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Be A Gen Savvy Planner: Take Off Your Generational Lenses

Our early environments shape us for the rest of our lives.

That’s why there is so much difference between the generations, said Cam Marston, an expert on generational change and founder of Generational Insights.

Marston told FPA Retreat attendees in April that baby boomers are tough and were never told they were unique or special, so they overcompensated by telling their kids—who are Gen-Xers and millennials—that they were extra special. Therefore, those two generations were raised to think they were unique and that their needs were very important.

“What imprints on younger people impacts them for the rest of their lives,” Marston said. “Millennials and Gen-X have been brought up to say, ‘What’s going to make me happy?’

Planners should understand the vast differences between the generations and know how to talk to and communicate with each one.

Boomers. To connect with the boomer, Marston said, you need to understand how they see the world. They’re hardworking and they have the mentality that retirement is going to be great. They want to hear your story and know where you come from.

Hanging up your diplomas or certificates in your office during your meetings with boomers is a good idea.

Key points about boomers:

1.) Understand and acknowledge their work ethic—which they generally measure in hours (i.e., “I work 50-60 hours a week”).

2.) Ask them about their accomplishments and acknowledge what they’ve done.

3.) Communicate that you are on the same page. Emphasize that you are a team.

5.) Pick up the phone and call them and meet with them in person.

6.) Beware of too much technology.

7.) Know the difference between “leading” baby boomers (older than 62 and like communication that emphasizes how they deserve retirement); and “trailing” baby boomers (ages 53-61 and need to be reassured that they’re going to be OK despite setbacks they experienced in retirement savings thanks to the recession).

Gen-Xers. This generation are stalkers of product and services. They demand to be an educated consumer and are leery of “being had,” Marston said. They are interested in how well you can teach them to make a good decision. Your relationship should be a partnership.

Key points about Gen-Xers:

1.) They are going to do research and have you prove why your advice is better than what they found via this research.

2.) They tend to prefer email and your communication should be brief, succinct and to the point.

3.) Don’t waste your time leaving them voicemails.

4.) Make sure your web presence is pristine—they’ll look you up online before contacting you.

5.) The Gen-X mother has tremendous buying power and influence. She’s coming up in terms of her earning, she’s informed and she’s fully engaged. Keep her happy.

6.) Communicate how decisions will affect them personally.

Millennials. Millennials are individuals with a group orientation. They believe they’re unique but they also enjoy being part of a group.

Millennials think, “You tell me about me and what’s going to happen and how I’m going to feel about it,” Marston said.

Key points about millennials:

1.) They’re optimistic.

2.) You will get more attendance from them if you ask them to bring people. Engage them as a group and they will be more interested.

3.) They feel they are unique and special.

4.) They don’t think so much in the long-term as the other generations.

5.) They are achieving milestones (i.e., getting married, buying houses, having kids) later in life than the previous generations.

6.) Communicate via text messages and social media.

Understand these key points about each generation and try to see the world through their eyes when you’re talking to them.

“Everybody pitches and articulates their value from their own generational lense,” Marston said, “but I’ve got to take my lenses off and put on somebody else’s.”

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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


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The Circle of WOW

On a recent flight home, after giving a keynote speech on driving deep client loyalty in the financial services industry, the woman sitting next to me asked about my business. It turns out that she was a public relations executive for the dental industry.

Intrigued, I asked, “What is the most effective slogan you have ever authored in your world of teeth?” She responded, “Simple. This one: you don’t have to floss every tooth, just the ones you want to keep.”

Instructive! So it is for clients in the financial services industry: you do not have to connect emotionally, or make meaning with every client, just the ones you want to keep.

Let’s be candid: nobody can control market events, but investment advisory teams can control how they connect emotionally with clients, colleagues and others. Regulatory changes and challenging investment environments should remind us that making stronger connections is more important than ever. And a key way of doing that is what we at Janus Henderson Labs affectionately refer to as The Art of WOW—focusing on actions that build impactful connections with those we care about at work and beyond.

Launching a meaningful wow journey requires planning. We like to start with “The Circle of WOW,” a four-step business development approach designed to fire up your business development efforts and start a perpetual upward spiral of results:

Step 1: Evaluate. Find your super-niche that helps you grow on purpose, not by accident. No matter what your profession—cultivating a “happiness advantage” is a natural outcome of discovering your unique business tranche (UBT) and developing your business around it.

Step 2: Activate. Identify and WOW your “Client Marketing Officers” and never ask for a referral again. Learn to consistently deliver WOW experiences to key members of your UBT, and leverage their guidance on how to grow your business with the help of other extraordinary members of the group.

Step 3: Replicate. Curate ideal clients and quit prospecting as you know it. With the help of your Client Marketing Officers, identify best new prospective clients and connect with them based on the fundamentals of WOW. Design each prospect’s experience based on a customized assertion schedule.

Step 4: Perpetuate. Create a magnetic ecosystem. Stop promoting and start attracting (and connecting). Deliberately cultivate personal rituals and design your environment to continually attract and nurture your UBT. Maintain a strong presence as an expert and dominate your space with unmistakable joy and command.

While WOWing our clients is certainly an art, we follow an actionable playbook on how unexpected, thoughtful behavior can elevate you from a professional resource to a provider of truly personalized service.

To learn more contact Janus Henderson about The Art of WOW. Our program, designed to drive extreme client loyalty, was developed in partnership with Dr. Joseph Michelli, internationally recognized client experience expert and author of The New Gold Standard: 5 Leadership Principles for Creating a Legendary Customer Experience Courtesy of the Ritz-Carlton Hotel Company and The Starbucks Experience.

JohnEvans
John L. Evans Jr., E.D., is the executive director of Janus Henderson Labs of Janus Henderson Investors, formerly Janus Capital Group. He is a practice management expert who conducts extensive consulting and training with top financial intermediaries and businesss leaders worldwide.

 


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Explain What You Do So People Will Immediately Want to Work With You

When you meet a prospective client, are you able to introduce yourself so that they immediately want to work with you? If you know how to speak their language, you’ll be able to clearly communicate what you do so that they can understand.

When I say “language,” I’m not talking about their native tongue—I mean the language of results.

If you can craft an introduction that’s focused on the results that your prospects are looking for, you’ll be able to get people interested in what you do.

When I first started as an adviser, I’d usually just tell people that I’m a financial planner. I quickly found out that it wasn’t the best way to introduce myself if I wanted to get people interested in what I do. The reason why this didn’t work was because so many people hear the term financial planner and their guard immediately goes up.

As I figured this out I’d then try to explain in more detail and ended up just getting confused looks. But once I learned how to speak the language of results, I was able to become more compelling and get more people interested in how I help people.

When you’re able to do this you’ll be able to introduce yourself in a way that’s compelling and People will begin to become very interested in what you have to offer. Remember these two things:

1.) Be Specific. Don’t worry about excluding people. If you have multiple “types” of people that you help, you have the advantage of tailoring your answer to the person you’re talking to. You’ll see what I mean in a minute.

2.) Focus on Results. When you meet someone for the first time, they don’t really care about your services, your process or your credentials. If you want to hook people and get them interested in you, you have to focus on how you help people. What are the problems you solve for people?

Ways to Introduce Yourself

There are two great ways to explain what you do. Both are non-salesy and will clearly communicate how you help people.

Way No. 1. This is where you give a two-sentence answer that communicates the problem, the solution and the reward.

Communicate the problem first. You don’t want to start the conversation with what you do. You want to start it by focusing on them and the thing they are thinking most about. What problem does your ideal prospect have? What pain is causing them to seek out an adviser?

Then communicate the solution. Ask yourself, “What do you do that solves that problem?” and “How do you make the pain go away?”

Finally, communicate the reward. Ask yourself, “What’s their life like after your solution?” and “What are the good feelings they’ll experience after working with you?”

Here are some examples of things to say:

“Most people don’t feel 100 percent confident about their financial future. We give them a road map so they know exactly where they’re going and so they can make the right decisions along the way.”

“As a lot of people get close to retirement they’re not sure if they’re making the right decisions. We take them through a three-step process to help them get clear on their financial future.”

Way No. 2. This is a one-sentence introduction that takes fewer than 10 seconds and will communicate three things: what you do, who you help and how you help them.

Here’s the script: “I’m a financial planner and I help (specific person) (with a problem) by (solution). Here are a few more specific examples:

“I’m a financial planner and I help people who are five years out from retirement create a plan they can feel good about.”

“I’m a financial planner and I help retirees who want to leave a legacy create a plan to efficiently pass on not only their assets and their wisdom to future generations.”

“I’m a financial planner and I help busy professionals who want to make good financial decisions by giving them a one-page financial plan.”

What’s Next?

Write down your own version of how you would introduce yourself to the next prospective client you meet.

To learn more about how to explain what you do so people will immediately want to work with you, sign up for this online mini-course.

dave-zoller
Dave Zoller, CFP®, is a financial planner who teaches other financial planners how to grow their practice so that they can help more clients. He runs Streamline My Practice, a consulting company for advisers.


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How Much do Your Clients Really Know About Required Minimum Distributions?

As the front end of the first wave of baby boomers begins turning 70½, a maze of complex decisions surrounding required minimum distributions (RMDs) for retirement accounts including 401(k)s and IRAs eagerly awaits.

Russ Shipman, senior vice president and managing director of Janus’ Retirement Strategy Group in Denver, Colo., shares what he believes is critical to keep in mind as you talk to your clients about the risks and opportunities related to these obligatory annual payouts.

What do you see as some of the biggest misconceptions with RMDs facing today’s retirees?

Shipman: Understandably, a lot of people just don’t appreciate the complexity, not to mention RMDs often come due before they know it. The first year in particular is especially confusing, given the 70½ triggering event. Many people by default will assume that their IRA or account holder will be responsible for calculating their minimums since those are the people shipping them a check. The hard truth is different. Granted, custodians and plan administrators routinely calculate RMD, but the accuracy and timely execution is on the account owner—who may not be aware of the tables in Internal Revenue Service Appendix B to Publication 590-B (see Laura Saunders’ Wall Street Journal Article “Everything You Need to Know About Required 401(K) and IRA Withdrawals”).

Additionally, if clients have multiple retirement accounts, the administrators do their calculations independently, rather than accounting for the sum of what they must withdraw, so selecting what to withdraw should be done thoughtfully and with good advice (Note: for IRAs, a saver may take required payout distributions disproportionately across multiple IRA accounts as long as the aggregate satisfies the correct total. Payout distributions from 401(k)s must be computed separately and come from each account). The rules can be even more confusing for people who are still working at age 70, which is increasingly common as Americans enjoy longer and healthier lives.

What are some of the options that retirees may not be aware of as they approach distribution age?

Shipman: The good news is that there are many options, and financial advisers can help by presenting these to their clients well before the first RMD comes due. Advisers can help clients look at fees associated with each of their retirement accounts, to start. They can also look at the types of investments they may or may not want to hold or withdraw from—for example, if a client has investments in a closed fund, they may never have access to it again if they take a balance to zero. Or, they may not want to touch a bond-heavy fund if they are getting desired tax-advantaged income there. They can also take distributions in different ways—lump sum or monthly, or through in-kind shares or real estate in certain instances. There are also some tax-advantaged options around how to spend it – such as charitable donations, which may come with additional tax benefits.

What are the biggest risks of not getting the right advice before structuring distributions?

Shipman: The penalty for not taking an RMD is incredibly steep—50 percent of the required distribution. As the government sees it, they’ve let people enjoy tax-free growth for years, and now they expect savers to start paying regular income tax on their distributions, Roth investments aside, of course. There could also be implications for the heirs of those taking incorrect RMDs—they could inherit the burden of a miscalculation.

What else can advisers do to help?

Shipman: Start the conversations early—long before the RMD is due. It may take some time for clients to wrap their heads around what this all means, what they want to do with the money, and where they want to source it, account-wise. Advisers can help by looking across different accounts and cost structures, and also connecting clients to providers of sound, comprehensive tax advice. Don’t make assumptions—have the conversation! Clients may not know what they don’t know, and your good and valuable advice around all things RMDs is needed.


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4 Ways to Retain Heirs

Ponder this worst-case scenario when it comes to introducing yourself to your client’s heirs: you’re at your client’s funeral and you offer both your condolences and a business card. The chances of those children and grandchildren calling you up after that are pretty slim.

Whatever you think of the younger generations—they’re lazy, entitled, glued to their phones—the fact remains that $24 trillion in wealth will transfer to them by 2030. They’ll need help. Introducing yourself to your clients’ heirs early and genuinely is the key to retaining that business.

Maria Quinn, adviser education specialist for Vanguard, told FPA Retreat attendees in April that there are ways to meaningfully engage with the adult children of your clients. First, Quinn advised, understand how the younger generations are different and how they perceive financial advice; second, fully engage both spouses; and last, authentically connect with the heirs of your clients.

In a 2015 Deloitte survey, 40 percent of boomers surveyed said their children work with a financial planner. Of that 19 percent said those children worked with a firm other than the ones the parents worked with and 21 percent worked with the existing firm.

Combined, Gen X and millennials (born between 1965 to 1997) are 141 million people. They’re different in the way they interact with financial planners. The acronym used to describe them is HENRY: high earner not ready yet. They will have wealth; they just don’t have it yet.

The younger generations are noted as the “401(k) generation,” Quinn said. They are saving automatically and don’t generally know where their money is invested. Both Gen X and millennials are socially conscious and express interest in learning more about retirement from their employer. Gen X tends to be distrustful of the financial advice industry while millennials see it as being too sales oriented.

But a smart move in reaching that next generation is to form a relationship with their mothers. Quinn said that many advisers tend to ignore the wife in client couples.

“She may be quiet in the room, but don’t think she doesn’t have opinions,” Quinn said. “She controls about 90 percent of the decisions. You want her in the room. You want to make sure you’re engaging her as much as you can.”

Some examples Quinn offered attendees to authentically connect with clients’ families were:

Do something special for your favorite clients. Quinn noted a planner who’d planned an 80th birthday party for his favorite client, pleasing her and impressing the family alike.

Offer pro-bono services for life events. Offer to do a financial plan for your clients’ children when you hear they are getting married or are expecting a baby. This could help forge a new client relationship and loyalty for years to come.

Pair up young advisers with young clients. Quinn said pairing up your clients’ children with your firm’s younger advisers would also be helpful. It would get that next-generation business in the door, while giving your next-generation advisers some valuable experience.

“Younger investors like to have a cultural similarity with the advisers that they’re working with,” Quinn said.

Be a savvy communicator. Quinn encourages planners to utilize technology to make a positive impression. She noted that the next generation of clients will do a Google search on you, and you want to be sure that what they find is appealing. Also, note that this generation probably doesn’t prefer phone calls, but rather emails and texts.

“If you do have clients whose children you want to make meaningful connections with,” Quinn said, “determine the most effective way to initiate engagement and establish a strategy for sustaining engagement.”


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4 Questions to Attract More Clients

There are just four questions that every financial adviser must answer if they want to attract more clients. If you can answer these questions, you’ll be able to more effectively communicate your message to prospects so that they will want to work with you.

No. 1: Who’s Your Ideal Client?

When advisers think about their business and how they help people, they tend to think the most about the services they provide. Things like the types of planning they offer, the investments and products they use for clients, the process they walk clients through, etc., but we rarely focus on defining who we serve.

The financial advisers that will survive and thrive over the long term will define their business not by the service they offer but by the people they serve.

They know exactly who their ideal client is.

No. 2: What Value Do You Provide?

You undoubtedly provide a lot of great advice to your clients. But what do your clients value the most? What’s most important to them?

Do they care about investment selection, the products, the process, your credentials, your years of experience or your past performance? I’m sure they do.

But there’s actually only one thing that your clients value above all else: their transformation.

They are seeking the positive change they experience by working with you. They want the end result. How do I know this? It’s because people buy the destination, not the plane ride.

What is the destination your clients are trying to get to? What’s the ideal end result you can help them achieve? This is the real value you give to clients and prospects.

No. 3: How Do You Clearly Communicate Your Value?

If you’re the greatest financial adviser in the world but you don’t know how to clearly communicate your value to ideal prospects, then you won’t be in business very long. If you cannot clearly communicate your value to people, nothing else you’re doing in your business really matters.

Many good advisers have failed because they didn’t know how to clearly communicate their value.

The best advisers are able to engage in a conversation with a complete stranger and within two minutes, that stranger fully understands how that adviser helps people. Even better, that stranger will have enough curiosity and excitement that they want to hear more from the adviser.

If you’re able to naturally start the conversation with people, you’ll have no trouble getting people in the door. And If you can communicate your value, you’ll have no problem getting people to become your clients.

No. 4: How Will You Consistently Attract and Acquire New Clients?

This is the most important question that advisers need to answer. It’s also the one most advisers have a hard time answering.

How do you find new clients? Most advisers rely on referrals to get new business. Some others still do seminars, lunches, cold calling and networking events. Those techniques are good but there are more and more advisers turning to newer ways of attracting prospects to them. Techniques such Linkedin referrals, Facebook ads, blogging and webinars are quickly growing in favor with advisers. This is because they are less expensive and more profitable than the “old school” ways of getting new clients. But there’s also a steep learning curve to these. You shouldn’t let that stop you from testing them out. When you find the technique that works for you, stick with it and focus all your energy there.

Take five minutes and try to answer these four questions. And be honest with yourself. If you’re having trouble with one of the questions, start exploring new ways to try and answer it. If you need ideas, download the accompanying guide to help you out.

dave-zoller

 

Dave Zoller, CFP®
Financial Adviser
Streamline My Practice
Warrenville, IL


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Education—The Missing Piece of the Investor Success Puzzle

Being a good financial adviser requires mastery of a wide range of technical skills. Being a great financial adviser requires having skills as a counselor and psychologist. Being an outstanding financial adviser requires developing your skills as a teacher. Here’s why.

The job of a financial adviser is to help each client get from Point A (where they are today) to Point B (where they want/need to be at some point in the future). The question is always how to maximize the chance that the client will arrive safely and securely at Point B.

When I first entered the financial services industry, the focus was on the technical aspects of this journey. Advisers used their financial planning and investment skills to define and plot the course from Point A to Point B.

Later, the focus broadened to include another dimension of the problem. Supporting clients emotionally and coaxing them to do the right thing has always been part of the job. But our understanding of the importance of that aspect of advising clients changed when research from the world of behavioral finance entered the mainstream.

Soon we were awash in new jargon that labeled each quirk in the vast inventory of our financial decision-making dysfunctions. A tsunami of information familiarized us with the basic concepts of behavioral finance, but left us unsure about what, exactly, to do with this information.

One exception is the area of risk tolerance. A host of service providers emerged with products that purport to help us measure the risk tolerance of our clients. But what should you do when there is a significant gap between a client’s need to take risk and their comfort in doing so?

Say you have a client that has done a poor job of saving over the years. The client has no choice but to be aggressive in their investment strategy if he is to have any hope of meeting his goals. But what if his tolerance for risk is very low? Do you ignore the client’s discomfort with risk-taking or do you dial down the portfolio in favor of a smoother ride?

Actually, this is a false dilemma. It assumes that the client’s risk tolerance is a fixed feature like the nose on his face. This is simply not true. Soldiers learn to fight with bullets whizzing by their heads. Athletes learn to maintain their focus in the midst of chaos. Clients can be taught to better weather the inevitable storms they will encounter. Education is the key.

Most advisers are comfortable answering client questions about investing, but this level of education is reactive and event driven. Exhorting clients to “think long-term” and “stay the course” is not education, it’s sloganeering.

Being a good investor requires a solid frame of reference. Clients need to know what to expect and why things happen the way they do. They need that course we all should have had in school, but never did. Providing this level of education requires thought, planning and a proactive approach. But like soldiers and athletes, clients can be trained to be better, more confident investors.

If you want your clients to make it successfully from Point A to Point B, you should put as much time into teaching them about the journey as you do developing financial plans and investment solutions for them.

scott-mackillop

 

Scott MacKillop
CEO
First Ascent Asset Management
Denver, CO