using the label “baby boomer.”

Whatever terminology you use, let’s all remember to let someone be an individual first and foremost. And perhaps our industry should step back and ask if we are contributing to ageism.

Joni Youngwirth_2014 for web

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


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The 3 Real Secrets to Content Marketing Success

Good content marketing boils down to a simple, repeatable process: create the right message for the right people and deliver it to them at the right time. Then do it again, and again, and again.

It’s pretty straightforward; no growth hacks required. If you take this tried and true method, apply the tactics from that method to your situation, and do the work, you’ll succeed.

Success with content marketing actually looks very similar to success with personal finance.  Think about what your clients need from you to get to baseline financial success: they need nail the fundamentals, make smart choices day-to-day, get the really big decisions right and consistently take the actions required over time.

You need to do the same when it comes to your marketing.

You know that basic financial planning isn’t rocket science. Neither is content marketing. It’s the simple steps that add up to massive success over time. So are there really any secret marketing strategies or tactics that you can use?

Kind of. But they’re not what you might expect. These are the three real secrets to content marketing success that you need to know.

No. 1: Quality

At this stage in the game, quality content is more like table stakes than a trade secret—but judging by how many businesses think they can throw out quickly produced, low-value, poor-quality content, I don’t think the word has gotten out yet.

Let me be clear: if you’re not going to invest the time and effort into producing what you feel like is the best article on a particular subject available on the web, think hard before proceeding. Obviously, you won’t be able to devote an entire workweek to a single blog post (although content-driven sites like Sumo easily devote 10 to 40 hours to every blog post). But you can put in a few hours to create some high value articles, podcasts and videos each week.

And if you’re sitting there going, “No, I really can’t; I don’t have the time,” then that better mean you are so covered up in essential and necessary client work or revenue-generating activities that it’s time to outsource and hire someone who can do your content marketing for you.

Otherwise, you may feel pressed for time—but you can make time by increasing productivity, eliminating time sucks and working smarter.

No. 2: Efficiency

That leads us to secret No. 2: you must work efficiently if you’re going to get good at the content marketing game. There are no shortcuts here. Content marketing takes work. You need to put in that effort (or, again, find someone who can help you) if you want to succeed.

You need systems and processes in place, and you should look to automate what you can. Here’s a simple example of one that you could implement to make your content marketing tasks more effective and efficient:

Sample Content Creation Process

  • Create a blog post that people want to read
  • Publish and share on social media
  • Create additional, standalone social media posts by pulling out snippets (sentences or paragraphs) to publish as posts on various platforms
  • Promote the blog post to your email list
  • Turn a section of the blog post into a standalone email campaign
  • Choose one section of the existing blog post and expand it to create a new post or article to send to a third-party publication where you have a byline

Using this process, you can spin a number of content pieces from a single idea and post. That first post may take you two to three hours to write, but the subsequent content should be much easier and faster to create since you’re not writing from scratch.

When it comes to automation, you can:

Create an automated drip campaign to nurture leads in your email marketing system.

Use tools like social media scheduler Edgar to consistently publish evergreen content.

IFTTT is another tool that you can use to automate tasks. You can identify a number of triggers that should signal an action and IFTTT automates these activities. Set up and run paid ad campaigns via Adwords or search to drive traffic to a specific, optimized landing page and capture lead info (that you can then use your automated email campaigns on to handle follow-up).

If you have some basic workflows, systems and processes in place and still feel like you don’t have enough time to handle your content marketing, it’s time to do one of two things: find ways to work smarter and be more productive or outsource.

Here’s what I do to work more efficiently and eliminate time-wasters:

  • Do a quick audit of how you spent the last week. Where were you wasting time? What did you do that wasn’t actual productive work, that you can cut moving forward? How could you schedule the upcoming week better to work more efficiently? Note that you can’t accurately audit your time if you’re not tracking it—so start using a time tracker if you don’t already.
  • Identify your procrastination habits. Is there a pattern or a trigger that causes you to put off work? Look for that and see how you can change it, prevent it or work around it in the future so you can get more done in less time.
  • Get ruthless with your meeting time. I get that you need meet with clients—but anything that is not an essential meeting, get it off the calendar. It can usually go through email, which is more efficient if you handle email during your less-productive work times. Which leads me to:
  • Schedule your tasks appropriately throughout the day. Most of us need to do highly creative or analytical work in the morning. When that mid-afternoon slump hits, take care of more rote or less mentally taxing tasks like emails and admin work. Schedule your work days around your mental and creative energy.
  • Batch like tasks together, and do them together in blocks. Stop multi-tasking and context-switching.

If you still feel like you just absolutely positively do not have the time to deal with marketing, that should mean you are so covered up by essential, revenue-generating work that it’s time to outsource some of your workload so you can continue to grow and scale.

No 3: Consistency

Just like the world’s best financial advice is useless without action, your content marketing is equally unproductive if you have great quality that you can produce efficiently but fail to do so consistently.

People ask me all the time, “How often should I post on my blog or social media accounts? How many emails per month should I send to my list?” The answer is, “However many pieces of content you can commit to creating, publishing and sharing on a regular basis.”

Frequency doesn’t matter nearly as much as consistency does. What do you know you can do every week? Every month? Start with what you feel confident in doing, even if it’s just one blog post per month or three posts per week on Facebook.

Here’s what I tend to suggest as a bare minimum starting point if you want to see results from your content marketing efforts:

  • Blogs: Post every other week, or twice a month.
  • Social media: This depends on the network, but two to three times per week on LinkedIn and Facebook are good places to start. Make sure you post on the days when your audience is most active/when you have the largest percentage of your audience on the platform (which you can learn through the insights in your account).
  • Twitter: Twitter is the one exception to my “consistency over frequency” recommendation. I recommend posting to Twitter as frequently as you can because it’s so fast-paced and the half-life of a tweet is something like a few minutes—that’s it. Because it’s so frantic, posting as often as you can is going to get you the best result. But at a minimum, I recommend one to two tweets per day (which you can write and schedule ahead of time using something like Hootsuite or Buffer).
  • Email marketing: Touch base with your list at least twice a month. You can tie this to your blog post publishing schedule if it helps; you can send your list an email every time you publish a new post to share it with them. When it comes to clients, you need to be sending them communications (outside your personalized interactions and meetings) at least once month.

You can always ramp up from there and increase frequency if you realize you can keep up with a more demanding content schedule.

If you can start working these “secrets” to content marketing, you’ll likely see more success from your efforts. Remember, it’s not about any kind of fancy footwork or complicated, special strategy or tactic. It’s about nailing the fundamentals, working smart and sticking to your plan over time.

KaliHawlk
 Kali Hawlk 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.

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Just Get Out There and Do It: 4 Steps to Take Action

Years ago, a financial planner called concerned about his business saying, “I read all of the business books I can but nothing happens.”

When I asked why he thought this occurred, he quickly admitted it was because he did not have a plan to apply and support anything he read about that he wanted to incorporate; he wasn’t taking action.

Dale Carnegie said it best when he said, “Learning is an active process. We learn by doing. Only knowledge that is used sticks in your mind.” Unfortunately, the aforementioned planner didn’t use the knowledge that he had read about despite best intentions and simply went on with business as usual.

So how can you most efficiently apply what you learn and just get out there and do it? Here’s how: create your action process with detailed steps.

One of the saddest things I hear planners say is, “I know what I need to do, I just need to do it.” The reason they haven’t taken action is because they haven’t created a process for doing so and unless they do no real change will ever take place.

Let’s take a look at a step-by-step approach to taking action.

Step 1: Understand the New Process

You need to thoroughly map out any new process so that you know exactly what you need to do to implement it with the end in mind.

Take Robert T. for example, a veteran financial planner with 20 years of experience who unfortunately had become complacent in his business and needed to start prospecting again. As I coached him though a step-by-step process for turning strangers into clients we realized that he had a clog in his pipeline, he wasn’t closing. So, we worked on a sub-step that I refer to as “the psychology of closing the second appointment” and I introduced him to a tool I call “The Second Appointment Template Worksheet” so he could fully understand how to help prospects realize what they needed rather than trying to sell to them.

Step 2: Create a Deadline Driven Time Horizon to Begin

The next step is to make sure that you quickly take action by giving yourself a time horizon so that you have a deadline to begin and another to finish.

For Robert that due date was immediate since he had a big appointment coming up in which he could be gathering a million in new assets if all went as planned. Thus, I had him fill out the worksheet before our next session and we role played it.

Step 3: Put Your Plan into Action

Once you understand your process and create a deadline the next step is to put your plan into action.

Since Robert knew when his appointment was and had already role played it with me, he felt confident about the process. The extra preparation paid off because he effortlessly helped the prospect understand what he needed and why he should buy and turned the prospect into a client, gathering a million in new assets.

Step 4: Evaluate Your Process to Learn from It

One of the most difficult things for any planner to do is to admit they have challenges. However, once you do and are open to implementing solutions all that is left is to learn from successes as well as failures.

Robert learned that the process works. So much so that he used the tools mentioned above and has now (as of this writing) duplicated his success four times.

The Right Action Alleviates Anxiety

If you can relate to the anxiety that Robert was feeling when he realized that he was having a challenge with not closing the prospect, you aren’t alone. Most planners experience anxiety at some point in their business. The best solution is to take the steps to determine what to do, just do it and then evaluate how you did.

If you would like any of the tools mentioned in this piece, request them for free from our Melissa Denham, our 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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Helping Your Clients Unleash the Power of Discipline

When I was the editor of the Center for Financial Insight investor education blog, we received enough wonderful questions from investors and ideas from planners that it’s difficult to remember them all. One that has always stuck with me, however, is “If you only had time to offer a novice saver or investor a single tip, what would it be?”

It’s a great question, and given the sheer volume of content out there for investors to consume and the many intricacies involved in saving and investing, a tricky one to answer. In my opinion, if you strip away all the ancillary layers and pieces, the ability to put away money now to use at some point in the future is a matter of discipline. Foundational concept though it may be, attaining the level of discipline required to save enough money to buy a new car, much less live 30+ years in retirement, can be extremely difficult.

In this article, I want to shed some light on the concept of discipline, in the hope that you can use the content to help your clients take important steps toward executing a savings plan, or to do their part to ramp up their efforts in meeting their most important financial goals.

Discipline is a Learned Behavior

One of the fundamental learnings of behavioral finance is that our brains do their best to make it difficult for us to save money. Our brains are so hardwired to help us stay alive in the present, that we are actually unable to see ourselves as any older than we are in the present moment (without the help of computer software). In fact, according to research in the latest issue of the Journal of Financial Planning, some people see their older selves as entirely different people.

The next time you have a dream about the future, you may notice that, while your brain will age all of the other participants in the dream, you will still look exactly the same. So how important is the psychological connection to our future self in terms of our propensity to save?

An academic study completed in 2011 for the National Institutes of Health tested the difference in hypothetical retirement allocations between participants who viewed only an image of their current self and those who were exposed to an age-progressed avatar of their future self. The results were astonishing, as those participants who viewed their future avatars in virtual reality allocated more than twice as much money toward the retirement account than those who were not.

One quote from the study effectively sums up the psychological phenomenon, termed temporal discounting: “To those estranged from their future selves, saving is like a choice between spending money today or giving it to a stranger years from now.”

I think the data from the study is the best representation of what we’re really up against. Because our brains are actively trying to hinder our progress, the discipline required to take money away from our current selves to provide it to a “stranger from the future” will be a constant struggle and the polar opposite of an innate behavior. Success in attaining this discipline, it seems, will be the product of a lifetime of learning.

So How Does This Help Your Clients?

First, it lets us know that, while some people may naturally be better at putting money away than others, it’s not because those people are genetically predisposed to be “savers.” On the other side of the coin, we cannot say that we have lost the genetic lottery in terms of discipline. Knowing that we are all on a level playing field when it comes to our brain’s assessment of the future puts the onus directly on each of us to teach ourselves to save.

Second, the fact that discipline is a learned behavior provides us with a valuable frame of reference. Your clients likely have one or more areas of their lives that they have already conquered using discipline. Whether it’s making themselves get up and go for a run every morning, eating a protein bar instead of a doughnut for breakfast or studying toward a certification or degree instead of watching Game of Thrones, they know what it takes to harness their willpower, and saving money is no different.

Finally, I have found that, psychologically, it makes a positive difference when you can distill different areas of something extremely complex like the investment world down to a relatively simplistic idea or routine. It’s easy to become overwhelmed with the glut of content out there, and the ever-increasing amount of tips, tricks and things investors and savers “need to know” about the next big investing product or strategy.

I find it to be a welcome breath of fresh air to be able to focus on something that you can control, and I believe your clients will as well.

Discipline is Different for Everyone—Your Clients Need to Make It Their Own

Discipline means different things to different people, depending on context and a variety of different factors. For those who have children, it likely often means “time out” or another type of punishment for wrongdoing. For those in the military, it may mean a life-long commitment to training that develops self-control, character and efficiency (i.e., being able to “bounce a quarter off that bunk”). For those working in a hazardous environment, such as a nuclear power plant or an oil rig, adherence to discipline and routine could mean the difference between life and death. The point being, there is no “right” way to institute discipline across the board, especially when it comes to anything that requires a large amount of self-discipline.

Thus, in the context of saving, it’s very important for clients to understand the type of discipline to which they best respond. Otherwise, the prospect of beginning to put money away may be so unsavory that they never start in the first place. To begin thinking about the discipline style that might work for each client, helping them answer the following question can be a good place to start: “Using recent life experiences as examples, are you an individual who performs more effectively under the potential for reward or the possibility of punishment?”

This question was an easy one for me, as I am a reward man through and through. I get up in the morning to go to the gym primarily because I will compensate myself with a dessert later that evening. During hockey season, when I get home from work, I do all of my chores right away, as I will then deserve the gift of watching the game that evening.

Would I eat dessert and watch the hockey game anyway? Possibly, but I have taught myself to look at these luxuries as rewards based on certain triggers, and as a result, I consistently feel a sense of accomplishment and happiness when the pattern is completed. My reward scenarios are both good examples of classical conditioning; to cite a more ubiquitous example, one only needs to look to Ivan Pavlov and his research on salivation using his now-famous canines.

In his study, Pavlov set out to provoke a conditioned response to a previously neutral stimulus which, in his case, was a metronome (a device that produces regular, metrical ticks, often used by musicians to keep time). Pavlov would expose his dogs to the ticking metronome, then present food to the animals immediately afterward, with the result that the dogs began salivating when hearing the metronome in the expectation of food. Thus, the neutral stimulus (the metronome) became a conditioned stimulus, with a conditioned response (salivation).

Pavlov’s experiment provides us with another useful tenet of behavioral psychology, and the basis for a way to manufacture discipline in the context of saving. If you can build in a reward for putting money away on a weekly or monthly basis, even in small increments, it may be possible to condition yourself to begin treating the saving as a routine (as you likely already do in other areas of your life).

If your clients are on the opposite side of the spectrum, and they know that they will be more likely to make headway under the threat of punishment, there is actually a scientific basis for their behavioral model as well.

The idea was first introduced by behaviorist B.F. Skinner as part of his theory of operant conditioning, which is a method of learning in which we associate a certain behavior with a certain consequence. As part of the theory, Skinner split punishment into two different types: positive punishment, which introduces an averse stimulus after a certain behavior (i.e., your boss lectures you after sending an email with errors to a client), and negative punishment, which involves taking away a desirable stimulus after a behavior has occurred.

For your clients’ part, they just need to decide which one works for them, or if a combination of the two might be best. In the context of saving, an example of negative punishment might be to punish themselves for not putting away the required monthly amount by choosing to forgo a luxury purchase (i.e., new shoes they don’t really need, tickets to the baseball game, etc.).

In terms of positive punishment, they might print out a piece of paper with their savings shortfall displayed in large font, and put it up on their refrigerator for a few weeks to help them remember to hit their goal in the next month.

Final Thoughts

If attaining discipline in every aspect of our lives was easy, then we would all be in professional athlete-level-shape and every one of us would retire with millions of dollars in our coffers. Your clients who are already doing well saving deserve congratulations, as it’s far from easy to begin and even more difficult to sustain. It may help to let struggling clients know that, once they get started in earnest, it will be much easier to keep going, and not to worry if they only save small increments at the beginning.

Every little bit helps, and even making small adjustments and adding seemingly minor items to their routines can help clients attain a level of discipline. For example, if they’re not already automating deposits into a savings account, it’s one of the easiest ways to manufacture discipline (as you rarely miss the money in your daily budget, especially when creating an automated savings strategy after a raise, promotion or other recurring windfall).

If they aren’t willing or ready to automate their saving strategy, phone or tablet reminders can be a great way to stay on top of their plan, especially if they are making one transfer per week or month. I would also urge you to help clients avoid ruling out a good, old-fashioned pen on paper reminder on the fridge or under their phone on the nightstand. According to a 2014 study, students who took and had a chance to review longhand notes actually scored better on tests than those who took notes and reviewed them on a laptop.

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Dan Martin is the Director of Marketing for the Financial Planning Association, the principal professional organization for CERTIFIED FINANCIAL PLANNERTM (CFP®) professionals, educators, financial services professionals and students who seek advancement in a growing, dynamic profession. You can follow Dan on Twitter at @DanW_Martin and on LinkedIn at www.linkedin.com/in/danmartinmarketing.

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Brushing Up on Behavioral Finance Basics

When losing weight, it’s helpful  to weigh yourself every day and to keep a food diary. If you have a tracker like Fitbit and its Aria smart scale, you can track your weight data on the Fitbit app. You observe weight trends and your journal can inform you of what emotions trigger overeating. Also tracking what you eat informs you of what foods cause spikes in your weight and which are good for weight loss.

It might seem elementary to liken weight loss to investment performance, but they are similar for a myriad of reasons. The most important of which being that people are innately bad at both losing weight and investing on their own. They do best with support—whether it’s a personal trainer and nutritionist or a financial planner.

“Getting healthy is a lot like investing—it is incredibly easy in theory and very difficult in reality because we are constantly getting barraged with emotional biases that tempt us to do things that are against our best interests,” Cullen Roche wrote in the MarketWatch article titled, “Why You Should Think of Investment Managers as Personal Trainers.”

In light of the recent market correction, and with experts projecting increased volatility for the rest of the year due partly to the Fed raising interest rates, it might be a good idea to brush up on some behavioral finance basics that can help your clients stay financially fit and mitigate their impulses to make bad choices.

Start the conversations about volatility now, suggests Investment Executive in an article “Preparing Your Clients for a Bear Market.”

Have clients keep a journal. In losing weight, support groups oftentimes encourage you to keep a journal of your feelings to see what triggers overeating. An article in USA Today, “What Investors Can Learn from the Stock Market” recommends this tactic. Recommend clients keep a journal of what they were feeling and thinking during various portfolio changes, which over time, can help identify triggers for bad investment decisions or impulses.

The USA Today article also recommended having clients stay away from the news. You’d have thought that the recent market correction was a full-on recession by the way some cable news networks reported it. Sometimes ignorance is bliss, and during a downturn could be one of those times.

Investment Executive suggests being transparent with your clients and helping them understand your strategies and processes so they can remain confident that you will help them through downturns.

Lastly, have clients focus on the facts, USA Today reports.

“I’m a big fan of facts and data,” Brad Bernstein, senior vice president of wealth management at UBS told USA Today. “It’s a great time to remind clients about market history. And that corrections are normal.”

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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. Join FPA during its SPRING MEMBERSHIP DRIVE. Save $200 by 5/31 by using promo code MAY18 at JoinFPA.org. 

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Heed Your Own Advice: Plan

Research released yesterday from the Financial Planning Association and Janus Henderson titled, “The Succession Challenge 2018: Why Financial Advisers Are Failing to Plan for the Inevitable,” showed that financial advisers aren’t doing all the things they’re telling their clients to do when it comes to succession planning.

The research found that the number of financial advisers who reported having a formal succession plan in place has actually decreased from 28 percent in 2015 to 27 percent in 2017.

The research brought to light some reasons behind why advisers aren’t planning properly and also some interesting findings on how advisers in big firms differ in their succession planning from advisers in smaller firms.

Why The Lack of Planning?

There are several reasons why advisers are reluctant to plan for the next stage, the research found. Here are the top areas that presented the biggest challenges to succession planning:

Strategic. Fifty-one percent of planners said the biggest challenge was finding the appropriate successor or partner.

Michael Futterman, assistant vice president of Janus Henderson Labs professional development team, said this was a surprising aspect of the research findings—that advisers were not focusing on valuation but on finding the right successor.

“While valuation remains an important aspect of succession planning, it’s a math equation,” Futterman said. “The more challenging question of who [is the right successor] is one that cannot be answered with math.”

Personal. Twenty-two percent of advisers said personal concerns were an issue. This could be because it’s not easy facing retirement. Maybe planners are scared or don’t know what they want to do in retirement. Maybe they’re concerned about their health, or that they’ll be antsy and restless.

“While finding a successor is clearly an important challenge, the data suggests that personal challenges play a big role for advisers when thinking about the future,” the research report said.

Structural. Fifteen percent of advisers said they weren’t planning for business succession because of reasons like structuring the business to maximize value, the research found.

Mechanical. Twelve percent of advisers said the mechanics of developing and executing a succession plan was their biggest challenge.

Bigger Firms Plan Better than Smaller Firms

The research found that 60 percent of advisers in firms that have $500 million or more in assets under management had a formal succession plan in place.

“I think that these advisers have grown because they see their business as a business—and they treat it accordingly—or at least in greater percentages than those that might not have been successful, Futterman said. “They are interested in leaving a legacy and providing support for clients.”

However, only 13 percent of advisers in firms with less than $50 million in assets under management has a formal succession plan in place.

“The smaller adviser is likely struggling and does not see a horizon where succession planning is important or imminent,” Futterman said.

Just Do It

It all boils down to this: you simply need to start planning, no matter what type of challenge you’re facing and no matter whether you work at a large or small firm.

“Plan early, often and with options in mind should your circumstances change,” Futterman said. “If you don’t take control then someone else or something else will.”

Editor’s note: Download the Janus Henderson Investors and FPA research here. If you’re looking for additional resources to help you with succession planning? Click here for more from Janus Henderson Investors. Also, Michael Futterman will present an FPA webinar titled “The Succession Challenge: Why Advisers are Failing to Plan for the Inevitable” at 2 p.m., EST on May 30. Register for that webinar here. Stay tuned to FPA’s Research and Practice Institute for two white papers diving deeper into the research findings in June and July.

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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.