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The Power of Wow

After her particularly stellar basketball season, John Evans, Jr., Ed.D., took his 10-year-old daughter for a trip to the Sarasota, Fla. Ritz Carlton.

On the elevator ride up to their room, he praised her rebounding, her boxing out, her shooting. They settled in, left the hotel, and came back to their room to find a tiny chocolate cake with a message on top reading, “Congratulations on the great season, Susana.”

The bellman had heard the entire conversation and seized the opportunity to give these two guests what Evans refers to as a “wow moment.” He defines this as a unique, emotionally engaging experience that goes beyond expectations and is readily recounted.

Evans, executive director of Janus Henderson Labs of Janus Henderson Investors (formerly Janus Capital Group), told FPA Retreat attendees in April 2017, that generating wow moments for a great client experience, like the one he had at the Ritz Carlton, starts with energy levels, is followed by clarifying your purpose, and ends with expanding your team’s capacity to deliver authentic wow moments (read more about “wow moments” straight from Evans in the June 20 FPA Practice Management Blog post titled, “The Circle of WOW”).

“We have an energy crisis here, ladies and gentleman,” Evans said. “But here is the thing: we can create more energy.”

Evans noted that there are four areas on the energy pyramid: the physical (the fundamental source of fuel, sleep); emotional (the capacity to manage emotions); mental (capacity to organize and focus attention); and spiritual (the purpose beyond self-interest). Of those, we are most stressed in the mental and emotional.

But, Evans noted, stress isn’t always bad.

“Stress is the giver of life,” Evans said. “A life of pillows and marshmallows is no way to live.”

Evans notes that a way to generate more energy in all areas of the pyramid is to embrace stress and abolish multitasking, which he said is “one of the greatest enemies of extraordinary and the pathway to mediocrity.”

It’s counterfeit engagement, he said, and we all need to become more engaged. Focus on one thing at a time, establish healthy habits such as eating right and exercising, and see if your energy levels improve.

Next, advisers must clarify their purpose. Why do you do what you do? What is your purpose? Your cause? Your belief? Actively communicate that from the inside out.

Finally, appoint a “wow czar” or “chief clientologist” whose job it is to help generate these experiences. This person should have tremendous emotional intelligence and be creative.

“We have to be intentional about wow,” Evans said.

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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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5 Steps to Manage Critical Mass

It never ceases to amaze me when I get a call out of the blue from a former client who is concerned with how their business is doing. Typically, they have had a downturn in their production for various reasons such as lack of prospecting or motivation or even as a result of being complacent. However, today was an interesting turn of events when I receive a call from a previous client, Seth, who was excited to inform me that his business had reached what he termed “critical mass” and he didn’t know what to do about it.

Apparently, his consistent prospecting had paid off and he was now bringing in more assets, new accounts and doing more production than he had ever done before. I congratulated him on all of his accomplishments and that is when the conversation turned to the real reason for his call. He simply said, “I need your help. I have no idea how to manage this level of success.”

I’m sure we can all agree that this type of scenario is a good one to have, but regardless it was now proving to be a challenge. Since we had worked together, he trusted me and knew we would brainstorm a solution.

Following is a brief overview of some of the suggestions I would offer to you if your business grows beyond your expectations.

Step 1: Know What You Like and Don’t Like to Do. Some advisers and agents like to prospect while others like to manage their client base. The first step is to get crystal clear in understanding what you like and don’t like to do. Simply make a list of all the weekly activities you need to accomplish regularly and put a plus or a minus after each. It won’t take long before you realize what activities you look forward to doing and what activities you dread—if you didn’t know already.

Step 2: Do What You Love and Delegate the Rest. In Seth’s case, he loves to prospect and that is a big reason why his business had taken off. He also loves to manage his client base. However, about six months ago his assistant had decided to be a stay-at-home mom so she resigned. To save money, he chose to be his own assistant. Unfortunately, there is no one to delegate things to that he doesn’t like to do, such as the administrative activities and day-to-day operational tasks. The solution for him was to find someone who loves to do these types of activities. So, he needed to hire, train and delegate everything not involving prospecting and managing the client base to somebody else.

Step 3: Create a Scalable Business Model and Stick to It. In order to consistently manage steady growth, it’s important to have a scalable business model. Seth had realized that years ago when he transitioned his clients to fee-based accounts and continued prospecting as well as systematically servicing his clients. Within a few short years, he had doubled his assets and revenue. His fee-based model allows him the time to continue growing and managing his book of clients. And it shows.

Step 4: Create a Team. At some point, it’s important to admit that in order to continue growing and servicing your client base effectively it takes more than one or even two people. Eventually, Seth will have to look at adding some additional people to his team. One example would be to add a paraplanner to help put financial plans together. Since he is a people person and loves to connect, it might be a good fit to have someone who loves to do manage the behind the scenes work. This would free up some of his time to continue prospecting and meeting with his client base.

Step 5: Expand Your Value. Another option is to expand your value by introducing additional services to your client base. An example of this is for Seth to add an insurance agent to the team who would cross-sell to the client base offering quotes on property/casualty, life, health and even long-term care insurance. Doing this would not only help his clients but it would also help him retain his client base.

Why Strategic Growth is Important
Generating critical mass doesn’t happen to everyone. However, if you consistently prospect it can happen to you. The reason why having a strategy to consistently grow your business is important is because it will help you reduce the growing pains that come along with success. When you know what the next step is, then you are not afraid to take it.

Have you mapped out your success? If not, why not? Discuss this with me in a complimentary 30-minute coaching session. Schedule one by emailing Melissa Denham, director of client servicing.

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


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Framing Works: Would You Rather Have Prunes or Dried Plums?

Behavioral finance is a hot topic. It’s hard to find a professional magazine without at least one story on the subject. Unfortunately, all too often the story is interesting but not very useful as it leaves you wondering what to do with the information. Well, here are a few ideas we’ve developed from the lessons of behavioral finance that have proved useful over the years.

Consider the concept of framing; i.e., how something is presented can significantly alter how a person responds. Consider the following scenarios:

1.) Does your quarterly report provide last quarter and year-to-date performance data? Is your practice and value based on long-term planning? In behavioral finance terms that’s bad framing. Why focus your client’s attention on short-term market noise when we should be keeping their focus on the long term? Consider eliminating any performance less than one year. If asked why the change, it’s a great opportunity to remind them about the concept of long-term investing.

2.) Do you use the S&P 500 as a return benchmark on your quarterly? Ask yourself why. Are all of you clients’ portfolios 100 percent invested in large cap domestic stock? Again, this is bad framing. While it’s certainly appropriate to use the S&P as a benchmark for your core large cap domestic manager, just as you would use the S&P 600 value as a benchmark for your small cap domestic value manager, using it as a portfolio benchmark is focusing your clients’ attention on an index that is unrelated to their portfolio. What’s an alternative? If you have in fact done some serious planning for you client with MoneyGuidePro, you’ve based their needed target return on a real return. If so, the appropriate benchmark is inflation as that will enable both you and your client to measure the portfolio success relative to their planning needs.

3.) Ever have a client come in anxious to draw a large chunk of their nest egg to invest in a wonderful hot investment they just heard about from their friend/next door neighbor/handyman? If so and you’ve tried to logically change their mind you probably have not been to successful. Instead of trying to persuade them, let a financial plan do it. Rerun their plan with all of their optimistic assumptions. You then may be able to tell them: “Why that’s great, instead of that one week Caribbean cruise y’all were planning on, you can take an around the world cruise first class.” Then run their plan assuming things are not so rosy and they lose half of their investment (which could happen). Then the conversation might be: “Well, if it works that would indeed be great but if it tanks you do see you’ll have to work two more years.” That is powerful framing. When someone is excited about an opportunity they rarely think about potential negative consequences and are unlikely to listen to your warnings; however, when they provide their own framing (i.e., their own MoneyGuidePro plan) they often listen.

I hope you find these tidbits useful. They have all been tested over many years with real clients and they do work.

HaroldEvensky
Harold Evensky, CFP®, AIF®, is a research professor of personal financial planning at Texas Tech University and the president of Evensky & Katz Wealth Management in Coral Gables, Florida and Lubbock, Texas. Email HERE.

 


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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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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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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


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Safeguard Yourself Against Litigation

When unhappy clients lose money and decide to sue somebody, chances are that somebody is you.

“You don’t have to have done something wrong to get sued,” Greg Severinghaus, marketing manager and senior underwriter of Markel Cambridge Alliance, said in a breakfast session April 25 at FPA Retreat at Chateau Elan in Georgia.

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Greg Severinghaus of Markel Cambridge Alliance presented the session, “Improve Client Relations to Limit Litigation” at FPA Retreat 2017.

Severinghaus said many advisers he works with don’t think they could ever get sued. They tell him they’ve got good client agreements and they get good results. But then they get sued for something frivolous or something that wasn’t their fault.

For example, he said, an adviser he worked with interviewed with a married couple who never even signed on as clients who eventually sued him.

“We spent $50,000 defending him,” Severinghaus explained. That was a small claim, he said. The bigger claims run into the millions.

Severinghaus said there are many areas in which advisers get sued most, and he offered tips on how to safeguard yourselves:

Execution errors. Advisers frequently get sued for making trade errors. This is the most frequent source of loss for advisers who manage assets.  To safeguard from this, Severinghaus suggested advisers put basic policies and procedures in place to reduce the magnitude of errors. For example, match every order against confirmations and promptly resolve discrepancies.

Also, keep a log of erroneous trades to look for patterns and promptly address them.

Finally, maintain a discretionary fund to address erroneous trades before they get worse. Fix errors as soon as possible.

Client selection and deselection. Focus on onboarding clients who will take your advice. Steer clear of clients who are overspenders, who won’t take your advice, who are unwilling to take effective risk, who are not in need of the services you provide, who are unethical or who are high maintenance.

Clients who overspend are particularly prone to bring lawsuits against you.

“When the money runs out, they’re going to blame somebody and it’s always the person managing their money,” Severinghaus said.

Documentation. This is the biggest piece in defending yourself against litigation. Document everything—every client interaction and meeting—especially if the client did not take your advice. At your quarterly meetings, have the client sign documents noting they understand the reports and your recommendations.

Clients don’t always tell the truth, Severinghaus said, so having proof of what was said at your interactions is key.

“Competent behavior requires ongoing documentation,” Severinghaus said.

Wire fraud. This is a hot-button topic in recent years. More advisers are getting duped into wiring their clients’ money to clever hackers who have enough knowledge of the clients to be convincing.

If you suspect an email is fraudulent, pick up the phone and verify with your client that it was in fact them who contacted you. Don’t trust voice recognition either. When a client calls asking for something you think may be out of character, ask them if you can call them back with the number on file just to verify.

Also, ask questions fraudsters won’t know, and don’t send pre-filled wire instructions.