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These Tips Can Help Advisers Attract—and Keep—High Net Worth Clients

By Robert Powell, MarketWatch.com

For many advisers, high net worth individuals or households — those with more than $1 million in investible assets — are a kind of Holy Grail.

The reasons are clear. HWNIs, which represent just 0.7 percent of the world’s adult population but own 45.2 percent of the wealth, are good for business. They’re highly profitable and loyal, according to Rebecca Li-Huang, a wealth adviser at HSBC, who wrote a chapter in the June 2017 book Financial Behavior: Players, Services, Products, and Markets.

Consider: An adviser can earn one-half of 1 percent of assets under management on a $10 million account, say $50,000 a year. By contrast, the very same adviser would earn only $1,000 a year on a $100,000 account. For financial advisers, the attraction should be obvious.

But there’s more to the story, and advisers should get to know the psychology of HNWIs before taking them on as clients. Just like regular folks, Li-Huang wrote, they are prone to behavioral biases and judgment errors, not perfectly rational, utility-maximizing, unemotional homo economicus.

In short, wrote Li-Huang, they are humans. And in the U.S., according to Li-Huang, they often share a particular way of thinking about what they want from their money that financial advisers should consider when trying to serve them.

American HNWIs like to direct their investment according to their personal beliefs and values, and they play a large role in public life through philanthropy and politics, according to Li-Huang. And many want to leave a legacy by giving back to society while generating a financial return on their investments.

“The holistic returns on cultural, environmental, social, and political causes are gaining importance in wealth management,” wrote Li-Huang. “The trend toward helping HNWIs address their personal aspirations and social-impact needs is part of a broader wealth management industry transition toward giving holistic wealth advice.”

Focus on goals while mitigating stress

How can advisers do that? For starters, according to Li-Huang, advisers can focus on goals-based financial planning, holistic wealth management, and services that address investments, lending, tax and estate planning, insurance, philanthropy, and succession planning.

With goals-based planning, wrote Li-Huang, success is measured by how clients are progressing toward their personalized goals rather than against a benchmark index such as the S&P 500 stock index. (Publicly traded securities don’t necessarily contribute that much to a HNWI’s wealth, notes Li-Huang, as just one in eight millionaires say equities were an important factor in their economic success.)

Still, she argues, HNWIs do need to invest in diversified markets and use tax-efficient strategies. And advisers can add value by “mitigating psychological costs, such as reducing anxiety rather than improving investment performance” and by focusing on financial planning and advice on savings and asset allocation.

Li-Huang cited research that suggests that investors don’t necessarily want the best risk-adjusted returns but, rather, the best returns they can achieve for the level of stress they have to experience, or what some call anxiety-adjusted returns.

In the cast of HNWIs, they tend to practice something called “emotional inoculation.” They outsource the part of the investment decision-making that induces stress, according to Li-Huang.

HNWIs are especially looking to their wealth manager for help with philanthropy. They are looking for “support and advice, such as setting goals and defining their personal role in their areas of interest, identifying and structuring investments, and measuring outcomes of their social impact efforts,” she wrote.

Given that advisers need to provide their HNWI clients with tax and philanthropy specialists.

In advisers they trust

When HNWIs consider selecting an adviser, they tend to focus more on honesty and trustworthiness than past investment performance or standard professional credentials, according to Li-Huang.

That’s not to say that professional credentials and competence don’t matter — they do — but, rather, that they are not sufficient in and of themselves, according to Li-Huang.

HNWIs — who tend to have less time and resources for due diligence than typical clients of financial advisers — use something called “trust heuristics” when searching for an adviser with whom to work.

In other words, they’re even more likely to assume that the category leaders are among the best in a highly regulated world even as they hold advisers referred by family members, friends and acquaintances in high regard, according to Li-Huang.

Consequently, perhaps, HNWIs tend to trust their advisers much more than less wealthy retail investor trust their financial advisers.

So, what is trust to a HNWI? According to Li-Huang, HNWis trust advisers who show signs that they’re acting in the client’s best interest, reach out proactively, charge reasonable fees, deliver mistake-free work — and admit when they’re wrong.

In many ways, attracting and retaining HNWIs isn’t much different that getting and keeping what are called “mass affluent” clients, who have with assets of less than $1 million. But the differences are worth noting, because the stakes are higher, and a bit of extra knowledge can pay off.

This story first ran on July 21, 2017. Reprinted with permission.

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7 Steps to Building a Business Breakthrough

Have you ever been stuck atop a production plateau or seen your business head in a steady decline and wondered what it would take to turn your business around? Most advisers and agents go through peaks, valleys and crossroads at some point in their careers. There are many ways to pivot and change your trajectory if you find yourself in need of a re-route. Here are a few of my suggested steps to help you.

Step 1: Choose to Succeed
It may sound simplistic but success is a choice, either you desire to succeed or you don’t. To take the first step toward positive outcomes you have to want to move in the right direction. So, if you are tired of being where you are you must make a conscious decision to do want it takes to ensure change actually happens or the status quo will continue.

Step 2: Adopt a Great Attitude
It’s been said that, “Life is 10 percent what happens to me and 90 percent how I react to it.” Adopting a great attitude starts by understanding that nobody is responsible for your success but you. How you look at your circumstances is a choice that you must make every day. You will always be faced with obstacles but if you view them as an opportunity to grow you can turn them into triumphs. Start each day with an attitude of gratitude for all that you have and watch how quickly other aspects of your business and your life start to fall into place.

Step 3: Create Systems to get Results
No one ever built a great business by winging it. When you are truly honest with yourself you will realize that creating processes and systems for every aspect of your business, time management, prospecting, sales, client servicing and so on is the best way to get results. The secret to creating systems is to duplicate other’s successes by learning and implementing their systems. So ask someone you look up to in your business, what is working for them? Why re-invent the wheel?

Step 4: Take Massive Action
It has also been said that, “The distance between dreams and reality is action.” And, the more action you take the higher the likelihood that you’ll succeed. Let’s face it, you can have a fantastic system but if you don’t actually implement or integrate it then it is merely a wasted resource. Conversely, taking massive action ultimately generates both motivation and momentum.

Step 5: Track Your Progress
Measuring your milestones is a terrific way to enjoy the journey. In order to know if you are on the right path you must consistently track and evaluate your progress. It can be as simple as adding people to your pipeline daily or as complex as recording dials, contacts, new prospects, appointments and accounts. Knowing where you were and where you are now will help keep you moving toward where you want to be.

Step 6: Reward Yourself
As you accomplish your goals, it’s important to reward yourself along the way. Rewards act as a motivator to continue taking daily action because it provides an added incentive to push a little harder towards your end goal. Some successful advisers and agents use a simple reward system like allowing themselves to get a cup of coffee only after having contacted five new prospects. When you use this type of reward system consistently you form great habits to continue building your business.

Step 7: Make Course Corrections
To reach your peak potential, it’s important to make course corrections from time to time. Take for instance having a proven cold calling prospecting system that a successful colleague used to build his or her business. He or she was kind enough to map out their system for you, you took action, recorded milestones and rewarded yourself but success seems to be happening at a slower pace for you than you had expected. Chances are that you may need to make a slight course correction around who your target market is, tweaking what you say or how you are handling objections to duplicate their success.

Why Building a Business Breakthrough System Works
Business breakthroughs don’t happen overnight. It takes time to implement each step until you find the pace and formula that works for you. Now that you understand a bit more about what is involved to get going, all you need to do next is to take that first step towards your destination.

Are you using some or all these steps to have your own business breakthrough? To learn more, schedule a 30-minute coaching session with me by emailing Melissa Denham, director of client servicing.

Dan Finley

 

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


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5 Steps to ‘Connecting the Room’

One of life’s simple pleasures for me is something that others might dread: public speaking. For more than 20 years I’ve had the honor and privilege to speak in front of a wide range of audiences—investors, financial advisers, insurance agents and wholesalers.

A rookie financial adviser client of mine explained that he had held his first seminar and it had resulted in setting several appointments with qualified prospects. However, he was disappointed overall because he said that the audience barely said a word during his entire presentation. Even when he would ask them a question or attempt to interact with them, the room was silent.

If this has ever happened to you, please know that it happens to most speakers at some point in their careers. To combat that challenge, I’ve developed a solution that I refer to as “connecting the room.” If you apply this technique, I’m pretty sure you will never just hear crickets during your presentation again.

The following is a step-by-step process for connecting the room.

Step 1: Ask Strategic Questions

It’s no secret that the audience tends to be more engaged at listening when you ask them questions. That’s why it’s important to map out your questions prior to your presentation so that you have a strategy ahead of time.

Typically, I tend to start off a new subject with a question. An example of this was years ago when I prepared one set of questions for each section of my presentation. Instead of reading the Power Point slide titled “Inflation Eats up Your Purchasing Power,” I simply asked a strategic question to the group of retirees, which was, “How many people here paid more for their last car then they did their first house?”

Step 2: Get the Audience to Take Action

Another great way to help the audience connect with one another is to collectively ask them to take action by raising their hand. After I asked the earlier question, I paused and said, “Let’s see a show of hands of who can relate to that. Please raise your hand if you can.”

Immediately, several hands went up.

Step 3: Make a Connection

Next, pick out one person who seems to be paying attention or actively listening so that you can ask them to tell their story to the crowd. Ask, “What is your name?” then simply turn the dialogue over to them by saying something like, “Joe, when did you buy your first house? What type of home was it (ex: rambler, townhouse, split-level, etc.)? Was it here in town or somewhere else?” Let this individual share the limelight for a moment then continue asking a few more questions. Examples might be, “What was the biggest purchase item aside from your home that you bought?” and “Do you think you the prices for items like that will continue to rise?” Your final question should be a closed-ended question which elicits a “yes” or a “no” so you can emphasize your point. Finish the interaction by thanking the person, “Joe, thanks for sharing! Who here can relate to Joe’s story? Let’s see a show of hands.”

Step 4: Connect the Room

Usually a group tends to listen more intently when a speaker is dynamic and uses dialogue, versus a speaker who is static and utilizes a monologue. If you sprinkle in interactions throughout your presentation, your audience will be waiting for them. Use as many as you can—as time permits—to solidify your messaging and to strengthen your connection with those in the room.

Step 5: Make Your Point

Before moving on from one topic to another be sure to ask a summarizing question. Here is an example, “Does anyone know why things are more expensive today than they were when you bought your first house?” Let someone offer an answer and then explain your point of view. You could say something like, “The reason things are more expensive is because inflation eats up your purchasing power!”

Transitioning from one topic to another is often the best time to engage with the audience and have the group collectively relate to each other. Be sure your questions are catered to the demographic to which you are speaking and that the questions support your point of view.

Why Connecting the Room Works

When you use this technique, watch what happens to the people in the room, they speak more freely and are more apt to want to speak with you afterwards and hopefully they are on their way to becoming one of your clients. If they feel comfortable then they feel connected!

To schedule a complimentary 30-minute coaching session with me at, email Melissa Denham, director of client servicing at Advisor Solutions.

Dan Finley

 

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

 

 


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Building Growth Through Succession Planning

Succession planning isn’t just an “end-game strategy”; it is the key to growth and sustainability.

The specific goals of the succession planning process depend on the founder and his or her circumstance—including age, health and family demands—and they vary case by case. The point, though, is to take a methodical and practical approach to building a business that will endure beyond the builder. Four key areas to concentrate on are:

  1. Building strong, sustainable growth;
  2. Creating a focus on the bottom-line;
  3. Implementing a practical and reliable continuity plan; and
  4. Designing an income perpetuation strategy for the founding owner

The first is perhaps the most important. Building strong, sustainable growth for the business is supported by a clear succession plan in two ways. First, by incorporating next generation advisers who will be investing financially and physically as they buy in. One of the most effective ways to grow a business is to help the next generation build on the foundation the founder has already created and gradually transition ownership—and leadership. The next generation will learn not only how to “think like an owner,” but to be an owner. They will connect the daily goal of revenue production with the long-term goal of producing sustainable revenue in an efficient and scalable manner. They will make decisions that benefit the whole, not just themselves.

Second, growth through succession is about even more than just improving numbers. Strong, sustainable growth demands that the business owner increase their own capabilities as a leader—not just as a producer. As an executive of a multi-generational business, building the strength and depth of the entire team fuels continuous growth.

Cultivating ongoing growth in this way allows a founder to realize exponential value in the business they’ve built, while allowing them to plan for life after advising without worrying about the future of the business or the clients.

Unless the world of professional financial advisers discovers immortality or the fountain of youth, 100 percent of today’s advisers will see their careers come to an end, one way or the other. The only question is how you’ll help your clients transition from your advice and care to someone else’s. Will it be through a professional and carefully crafted succession plan; a last-minute sale to a friend or colleague; or will the clients be left to fend for themselves?

Building a business is about building for the future—your future and your clients’ futures. With a solid succession plan you not only promote growth—you build a legacy, and most importantly, you provide for your clients’ needs beyond the length of your individual career.

david_grau_sr

 

David Grau Sr., J.D.
President and Founder
FP Transitions
Lake Oswego, Ore.


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Pushing Past the Upper Limit Problem

Have you ever wondered why you are not consistently having record-setting years? Oftentimes while coaching financial advisers and insurance agents, I have noticed specific behavioral patterns that kick in soon after individuals have experienced success.

the-big-leapGay Hendricks, the author of the book The Big Leap: Conquer Your Hidden Fear and Take Life to the Next Level has coined a term for this that he refers to as “the upper limit problem”—which he defines as the amount of success that you are willing to allow yourself to have.

Here is how it works: We all have an “inner thermostat” that is set on just how much success we are willing to allow ourselves to have before we do something to self-sabotage and get back to our comfort zone. Unfortunately, most people don’t know their thermostat’s setting, much less a process for inching to a higher setting.

How to Reset Your Inner Thermostat and Resolve Your Upper Limit Problem
Hendricks said that in order to get to the next level, you cannot solve the problem that is holding you back; rather you need to resolve the problem by gaining a new level of awareness about it. Let’s take a look at the four main zones that he refers to that explains where people get stuck.

The Zone of Incompetence. One of the most common zones that I’ve seen advisers and agents revert to when they start to experience success is The Zone of Incompetence, which refers to spending time doing activities we are clearly not good at. Take for instance the last time you were having a record month: as the days went on did you find yourself doing activities that your assistant could be doing? If so, it was most likely because you were self-sabotaging your time by not doing activities that could have contributed to your continued level of success.

The Zone of Competence. Let’s say that you are great at doing what should be your assistant’s activities, you’ve done them for years and you find yourself saying things like, “Well, she’s got plenty to do so it’s just easier if I do this one thing for my client instead.” The challenge with this is that it’s never just one thing. If you are finding yourself doing these tasks, you are in The Zone of Competence. You both could be doing these activities but the truth is that if you are already having a successful month you essentially are now giving yourself permission to stop doing your job and tackling items that your assistant really should be completing.

The Zone of Excellence. Successful advisers and agents find themselves in The Zone of Excellence when they are accomplishing activities that they do well and are getting compensated. Unfortunately, this can create a comfort zone which in the long term will hold one back from reaching their peak potential. In addition, you may find yourself falling into a rut doing what you do well but not liking what you are doing. In other words, if you are great at public speaking but are sick of doing seminars you may not be happy and thus need to find things you are good at and like doing. You will burnout otherwise.

The Zone of Genius. At some point, you need to ask yourself the tough question, If you couldn’t fail at your business, what is it that you really would love to be doing differently?” The answer to that question will lead you to The Zone of Genius, in which you are doing what you love to do. As a result, work won’t feel like work. In this zone time doesn’t fly but instead it flows; you are not exhausted, you feel fulfilled. Granted you will still have to work to make a great living but you would also be happy and passionate about your professional life.

Taking the Big Leap
Take a moment to determine what zone you are currently in. If you want to live your life’s purpose, then you must take a big leap of faith and commit to becoming the person you are meant to be by finding the work you love to do. Then express to your target market your unique abilities and genuine willingness to help them so that one day they too could be in a position to afford to do what they love to do. If you can take this leap, you will have done what Hendricks meant by conquering your hidden (or unknown) fear and taking yourself to the next level of work and life.

If you are ready to take your big leap, schedule a complimentary 30-minute coaching session with me by emailing Melissa Denham, director of client servicing at Advisor Solutions.

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


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The Fulfillment Formula: Increase Return on Effort and Reap Full Benefits of Independence

If you ask independent financial advisers what the most rewarding part of being on their own is, most would answer:

(1) freedom of being an entrepreneur without a boss or a set schedule, where you can do what matters most to you when you choose;

(2) empowerment from creating your own destiny, leading your life, achieving success on your terms; and

(3) deep satisfaction that comes from developing meaningful connection with clients while directly and positively impacting lives.

These three benefits blend together to render a certain level of fulfillment. Whether that fulfillment is slight or maximized depends on how realized each one is in your professional (and daily) life. Essentially your fulfillment becomes a function of your return on your effort.

I don’t like to trivialize the concept of fulfillment as it is one of my driving core values; however, I know that if I keep the notion of fulfillment amorphous you will not make the progress you desire to mold your practice into what you know it can be. Too many advisers linger in a state of mediocre fulfillment, wondering why they aren’t getting more satisfaction from their work or unsure what to do next to leap from their current plateau.

To help you find clarity I have broken down the concept into what I call The Fulfillment Formula.

fulfillment-formula-jpg

Copyright 2016 Broderick Street Partners, LLC. All rights reserved.

The Numerator: Revenue
To increase your return, you can increase your revenue. It may seem obvious why we care about revenue, but for advisers who do not operate with intention to increase revenue, I want to remind you of this: you run a business. You need to make money to continue to have a profitable sustainable business over the long term. Otherwise, you have a hobby, a side gig or a charitable endeavor, and this formula does not apply.

At the very least your revenue needs to cover business expenses and the necessary personal expenses that your income funds. Revenue over that baseline threshold serves luxury personal expenses, savings and retirement, donations, gifts, child or parent support and wherever you choose to direct your cash.

Keeping effort constant, as you increase your revenue, you can achieve a higher return on effort and, thus, greater fulfillment.

The Denominator: Effort
We usually think about effort as the time, energy or money going into your business.

As an entrepreneur, you know it is much more than those resources—it’s also the heart, soul, sweat, blood and tears, too.

With only 24 hours in a day, multiple hats to wear as an entrepreneur, and the pressures of life outside the office, your personal effort can only take you so far before you start to exhaust your resources. You need to shift your support system to your team and technology to gain leverage and lower the effort you exert.

Even if revenue stays the same, as you decrease your effort you increase your return on effort and fulfillment level.

Amplify Your Fulfillment
As you can see, the relationship between revenue and effort renders either positive or negative fulfillment:

  • If your revenue is greater than your effort, you have positive return on effort and therefore a positive level of fulfillment. You may be satisfied with your current position, or you may desire to leap from this plateau to new levels of achievement in your business.
  • If your revenue is less the sum of your effort that you invest, then you will be in a negative state of fulfillment, perhaps questioning why you are continuing on this path or wondering how long it will last.

In either position, your can change your status quo when you increase the dollars coming into your business and/or decrease the effort that you exert in the business.

fulfillment-formula-2-jpg

Copyright 2016 Broderick Street Partners, LLC. All rights reserved.

As you grow the numerator or reduce the denominator, you will improve the return on your effort and experience an upward movement of your fulfillment.

Over time, as you build out client attraction and relationship marketing systems and find support for your operations to maximize return from The Fulfillment Formula, you will be able to amplify your fulfillment and reap the full benefits of independence.

Kristin Harad 2014Kristin C. Harad, CFP®
Marketing Trainer/Coach
KristinHarad.com
San Francisco, Calif. 


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Put Me In, Coach: How to Improve Like An Athlete

Being a financial adviser is a lot like being an athlete. If you have ever played on a team you can probably relate to the feeling of anticipation while waiting to play and all you wanted to say was, “Put me in, coach!” Once you got in the game it was up to you to make the most of the moment and shine.

One example of using this analogy is Amy, a ten-year veteran adviser who wanted to succeed and she needed my help to do it. As her business coach, I helped her determine what her goals were and what actions it would take to work smarter rather than harder. Next, we practiced by role-playing so she could get back to actually prospecting. However, it didn’t take long for her to realize that she was not applying what she had learned because her fears where getting in her way and thus she would rather sit on the sidelines than risk losing the game.

Let’s look at the steps I utilized with Amy to create her amazing comeback:

Step 1: Be All-In
What Amy was experiencing is very common for veteran and rookie advisers alike. It’s easy to want to win but it’s not always easy to risk the possibility of defeat. Many advisers choose not to even try. In other words, it’s like asking the coach to put you into the game but you choosing not to be all-in and not playing the best you could once you were in because you didn’t want to make a mistake and contribute to a loss.

The first step with Amy was to get her to commit to taking action and being dedicated to being all-in when it came to her own success. So, I had her make a list of reasons why she wanted to get to the next level and what would happen in one, three, five and even ten years from now if she continued not prospecting. After realizing the pleasure she would have by being a top producer and the pain that she could have by being a low level one, she committed to getting back to prospecting!

Step 2: Think on Your Feet
All athletes know that sometimes plays don’t go as planned. You may practice the play over-and-over again but on game day anything can happen. So too is practicing for an appointment and realizing the conversation isn’t going in the direction that you want it to. That’s why you must be able to think on your feet.

Amy realized that setting appointments with new prospects was getting easier but from time to time she was getting caught off guard with specific objections. I assured her that this is natural and all we needed to do was to increase the tools, techniques, strategies and solutions to handle any objection that came her way. It’s not about memorizing what to say but understanding the formula of how to say it. Once we did this, she could easily adapt to any conversation path.

Step 3: Assess Your Actions and Results
All great coaches know that the best way to take their players to a higher level is to help them assess their actions and results. Most teams watch game films so they can duplicate their successes and learn from their errors.

Within weeks, Amy was excited to tell me that her pipeline was full. She had eight appointments set for the week and had already turned a few prospects into clients since our last session.

Wanting to Win
Amy knew that just getting into the game wasn’t enough. Instead, she had to focus on her desire to win. If you take a page out her playbook you too can create this level of success.

If this blog resonates with you and you would like to have a free consultation with Dan Finley, email Melissa Denham director of client servicing for Advisor Solutions at melissa@advisorsolutionsinc.com.

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