Selling to the Affluent

Tis the Season to Socialize

2011-12-08T10:19:00.002-05:00

Toronto: “I had three client appointments cancel last week,” moaned Anthony, then adding in some frustration “I’m not going to bother chasing down people during December, nobody want to discuss business during the holidays.”

Anthony was obviously upset and his emotions weren’t allowing him to think clearly. Without boring you with our entire conversation, suffice it to say I shifted the conversation to the motto elite advisors adhere to throughout the holidays; tis the season to socialize.

Amongst the many nuggets uncovered in our latest affluent research, there is one factoid that every advisor working with affluent clients must understand; advisors who socialize with their affluent clients have 3xs the center-of-influence penetration over advisors who only have a business relationship. This presupposes that the advisor has a healthy business relationship in both cases. The same factoid holds true for referral alliance partners; CPAs, attorneys and the like.

One might think that once advisors are armed with this information that they’d make socializing with their affluent clients a priority. Not so. For some reason, many advisors struggle with the concept of mixing business with pleasure. From our perspective, this type of strategic socializing should be part of an advisor’s marketing budget. And the holiday season is the ideal time to invest both your time and money into getting social with your affluent clients, referral alliances, and their respective centers-of-influence.

Let me walk you through five simple ‘Tis the Season steps that might help you breeze through this holiday season like an elite advisor...

1. Make a list of the clients, referral alliance partners (CPAs, attorneys, etc.), and active pipeline prospects that you can get face-to-face with during this window.

2. Take your calendar and start mapping out how you envision your social schedule to play-out through December. Lunch, dinner, drinks, parties, and so on. This requires pairing social activities with each individual on your list. Consider this your planning phase. But don’t let it overwhelm you, the idea is to use it as a starting point.

3. Determine your strategic intent for each social interaction; sourcing a name, having your client bring a guest for you to meet, asking to be introduced, gathering more personal information that can be used to “surprise and delight” sometime in the future, getting invited to a holiday party (You’ll find yourself getting invited naturally; you won’t have to force it.) and so on.

4. If can’t possibly make all the invitation calls yourself, carefully assign these “strategic socializing” names amongst your team. Be careful with this, many of these people will need a personal invitation by you. Regardless, as you work to fill your calendar it’s a good idea to have twice a day huddles with your team, morning and evening, to make certain everyone is on the same page with your calendar.

5. Attend every holiday party or social get-together you can that involves these affluent centers-of-influence. You’ll also want to host one or two of these events yourself. Remember, intimate events are more powerful – they don’t need to be big bashes, nor do they have to break the bank. They can be low-key as they’re social.

For those clients where geography makes it impossible for this type of personal socializing, a thoughtful gift (bottle of wine, champagne, fruit basket, etc.) is a nice touch. You’ll want to compliment your gift with a “holiday greetings” phone call.

As you probably have some, if not a lot of these steps already completed, use the above to stimulate your thoughts and conversation within your team. There is no one way to socialize with strategic intent, but not getting to know your clients and referral alliance partners on a personal level is a big mistake.

Tis the season to socialize!!

Elite Advisor Teams are Raising the Bar

2011-09-02T08:17:00.002-04:00

Atlanta: "It seems as though everyone on our team is working feverishly," explained Walter and then adding, "I know this is the perfect environment for change, but my partner and I just can't seem to get started. What does your research say about these elite teams and how they're handling this ongoing crisis?"

It seems as though I've been answering some version of Walter's question since the financial crisis hit in 2008, with the recent volatility serving as a reminder of the basic truism; within crisis lies opportunity. For elite teams and advisors this opportunity centers around strengthening the loyalty of their affluent clients and acquiring the friends, colleagues, and family members of their affluent clients. Elite teams have mastered this relationship management - relationship marketing nexus.

Before peeling back the onion and getting into some of the details of elite financial teams, let me start with sharing some of our 2011 Q2 findings. On average, advisors on elite teams have much stronger client loyalty, (71 percent to 26 percent), bring in nearly 3xs the new assets, and have a significantly higher level of career satisfaction, (61 percent to 40 percent).You don't have to take too deep a dive into the details to understand why these elite teams are able to perform at higher levels in these challenging times.

However, there are a handful a useful insights - for instance, a much greater percentage of elite teams are in a vertical structure (senior advisor functioning as the team leader) as opposed to a horizontal structure (equal partners); 59 percent vertical and 32 percent horizontal. As I explained to Walter, effective team leadership is the foundation of elite teams and is what enables them to be proactive and opportunistic in times of crisis. Walter's team is horizontal and they've yet to address the team leadership issue.

Our research has also identified a large gap between elite teams and the general population of teams in terms of roles and responsibilities...

Elite Teams 77% clearly defined roles and responsibilities

All Teams 45% clearly defined roles and responsibilities

Our only surprise in this finding was that only 77% of elite teams claimed to have clearly defined roles and responsibilities amongst team members. We would have thought that figure would have been higher, although this could be explained by the fact (2011 financial advisor research) that elite advisors strive for excellence and tend to be more self-critical, coupled with the fact that 32 percent of the elite teams are horizontal in structure, which makes role clarity more challenging. Regardless, there is a large gap between elite teams and the rest of the field regarding clearly defined roles and responsibilities. This is a factor in the disconnect of "everybody working feverishly" in Walter's team but not being able to capitalize on the current environment.

One other telling area involves "linking individual performance to the team's goals" - only 9 percent of the general population of teams are performing extremely well in this area as opposed to 25 percent of elite teams. This highlights a number of issues:

1. Elite teams are far from perfect. Many can improve the effectiveness of their team leadership, roles and responsibilities can be fine-tuned, and a better effort can be made in communicating how individual team members impact the team's goals.

2. All teams would benefit from re-visiting their goals, making the necessary current crisis adjustments (relationship management and relationship marketing; increasing new client acquisition goals) and communicating this repeatedly to all team members.

3. Every team, elite or general, and every solo advisor, can use this current environment as a catalyst for improvement.

4. Although elite teams aren't perfect, they are also far ahead of the rest of the field in virtually every metric measured.

Our expectation is that the elite teams will continue to improve and further distance themselves from the field. However, every advisor and every team should strive to improve. Couple the expectations of today's affluent investor with the heightened skepticism fueled by the financial crisis, and more wealth management teams and solo advisors need to be working towards achieving elite status.

Shakey Markets Action Plan

2011-08-12T15:24:00.002-04:00

Market volatility increases the importance of working with a real financial advisor. It’s the time to be PROACTIVE and go on offensive!!!

Be proactive with contacting your affluent clients. This can be done through calls, personal meetings, lunch and learns, and social interaction. In the last serious downturn, only 19.9% of advisors increased their face time with clients. Don’t let this be you!

Call every prospect in your pipeline – this is the perfect time for a 2nd opinion – to offer help and guidance. Invite to any lunch and learn, economic update and other client events.

Be prepared for social conversations around the turmoil. These can all be opportunities for offering a 2nd opinion. Avoid getting into details about the markets. Focus on the “mini-close” for a 2nd opinion.

Roll-up your sleeves and get working! Be prepared to work through the weekend; talking to clients and providing 2nd opinions.

May the force be with you,

3 Highlights from our Pre-Released 2011 Teams Research

2011-07-19T16:05:00.000-04:00

The following are three highlights from our pre-released research report on teams. Keep your eyes out for the full report to be released soon!

1) Wealth management teams are playing a significant role in the world of financial services. However, the majority (55%) of advisors are currently not working on a team. With little difference in key metrics such as career satisfaction, new assets acquired, and client loyalty between solo advisors and advisors on the general population of non-elite teams, advisors are likely to be more cautious towards becoming part of a team. That said, advisors on elite teams excel on all key metrics.

2) The disparity in career satisfaction between advisors on elite teams (61% very satisfied ) and the rest of the field (43% and 40%) raises the question; are they “very satisfied” because they are elite or are they elite because they love what they do (they’re very satisfied) ? Most likely the answer is somewhere in the middle, these elite team advisors love what they do, are committed to excellence, and have developed into an elite team as a result. What we did find interesting is how the career satisfaction of solo advisors had a meaningful improvement from 2009 to 2011; 29.6% to 43% very satisfied, while career satisfaction of financial advisors associated with the general population of teams remained basically the same; 41.6% in 2009 / 40% in 2011. It is also worth noting that solo advisors are currently more satisfied with their careers than advisors on teams, while advisors on elite teams lead the field by a wide margin.

3) It is interesting to note that there is little difference between the vertical and horizontal models in the general population of teams. Whereas, there is a major disparity in the elite teams between vertical (59%) and horizontal (32%) models. With team leadership such a key ingredient in all elite teams, it appears that a challenge amongst horizontal teams centers around the leadership issue.

Eliminating Time Wasters

2011-03-04T08:01:00.001-05:00

Phoenix: “We recognize the importance of continually improving our service model,” Robert said. “But there are only so many hours in a day, and we can’t afford to be continually hiring new support personnel to meet the service expectations of our affluent clients.”

I couldn’t agree more. No advisor will achieve “service nirvana” by constantly hiring more personnel. In fact, it’s been our experience, in more than two decades of coaching teams and dealing with virtually every aspect of practice management, that a number of issues must be addressed before considering any new hire. In this issue, I’m going to discuss one of the more insidious of these pre-hire issues—existing time wasters.

It might be helpful if I put all of this into the context of affluent client loyalty. Every 21st-century financial practice wants their clients to be loyal, especially their affluent clients. In our 2011 Q1 affluent research project, we asked affluent investors: “What would cause you to search for another financial advisor?” Two responses trumped all others and were a virtual tie for Number One:

* Poor service.
* Repeated mistakes.

As I’ve written about repeatedly, this financial crisis has placed financial advisors into a new world where the advisor/client relationship has forever changed. The amount of services today’s affluent investor is expecting to receive, combined with the level of personal service they are demanding, highlights the importance of best-of-class support personnel. This component of a financial practice has become indispensable.

Financial advisors who recognize the importance of this component and are willing to invest the time, energy and money into developing excellence within the role will find themselves reaping the rewards of the positive word-of-mouth influence generated by their affluent clients. With just a little fine-tuning, most financial advisors are capable of making significant improvement in this critical area without spending a lot of money. The first step in such fine-tuning is to correct any existing time wasters.

To help you along in this process, I thought it would be helpful to review the Time Waster section of our 2011 Q1 Administrative Assistant Survey. Please take notice of the differences in perception between advisors and assistants in virtually every category. This is the heart of the issue.

The above graph outlines the major administrative assistant “time wasters” from the perspective of both the advisor and the assistant, all of which interfere with providing personal service and eliminating mistakes. But this also highlights a serious performance reality: many advisors don’t really know what their personal administrative assistant is doing throughout the course of a day. Whether it’s advisors complaining of their assistant’s inability to prioritize, or servicing smaller clients, or cluttered desks, existing time wasters will not be corrected until advisors and assistants get on the same page.

The following five-step exercise will help you find any existing time wasters hampering your team. This is a delicate exercise. You don’t want your assistant to think his/her job is in jeopardy (unless it is). Let them know you’ll be running the same exercise personally to see what areas eat into your productive time as well:

1. Ask your support staff to rate him or herself in each of these categories in the above graph using the following five-point scale (1 = not a time waster, 2 = not a serious time waster, 3 = could use improvement, 4 = a time waster, 5 = a serious time waster) for your support person.

2. Independent of your support staff, each advisor also rates each of these categories.

3. Meet as a team to discuss your rating of each category.

4. Agree on an action plan to correct the top three serious time wasters that everyone agrees upon.

5. Reconvene in 30 days to determine the progress. If serious time wasters are corrected, repeat step 3 for all remaining time wasters.

Improvement in service begins with advisors knowing what their assistant is doing during their working day. When this occurs, a natural clarification of roles and responsibilities follows, as well as improved communication between advisors and support personnel.

Today’s environment has created a tremendous opportunity for advisors to differentiate themselves through their personalized service and solutions. The days of viewing support personnel as an automatic solution to service issues, only to be treated as an after-thought once hired, are long gone. I recognize none of this is easy, but eliminating existing time wasters doesn’t cost any money, it will help improve your service model, and will keep you from making a hasty or unnecessary hire (which could cost you dearly).

Does Your Practice Have a Social Media Plan?

2011-02-17T17:20:00.000-05:00

Fort Lauderdale: “We’re considering integrating social media into our marketing plan,” Joseph started out saying. Then he backtracked—“Yet, all we hear about it is what we can’t do from a compliance perspective. What is the benefit of even getting involved?”

First, as I explained to Joseph, it is essential that he understand his broker-dealer compliance guidelines regarding the use of social media. Then I reminded everyone in the audience of the recent 60 Minutes interview with Wael Ghonim, the Egyptian Google marketing executive, who attributes social media as the driving force behind Egypt’s regime change.

Social media is already playing a huge role in how people throughout the world communicate. My feeling is that it’s smart to become an early adopter, but in doing so, it’s important to be careful and to engage it with strategic intent and guidelines.

To help address this topic in more detail, I’ve decided to ask Kevin Nichols, our resident social media guru, a handful of questions.

Q. Can exposure through social networking be helpful to an advisor’s practice?

A. Yes, but it must be used properly. The reality is that every member of your practice is an extension of your brand. If used properly, social media can serve as a powerful tool that allows every member of your team to have their “ear to the ground.” This will help them listen to clients and develop a reputation for being responsive–just the opposite of the former Egyptian government.

Q. How can advisors use social media effectively in today’s environment?

A. It’s important to be operating from a plan. As an advisor, what is your objective? If your intentions are to connect with prominent players in your community to enhance your brand, it is important to approach the possibility of connecting to these people through mutual connections—and ask for permission! The last thing you want to do is make a bad social media impression. On the other hand, if your intention is to enhance your prospecting, social media is a great vehicle for enabling you to understand the relationship between people you currently know (top clients and centers of influence) and people you want to know (prospects).

However, you don’t want to ask for an introduction through social media. Once you’ve gathered your intelligence, you simply call your client or COI, as there are various ways to segue into that conversation seamlessly.

Q. What are your thoughts about advisors tweeting and blogging?

A. For most advisors, this should be avoided. This is what scares FINRA and most compliance departments. For advisors who do a lot of writing, they should check with their legal department and explain exactly what they plan to do. If they get permission, they will want to make certain that it’s in writing. Reading something like “Corporate Blogging for Dummies” is not something I’d recommend for advisors. FINRA is currently giving social media another look, but as it stands now there are simply too many legal ramifications for advisors who blog and tweet.

Q. If an advisor adopts a social media plan that involves COI branding through establishing the right connections, and marketing by orchestrating an introduction, how much time and attention needs to be devoted to monitoring all the connections?

A. That’s a great question. Ideally, I recommend advisors review their connections as the first thing they do every morning and then again in the evening. You can never be certain what has been posted, who has asked to be connected, and so on. This can happen during the day or at night, and people who use social media are on it constantly. I recognize this is a bit much for most advisors, but at a minimum, your social media plan should include daily maintenance—either morning or evening.

As you begin to get a feeling for Kevin’s social media advice, everything appears to revolve around common sense. You want to adhere to the same communication guidelines you would use in any other communications medium. If you don’t want to see your communication on the front page of your local paper, if you don’t want an association you have with someone broadcast all over town, or if you don’t want to be associated with private information being broadcast to the world, stick to your plan and work it.

Also, any attempt at using social media as an infomercial for your practice (testimonials, etc.), will likely lead to being shut out of most affluent connections in your community. On the other hand, if your plan focuses on developing the right connections to be used very carefully, you’re likely to significantly expand your affluent connections.

Advisors Letting Go & Gaining Control

2011-02-04T09:27:00.002-05:00

Richmond: “I do everything for my clients, they love me, and at the risk of sounding arrogant, I get introduced to their friends, clients and colleagues without asking,” Warren explained in sort of a frantic staccato. “But I’m killing myself. I can’t go on at this pace or I’ll be dead next year.”

Sounds quite dramatic, doesn’t it? But after a rather lengthy discussion, Warren confessed that he’d been working on this issue for over two years. Still alive and well with a healthy business, over $100 million of assets and north of $1 million in production, Warren wasn’t some young Turk sharing an assistant with five others. He’d been working with his own personal assistant for a number of years. I recognize that many advisors would love to trade places with Warren; however, many veteran advisors are facing similar challenges – letting go of control. They can’t let go.

For example, after Warren finished explaining all he had to go through to procure the proper documents for a client and his attorney (the attorney also referred the client) — how he succeeded, how only he could’ve done it and how pleased both were — I asked, “Couldn’t your assistant have handled that task?”

His body language provided more insight than his non-answer response. His assistant “wasn’t good at solving problems, she was smart but didn’t like to think for herself,” and was too busy doing routine clerical work. Huh? But you get the picture. Like many advisors, Warren didn’t trust his assistant to handle anything but routine administrative work. He prided himself in being the indispensible “go-to” professional. However, because he’s been incapable of letting go, he’s still a one-man band and killing himself in the process.

Now that we had gotten to the root of the problem, Warren confessed that he’d interviewed at least four junior advisors to help him manage client relationships and help his assistant with administrative issues, but none was up to his standards. The same was true in his efforts to hire a part-time assistant. Go figure. It was obvious that Warren was smart and knew his problem, but he was going through the motions of attempting to solve it as he was creating obstacles each step of the way. Warren was afraid to give up control.

I walked Warren through an exercise we use frequently when refining roles and responsibilities. Whether you’re on a team or solo, working through exercises should help you improve your overall efficiency.

1.) Determine your primary role. Like many advisors, Warren finally concluded that what he could never delegate was a) relationship management of top clients, and b) relationship management with his centers of influence (this was his rainmaking turf.) But he could delegate relationship management of smaller clients, money management, and administrative problem-solving.

2.) Outline everything that is interfering with you spending 70 to 80 percent of your time performing your primary role (above). Here you want to list all the tasks you must delegate/let go.

3.) Determine the primary role of each member of your team/practice; partner, junior advisor, expert, support, intern, etc.

4.) Have each individual sign off with your description of his or her primary role and then ask everyone to outline what is interfering with them being able to spend 90 to 100 percent of their time performing their primary role (you’re spending only 70–80 percent of the time in your primary role because you must oversee what you’ve delegated/inspect what you expect.)

5.) Determine the changes necessary to implement the above; jettison smaller clients, create a better service model, hire another assistant, hire a junior advisor, hire an intern, fire a poor performer, etc.

6.) Outline the role of your future new team member, junior advisor, part-time assistant, intern, etc. (if no new additions are on the horizon, outline the ideal role of your primary assistant.)

7.) Take action! Whether it’s delegating, hiring, firing, or communicating, baby steps that are linked to an objective bring about tremendous results.

None of this is complex, but for many advisors (Warren has lots of company), letting go is very uncomfortable. They must be in control and hate paying money for someone who can’t perform tasks at their level of perfection. Unfortunately, they end up doing all the low-dollar tasks that elite advisors delegate.

The irony of control is that you must let go of control in order to gain control. For every advisor who is serious about growth, letting go is essential. Granted, it’s not easy getting the right people in the right roles and then training them to the ways of your practice. This is work, but also a requirement for growth.

Who knows what Warren will do. But his COIs have asked about his capacity, and in his words, “I know I’d get a lot more business from them if I develop a team.” It’s obvious that he’s at a fork in the road; one path is letting go (delegation), team building and growth, while the other leads to insanity (his words). Letting go is far outside of his comfort zone, but my hunch is that he’ll opt for growth. How about you?

Insights from our Research

2010-09-20T15:08:00.002-04:00

There is no denying that this financial crisis has had an impact on advisors. Many advisors who are on teams in more or less a loose confederation than a true team have disbanded. Others are trying to form teams as it has become obvious that the better teams have raised their level of professionalism and are providing more services as a result of this crisis.

Few would be surprised that our research indicates that New World Advisors (industry elite) are more likely to be part of a team. Why? It is extremely challenging for a single advisor, or dysfunctional team, to meet the service and relationship needs of today’s affluent investor.

With career satisfaction of New World Advisors far exceeding the general population (66% vs. 40%) I thought it might be interesting to look at the activities having the most impact on career satisfaction. You should know that all the following involve relationship marketing and are also rated both high-usage and high-results…

• Introductions
• Strategic networking (social prospecting)
• Referral alliances (CPAs, JDs, etc.)
• Client events with guests

What’s important to understand is that effective relationship management of existing affluent clients, referral alliances partners, and affluent COIs, is a prerequisite for effective relationship marketing. Word-of-mouth influence is today’s most powerful force impacting affluent decision making. New World Advisors make certain that this force is working in their favor.

Incidentally, 99% of advisors consider being in possession of high-level affluent sales skills as being extremely “important” while only 40% claim to be receiving any assistance by their B/D in developing these skills.

The message; work to develop affluent sales skills, pay careful attention to managing your relationships and you too can capitalize on the opportunities created by this financial crisis and simultaneously improve your career satisfaction.

How to Manage CPA Relationships

2010-08-26T08:59:00.001-04:00

Philadelphia: “I’ve been conducting CPA workshops for CE credits for a number of years,” Mark explained with a pained expression, “but have yet to have to develop any type of referral alliance relationship.”

Are you surprised? Probably not. This is a common challenge facing financial advisors. CPAs need ongoing continuing education credits, somehow – someway, financial advisors are allowed to present specific workshops that meet the CE requirements, and CPAs attend. Although this can get you face-to-face with CPAs, it can be light years removed from developing a healthy working relationship.

Developing a healthy CPA referral alliance requires much the same strategy and tactics as romancing an affluent prospect into becoming a client. Seminars don’t make the cut, and even though CE courses can get advisors like Mark in front of CPAs, left on their own they do little in terms of managing any type of relationship.

This might seem a bit daunting at first glance, but the following is the secret sauce for managing CPA relationships (actually it’s rather simple)…

• Step 1: Create a Profile for each CPA – Here is where you begin to compile both personal and professional information. Your objective is to gather as much intelligence about each CPA that will enable you to follow-up with each on both a personal and professional level – without coming across as a bore, or worse, a broker.

There are many ways to gather this information, but essentially you want to know their areas of expertise, colleges attended, types of clients, mutual clients, marital status, spouses interests, and so on.

We have a simple profile form that our clients use to compile this new-found intelligence – but you can easily create your own. The key is to have a system you will use.

• Step 2: Ask Around – Word-of-mouth influence is the #1 tool used by the affluent and potential referral alliance partners and you want to use it carefully in your quest to gather information about a CPA you’ve targeted. Contact your mutual client, a COI or whoever is associated with the CPA and ask a few subtle questions. Much like selling to the affluent, this is an art form that requires finesse. You don’t want to come across as mechanical or overly nosey, rather you want to leave the impression that you’re naturally curious.

Think of information along the lines of; how long they have worked with this CPA, what they might know about them on a personal level (hobbies and interests), what they like best working with them, and so on.

• Step 3: Conduct Online Reconnaissance - With so much personal information available online it is foolish not to take advantage of it as you work on gathering background intelligence on your targeted CPA. According to Kevin Nichols, our resident Social Media guru, LinkedIn is your most effective tool for getting started.

Kevin suggests start by running an advanced search for CPAs in your area. Your objective is to gather information based on their profile, and at the same time you can also look for mutual connections.

• Step 4: Use the Information – Gathering intelligence is one thing, using it intelligently is another. At this stage you had best be careful. The last thing you want is to spook the CPA you’ve been working so hard to manage the relationship. You never want a CPA thinking, “How did he know that?” Ugh!

Much like asking clients and COIs questions, finesse is the key. Once again, this is an art form that requires social skills as well as sales aptitude. In essence, you will effectively manage each CPA relationship by blending both into part of your natural style. Which of course, requires the first three steps to be completed.

How to Frame a Healthy CPA Referral Alliance

2010-08-10T07:42:00.000-04:00

Kansas City: “It seems as though it is getting nearly impossible to establish good CPA referral alliances, groaned Ed, then adding “I’ve been conducting CE courses for CPAs for nearly three years, but haven’t got a referral from any of them.”

In many ways, developing a healthy CPA alliance is similar to penetrating affluent centers-of-influence. How so? Both the affluent and CPAs have been overly solicited by financial advisors, and albeit for slightly different reasons, both groups are leery of the world of financial services.

The following steps have evolved from our research and have been successful in developing healthy CPA referral alliances when properly applied.

1. Identify specific CPAs you would like to work with.
2. Gather some background information on each to assist in developing rapport.
3. Contact the CPAs you’ve targeted by a telephone call or face-to-face interaction.
4. Officially meet face-to-face with the sole objective to develop rapport and uncover a reason for a follow-up face-to-face.
5. Send a summary document (email, note, etc.) that provides an overview of your initial meeting and reminds of your upcoming 2nd face-to-face meeting.
6. Officially meet face-to-face a second time with the objective to strengthen the relationship.
7. Manage each relationship by staying in touch and treating each targeted CPA as if they were an affluent prospect.

There is no miracle presentation that will carry the day and qualify you in the mind of your targeted CPA as worthy of referrals. It’s all about developing a relationship on a personal level. Once a CPA gets to know you, determines that he likes you, and feels as though he can trust you, then and only then have you created a window of opportunity for developing a healthy referral alliance.

I’ll be diving into these topics in upcoming articles, but this is a good framework for getting started.

Gaining Bandwidth: Re-engineering Your Book

2010-08-09T17:13:00.001-04:00

*The following is from Registered Rep. Magazine's Practice Management Newsletter.

Philadelphia: “I really don't think it’s fair to treat clients differently, so I provide the same level of service to all my clients,” Marty explained. “But I’m really swamped –- I’m beginning to think that I’ve got to change something.”

Marty is dealing with an issue that I’ve been talking about since writing How to Build a 21st Century Practice nearly a decade ago -- client segmentation. Every financial advisor has only so much bandwidth, so much client service capacity. One of the many revelations financial advisors have experienced as a result of this Category 5 financial tsunami is the time and attention smaller clients require when they are scared about their financial well-being. Throughout this crisis, whenever advisors are asked which clients are calling in the most, the answer is always the same: smaller clients.

As I explained to Marty, every client should get the service they pay for and a little bit more. Every client! To that end, I’m a client advocate. However, rarely do advisors find themselves with too many clients because they are taking a personal interest in serving every client. The reality is that it’s such a challenge to acquire clients in those first few years, the industry has inadvertently conditioned advisors to collect clients. In our heart of hearts we all know that collecting clients isn't about service, it’s about our own insecurities.

So here is the 5-Step Client Re-engineering Process that we coach advisors to follow for gaining bandwidth:

1. Conduct a Net-Profit-Contribution Analysis for every client on the books. This is a simple inventory process where you assess four criteria:

* Annual revenue generated;
* Assets on the books;
* Potential revenue (assets held elsewhere, other financial solutions that could add value and fully monetize the relationship);
* Center-of-Influence (ability to introduce you to affluent friends, colleagues, family members, or clients).

If a client meets any one of the aforementioned, they are classified “above firewall” and labeled accordingly (R-revenue, A-assets, P-Potential, COI-center-of-influence).

2. Determine the appropriate actions for clients who are above firewall. For example, Marty had a few clients with a lot of assets but generating no revenue; his objective was to upgrade those clients into profitable revenue generators. He also had two CPAs and an estate attorney who are centers-of-influence but not clients; he decided to schmooze them as if they were top clients.

This firewall exercise also involves assessing the service your best clients have been getting. In Marty’s case, he wasn’t providing them the time and attention they deserved because he was swamped dealing with his smaller clients.

3. Identify the clients who you have classified as below firewall. These are clients who by your own calculations are generating minimal to no revenue, have no potential, and are not centers-of-influence. This is what’s clogging your bandwidth.

4. Determine what path you are going to take with clients that are below your firewall to gain bandwidth:

- Sever the relationship completely (give them away);
- Get another advisor to service these clients for a revenue-sharing arrangement;
- Bring a junior advisor onto your team to service these smaller clients;
- Give these clients to your firm for servicing.

Whatever path you take will be determined by a number of variables: your broker-dealer of record (some of the larger firms have service centers where advisors can park smaller clients), your access to junior advisors (whether in your office, your firm, or your community), the quality of these junior advisors (must be honest, hardworking, and competent), the willingness of a quality junior advisor in assuming the servicing responsibilities of your smaller clients (a newer advisor in a serious growth mode is usually a good fit), whether you feel the need for a junior advisor on your team; and finally and of most importance, which path will accelerate your long-term growth.

Marty was mentoring a newer advisor and after much consideration, he opted to give these clients away to this individual. Initially he wanted a shared-revenue arrangement, but he realized his continued liability (name remaining on statements) wasn’t worth the minimal shared revenue he’d receive, wouldn’t really gain bandwidth, and therefore wouldn’t fuel his growth.

5. Communicate with each client and inform them of the path you have selected in step four. Like many advisors, Marty opted for a combination that involved a personal phone call to a select number of clients with whom he had a personal relationship, while sending a letter to the rest.

Incidentally, I made certain that Marty understood that even though he would be signing his name to this letter, the junior advisor who was receiving these clients would write it with a post-script that read: If you have any questions feel free to call "Junior Advisor" at 888-123-4567. (The idea is for Marty to spend as little time as possible giving these clients away.)

Marty's initial reaction was like that of many advisors; he was full of guilt and resistance. It was only when I got him to admit that these clients would be served better by the advisor he was mentoring that he consented to take the plunge.

With only 29.9 percent of advisors increasing the personal time they are spending with their affluent clients during this crisis, and with the preferred medium of communication of today’s affluent being face-to-face, advisors need to be very aware of their bandwidth.

One of the reasons New World Advisors, today's elite, are in a growth mode is because they have the bandwidth to spend time with their top clients and to penetrate their affluent centers-of-influence.

7 Mid-Summer Reflection Points

2010-07-22T10:32:00.000-04:00

St Louis: “I’m going on vacation for two weeks with my family, and this is always a good time for me to reflect on my business,” explained Robert, then asking “What does your research suggest I focus on?”

There are different schools of thought regarding vacations. Some people like to get completely away from it all, some are constantly calling their office, and others find the rest and relaxation perfect for carving out a little time to reflect on their business. I must confess, like Robert, I’m of the later profile.

It is difficult, if not impossible for highly ambitious people to completely hit their off switch. The secret is being able to do a little bit of thinking and reflection that wouldn’t happen in the office, but do so without ruining your vacation and or your summer. Ha! But, it can be done.

The following are the Practice Management Reflection Points I outlined for Robert…

7 Practice Management Reflection Points

1.Client Segmentation – How many clients are on your books? Do you still have too many clients? Is there a way to jettison smaller clients? Do you have minimum standards you follow for accepting a new client? What could you improve?

2.Client Service Model – Do you have a distinct service model for your top clients? Do you have another service model for clients that are still profitable but not your best? Are there distinct differences between your service models? Does everyone in your practice have clarity regarding your service models? What could you improve?

3.Client Loyalty – Are you ‘wowing’ your top clients? Do you know everything you need to know about them? Have you been able to ‘surprise and delight’ them? Do you know their passion points? When was the last time you socialized with each of your top clients. What can you improve?

4.Wealth Management Services – Are you providing comprehensive solutions for the multi-dimensional aspect of your client’s family’s financial affairs? What services have you added as a result of this financial crisis? How have you changed? How do these services impact your compensation? What wealth management services could you add? Have you fully monetized all of your top clients? What can you improve?

5. Rainmaking – How many new clients have you acquired year-to-date? How many of these new clients are greater than $1 million investable assets? What is your net-new asset total for the year? What does your pipeline look like? Do you know how to market your services to today’s cynical affluent investor? Have your marketing efforts been consistent? What can you improve?

6.Personnel – Do you have the right people on your team (in your practice)? Do you have enough support? Do you any underperformers on your team? If so, how are you addressing the problem? Do you have role clarity and performance expectations for each role? Do you conduct performance reviews? What could you improve?

7.Leadership – Do all personnel know your vision for the team? Have you linked annual goal targets to your long-range vision? Is everyone aware of the connection between your annual goals and your vision? Have you explained to each individual how their specific role impacts both your annual goals and your vision for the team? Do you have some sort of a metrics scorecard to help everyone stay on track? Are you on target for your annual goals? Are you on target for your vision? What can you improve?

Now relax. The aforementioned are merely questions geared to stimulate reflection. In Robert’s case, he was going to reflect upon his service model and client segmentation. He still had too many clients and it was interfering with his Rainmaking.

As we discussed this, my suggestion to Robert was to think outside the box, reflect, jot some thoughts on paper and leave it until he returned from vacation. It’s important to understand that reflection precedes action.

Mid-summer is an excellent time to reflect and fine-tune. Everything is a bit slower during the summer, but business does go on. The idea is for your strategic reflection to lead to a few adjustments that will accelerate your pace during the second half of 2010.

Enjoy the summer – but reflect and adjust.

7 Affluent Rapport Killers

2010-06-30T13:38:00.000-04:00

Recently I had the pleasure (tongue in cheek) of having lunch at a fundraiser with a table of BORING affluent locals. An hour later, after my excruciatingly painful meal, it was apparent that these people are ideal prospects but don’t have a clue about developing rapport and making a good first impression. Not that they cared, but few people would like to be called “boring.”

Now, keeping my tongue firmly implanted in my cheek, let me remind you that an aspect in the art of selling to today’s affluent is being able to quickly establish rapport, often times with boring people. And boring conversations are a turn-off. Right?

So as we enter the summer season when advisors should be working to capitalize on this crisis – PROSPECT – which leads to active social prospecting, let’s have a chuckle and review what I’ve termed the 7 Affluent Rapport Killers.

1.Talking too much – Do you know anyone like this? How about any advisors who like to hear themselves talk? I do. The rule of thumb for affluent rapport building is to spend 80% of your time listening and 20% talking. Let them babble on while you force yourself to be interested.

2.Talking about yourself – Get used to it. But don’t do it. Don’t you love it when you’re listening to someone tell you, in minute detail, about themselves –what they’re doing, what they like, what they’ve done, etc. Another rule of thumb with the affluent is that when they’re talking 80% of the time, it important to get them talking about their favorite subject – themselves! Sorry, but they could care less about you.

3.Not listening – Isn’t it infuriating when someone asks you a question and you get the feeling they are not listening to your response? It’s poor form. This is a real challenge for anyone who likes the sound of their own voice, especially advisors. Why? Because instead of listening they’re looking for an opening to … talk. Some even interrupt. Ouch!

4.Bragging about your kids – I know, everyone’s child is going to be a professional athlete, doctor, attending an Ivy League college, or about to save the world. Which is why an entire industry was built around bragging bumper stickers; My Child Is An Honor Student at…. I don’t know about you, but I’ve never seen one that read My kid’s stupid! Remember, it’s okay for your prospect to brag, to be boring – your job is to develop rapport by faking interest in their kids.

5.Talking about recent increases to your wine cellar – Nobody likes a snob, and although affluent prospects enjoy wine, few are true aficionados but many will pretend. So, play along rather than engaging in a bragging contest, ask questions and then educate by suggesting a well priced varietal.

6.Replaying your last round of golf – Be prepared to listen with interest to the boring golf games of your affluent prospects. Because other golfers would rather play golf than listen to someone dribble on about their game, you have a window of opportunity to organize a game. Oh, and don’t talk about your game. Listen to their dribble, develop rapport, and get a game.

7.Detailing the plot of your favorite TV show or movie – Don’t you love it when someone just keeps on rambling about a movie or show they’ve seen? Ha! Re-telling the good scenes, jokes and all – boring! Much along the line of detailing a great meal you once ate at a particular restaurant – who cares? You do, when you’re listening to an affluent prospect. Of course, as a master rapport builder you avoid this faux-pas.

Now, keep your powder dry, there are exceptions to all the above. These topics aren’t boring to everyone and not all affluent prospects (and advisors) are boring. The secret is that when engaged in properly (listening more than talking) you’ll find yourself naturally developing rapport with affluent prospects in social circles.

However, remember you need to brace yourself to being bored. Today’s affluent like to talk about themselves. Boring, but rapport building.

It's Summer! Select the Right Social Event

2010-06-14T11:03:00.001-04:00

Philadelphia: “Every time we decide that we’re going to incorporate intimate social events into our business, we get derailed,” groaned Bill in the Q & A session following my keynote, concluding with his real question, “how can we get started?”

Bill isn’t alone. Although intimate social events are the preferred event of today’s affluent investor (see chart below) and the event to which they are most likely to bring a guest, few advisors seem to have incorporated them into their business model. This is a shame. Why? Because it’s one the few activities where you are able to express appreciation to your best clients and prospect at the same time. And the bonus, when done properly, you are mixing business with pleasure.

The objective is to entertain your best clients and friends within their centers-of-influence. It’s important that you begin with the end in mind; you want your clients to bring guests. This requires selecting an event that is guest-worthy. If you picky something that might be considered boring or salesy (i.e. a dinner hosted by your firm), as our research highlights, you will struggle getting people to attend. SO, the first step is selecting an event that is worthy of your client’s making that extra call (to bring a guest).

We are frequently asked about which types of events are most popular. The answer is; it depends – as it’s based on your specific client base. However, we’ve found that most of the events that advisors have held fall into the following broad categories:

• Life Milestone Events – Birthdays, anniversaries, and graduations offer excellent opportunities to honor clients and their family members.
• Cultural Events – Art exhibits, concerts, theater outings, and events that honor the culture of your community all have worked well.
• Entertainment – Here is where you can have some fun; whether it’s a wine tasting, cooking, antiques, or playing bridge.
• Sporting Events – This can be either as observers or participants. Golf, tennis, and boating are favorites. College and pro games are also appreciated by those who are fans of local teams.
• Educational Events – An invitation to clients and guests to hear a well-known speaker is one option. Another is to bring in a speaker on a topic that you know will be of interest to a select group of clients (nutrition, cancer prevention, etc.)
• Charitable Events – Select with care, knowing that your clients might be solicited by the organization sponsoring the event. This is a great way to be see by the power players in your community.

These broad categories should provide you a framework for determining which match your client’s interests.

Think not only of your first event, but of your second event as well. Setting up at least two events over the balance of the summer provides an option for clients and guests that are unable to make the first event.

Remember, the best events are personal and fun – they don’t have to be extravagant or costly.

As you consider your events for the summer, keep in mind that these events must also be something you enjoy. So, if you don’t play golf, forget about any type of golfing event. If you don’t like wine, skip the wine tasting. The idea is to think in terms of socializing with your top clients and their friends in a non-threatening environment.

Keep these events intimate (8 – 10 people per advisor) and you will be able to develop rapport with all of your guests; clients and prospects. Do so, and you will soon be filling your pipeline as you master the art of mixing business with pleasure.

Opportunity Amidst Crisis

2010-05-21T10:23:00.002-04:00

*The following is from Registered Rep. Magazine's Practice Management Newsletter.

San Diego: "I'm getting the feeling that this crisis is never going to end," groaned Steve. "It seems that nothing I'm doing with my clients is relevant in the midst of a 1,000-point drop in the Dow in a matter of minutes."

Steve was exhibiting the characteristics of apathy -- which is the first cousin of defeat -- throwing his hands up in frustration and saying, "There's nothing I can do!" Everyone, even the savviest financial professionals, was floored by the wild gyrations of the Dow Jones on that eventful May 6. To put Steve's comments into context, all of this occurred only a few hours before my presentation and he was still in the processing mode, but going down the wrong path.

A crisis that seems to never end can be nerve-wracking even for the best of us, but much more so for those who fail to take deliberate "crisis control" action. Financial advisors should view the recent events (Greece, 1,000-point swings, Goldman Sachs/SEC, etc.) as both a wake-up call and an opportunity.

The Wake-up Call: Financial advisors need to be working feverishly to become the "go-to" financial coordinator for their affluent clients. This requires extreme diligence, both with managing their practice and managing client relationships. There can be no complacency, no resistance to making the requisite changes that ensure you, as a financial advisor, are overseeing the multi-dimensional aspects of your affluent clientele's financial affairs.

The Opportunity: Every crisis is a two-sided coin: problem versus opportunity. The aforementioned wake-up call describes the ongoing challenge, but the opportunity is uncanny. Why? Because it's disguised within the wake-up call. The more the media beats the drums of financial doom, the more this financial crisis spreads its tentacles, which provides the media the fuel to beat the drums of panic, and the more nervous the affluent investor becomes. All of which heightens their awareness of the need for first-rate professional advice and guidance.

Since that momentous 1,000-point trading error day, numerous advisor blogs and forums have been singing the praises of financial advisors who weren't inundated with calls from panicking clients. This sounds like nirvana to any advisor flooded with calls from panicked clients, but there is a danger lurking in this smugness.

From the perspective of the New World Advisor, today's elite as defined by our research on meeting today's affluent investors expectations, I'd highly recommend that you view these turbulent times as, yes, a pain in the a--, but also a real window of opportunity. As I outlined to Steve, advisors can capitalize on this ongoing crisis by conducting a thorough re-evaluation of their current state of affairs on three fronts.

Let's take a quick look at each to get you started…

1) Your Practice/Team

What services are you providing? For instance, comprehensive financial planning and its execution are extremely important to today's affluent investor and should be at the core of your practice. The same is true for financial organization; keeping your client's financial documents organized and current. Alas, though nearly 80 percent of advisors claim that planning is an integral part of their practice, only 25 percent of today's affluent feel as though they have a comprehensive financial plan.

How competent is your personnel? Your practice/team is only as strong as its weakest link. Are roles and responsibilities clear and understood? Are you conducting performance reviews? Is everyone pulling his or her weight?

This ongoing crisis creates the perfect window of opportunity to add services you heretofore have not provided. It is also the time to address performance issues of all personnel, and re-align roles and responsibilities if necessary.

2) Managing Relationships

Each new chapter within this crisis affords an opportunity to strengthen your client relationships. How? By meeting face-to-face and explaining what is occurring and how you are protecting them, by calling them and explaining the same, by meeting with them socially, and so on.

It is also the perfect time to strengthen your referral alliance partners. You should, if possible, meet with each on a personal basis and help them understand what's happening, how you've responded, how clients are protected, and help them in explaining this to their clients.

3) Rainmaking

Eight of 10 affluent investors have enough dissatisfaction with their financial advisor(s) that they would consider making a change if they knew of a better alternative. Whether it's Goldman Sachs and the SEC, Greece, market volatility, or the media fanning the flames of panic, nervous affluent investors are in a perfect frame of mind to meet with you for a second opinion. You want to be penetrating your affluent client's centers of influence.

Hold a series of small events focused on "Economy & Market Update" as this ongoing crisis has made these events the second-most favored (intimate social events are number one) by today's affluent investor, and the second-most likely where they would bring a guest. Make certain you have each client bring a guest you've selected, and also invite your strategic referral alliance partners.

Deliver one second opinion daily.

It's ludicrous to suggest that advisors should be enjoying this financial crisis. Today's world of financial services is extremely unsettling to everyone. However, there is a sliver lining amidst all of this pain. As I explained to Steve, this is the opportunity to very carefully fine-tune your practice in a manner that will enable you to capitalize on these challenging times.

Business in Social Settings

2010-05-20T08:56:00.001-04:00

*The following is from The Oechsli Institute's Performance Edge Newsletter, written by Stephen Boswell.

Greensboro: “I’ve got a wealth of social connections, but have been reluctant to go after the business. I just don’t feel comfortable putting these people in an awkward position”, said Fred, an advisor who recently called our office.

Fred is one of many advisors who struggle with the idea of putting social contacts into their pipelines. You may be asking, if this makes people uncomfortable, why don’t they focus their efforts elsewhere? Well, because social connections often represent an enormous (and fairly quick) prospecting opportunity – low-hanging fruit, if you will.

However, there are many reasons why social prospecting hasn’t played a bigger role in many advisors’ marketing strategies. Our 2010 Financial Professional research gives us insight into a few of the common stumbling blocks:

The reason for overcoming the aforementioned fears is simple. People that like you, trust you and respect you professionally are one step away from being clients. You should be the person they trust most to handle their family’s financial affairs. The key is introducing your services properly; in a non-threatening, non-salesy, “doing a favor” kind of way.

In our coaching, we see several core mindset issues that hold people back from mastering social prospecting:

- Social Self Consciousness: Being intimidated by approaching people of wealth.

- Poor Sales Skills: Not being sure how to approach social contacts the right way.

- Fear of Being Salesy: Not wanting to appear like a salesperson is a major issue – Closely aligned with poor sales skills and social self-consciousness.

- Low Confidence: This is often conveyed as “Not wanting to put your relationship in jeopardy if something goes wrong”. Many advisors don’t feel confident enough in their service offering.

From Fred’s perspective, the issue was part sales skills and part confidence. With a combination of serious self-awareness (recognition of strengths and weaknesses) and intensive performance coaching, Fred went through a metamorphosis. He rededicated himself to stepping outside his comfort zone and deliberately practiced his affluent sales skills in two core areas:

- Verbiage: Fred was intent on mastering the language he would use in approaching his social contacts. We scripted some basic bullet points and he practiced until he “owned it”.

- Timing: Week by week, we helped Fred activate his “Rainmaker Antenna”. We knew that he was having frequent conversations with his social contacts regarding their family and their business. Each of these conversations had one or two natural points for him to introduce his professional services.

Here’s where opportunity meets preparation. Within one week, he was speaking with a doctor friend of his who started complaining about upcoming tax changes. So he offered to meet and share some thoughts on what his team is doing for some of their current physician clients. Then he found out that a small business owner at his club was preparing to sell some real estate, so he mentioned the work he’d done with other business owners and suggested they meet to ensure that their family was on the right track.

These are two of countless opportunities that heretofore Fred, like so many advisors, let slide. However, the new and improved Fred – self-aware –deliberately practicing his affluent sales skills –allowing himself to go far outside his comfort zone has offered second opinions to eight different social contacts, four of which became clients in a relatively short period of time. And he did all this without being perceived as a salesperson.

Fred’s story isn’t an anomaly; this kind of transition can be yours – if you dare. Step outside your comfort zone, practice your sales skills and you too will reap the rewards of high impact social prospecting.

5 Ways to Guarantee an Unproductive Summer

2010-05-07T08:15:00.000-04:00

The following is from Registered Rep. Magazine's Practice Management Newsletter.

Nashville: "I've always found it difficult to do much serious business during the summer," Gerry said to me after a talk I gave. Then he asked, in a way as though to get confirmation, "Don't you think the summer is a time when you should scale back business activities?"

Gerry did not get the confirmation he was seeking. However, when I asked him to list his role models within the world of financial services, he responded immediately: Warren Buffet and Charlie Munger. After complimenting him on his selection and reinforcing the importance of modeling ourselves after elite performers, I suggested he approach this summer by applying some thoughts by Charlie Munger.

So, in the spirit of Charlie Munger, the following are the five ways that I outlined for Gerry that will guarantee that he has an unproductive summer (the polar opposite of an elite advisor):

1. Don't Read - As an advisor in today's volatile world, it's not important that you have a historical perspective, a depth and breadth of industry knowledge. In the words of an affluent focus group member, "I like my advisor, he's a good guy, but he doesn't have a clue." Wow!

Reality:
In Munger's own words, "In my whole life, I have known no wise people (over a broad subject matter area) who didn't read all the time - none, zero. You'd be amazed at how much Warren reads - and at how much I read. My children laugh at me. They think I'm a book with a couple of legs sticking out." One of the most important criteria for the affluent when meeting a financial professional is their impression of the advisor's competency and professionalism. Reading on a regular basis not only increases your knowledge base and makes you a well-rounded person; it makes you more interesting.

2. Don't Prospect - Rainmakers stop prospecting during the summer, they stop working on their sales skills and take a break from social prospecting. In addition, today's affluent investors aren't concerned about their families' financial health during the summer.

Reality:
Putting your prospecting on hold because of the summer is the equivalent to Peyton Manning not training during the off-season. In addition to constantly working on their skills, rainmakers understand that opportunity abounds in today's environment. Some of our latest 2010 Q1 research on affluent investors states that most investors would welcome a second opinion if they had such an option. Also, it’s important to note that the more affluent a prospect, the more likely they are to want a second opinion. This is the opportunity of a lifetime - so take advantage!

3. Don't Attempt to Spend Time With Your Clients (they're on vacation) - Your affluent clients don't want to socialize with you during the summer. After all, they are planning on skipping town and none of them will be having barbecues, playing golf, or going to the pool.

Reality:
A common misconception is that everyone is traveling. While some clients do make travel arrangements during the summer - like all holiday periods, it is a time for socializing – such socializing is one of the most potent rainmaking activities. Being able to connect with your clients on a social level will not only earn loyalty, but it will afford you an opportunity to meet their friends.

4. Don't get to know your clients personally - Your clients do not want you to know anything about them personally. They only care about their investments and want the relationship to be strictly business. Sure...

Reality:
Our research shows that your affluent clients want you to know as much about them personally as professionally. They want you to take a genuine interest in them. Knowing your clients' hobbies, interests, and other hot buttons will afford you opportunities this summer to provide them with presents and activities geared to their personal likes.

5. Don't hold any intimate (social) client events - Your clients have no interest in attending fun events during the summer. They have their own plans, go on vacation, and or go into hibernation and have no interest in coming to a social gathering. Duh?

Reality:
There are numerous creative ways to leverage the outdoors during the summer months for intimate client events. Look to hold a barbecue or take a few clients to a baseball game where they can bring some friends. Summertime is a social time and a very natural way to hold a few fun events and penetrate your top clients’ centers of influence.

It's one thing to have role models, but for a role model to be anything other than a hero we admire from afar, we must hold ourselves accountable to making the necessary adjustments. Charlie Munger doesn't shut down during the summer!

Gerry has since renewed his commitment to summertime rainmaking. As a starting point he's selected two heroes that are worthy of everyone's admiration. Incidentally, Charlie Munger considers Benjamin Franklin his greatest role model and like Franklin, he is curious, patient, practical, and a life-long learner. So, my dear friends, have a summer that would make both Charlie and Ben proud!

Affluent Marketing Reality

2010-04-09T08:45:00.003-04:00

Atlanta: “If there’s one thing that you can share with me that elite advisors are doing to bring in new business, what would that be?” John asked with a very serious expression on his face.

This is a question we get asked repeatedly both from newer advisors to $3 million producers like John. It seems as though the entire industry is at a loss in how to effectively market financial advisory services to today’s affluent investor.

As I explained to John, there is no one thing elite advisors are doing, rather it’s more like a compilation of activities – a number of inter-connected actions that when applied with strategic intent, work together to bring about a desired result; new affluent clients.

Our Q1 2010 Financial Advisor Survey provides a number of examples. For instance…

• 8 of 10 elite financial advisors provide comprehensive financial planning for their affluent clients and help them execute their plans.

• 66% of elite advisors organize and coordinate the financial documents for their affluent clients.

• 81% of elite advisors have adequate support personnel to provide the desired level of service to their affluent clients.

Granted, these are not marketing activities per se, but they are an essential aspect of the affluent marketing reality. And there should be 100% of advisors adhering to the above. Why? Because these areas are of critical importance to today’s affluent investor and word-of-mouth influence is their primary method of making major decisions – they talk to each other. Yes, elite advisors still have room for improvement, but they are still head and shoulders above the general advisor population.

The following chart illustrates the gap between elite advisors and the general population in regards to marketing. By core activities, we mean those within which are executed consistently as part of a marketing plan.

The above chart also explains why even today’s elite advisors are not bringing in as many new affluent clients as they should. Although the high-impact activities such as introductions, strategic networking, and referral alliances are the activities elite advisors are most involved with (same as the general population, just less) and constitute their core marketing activities, the usage of each should be above 80%. The following chart serves to confirm today’s affluent marketing reality and reinforce the idea that these top activities need to be executed with more consistency and skill, even by elite advisors.

Today’s reality when it comes to marketing your services to the affluent revolves around relationships on two fronts:

1. Relationship management - Existing affluent clients and referral alliances are your acre of diamonds. Which is why you must make certain that you are delivering all the services they deem important, while providing a Ritz Carlton quality of service with a FedEx level of efficiency to your affluent clients, which provides you with the platform upon which to engage in the second aspect of relationships.

2.Relationship marketing – penetrating affluent centers-of-influence, clients and referral alliances, by expanding your relationships and skillfully selling your services

After listening to my explanation, John confessed that he was marketing by the seat of his pants. He wasn’t comfortable selling his services in affluent circles because he didn’t want to come across as a salesman, and therefore he was randomly engaged in these high-impact activities.

Being the good coach and a seamless salesperson, when John asked what I thought he should so, I simply registered him for our upcoming Rainmaker Weekend in Philadelphia. He sold himself.

Affluent Sales Secrets

2010-01-12T15:01:00.000-05:00

Dallas: “I’ve got some extremely affluent clients,” explained Mark in the Q & A session following my keynote address, then adding, “it’s hard to imagine prospects in these wealthy centers-of-influence being interested in any type of financial planning or influenced by the broad-based questions that you’re advocating.”

Like so many advisors, Mark didn’t understand the affluent, much less possess either the mindset or skills to sell his professional services to them. He was looking into the future with at least one-eye focused on the rearview mirror, “My wealthy clients are only interested in fixed income products -- this how it’s always been and it’s all they ask me about.” Obviously, there seemed to be a lot of issues holding him back. His question was actually an attempt to rationalize his struggles in affluent client acquisition, rather than admit that he was positioned as the “bond guy”.

Because Mark doesn’t understand today’s affluent investor (we do – that’s what our research is all about), he assumed his ‘wealthy’ clients, friends and colleagues were above any conversation that involved two simple broad-based questions:

• How has your wealth management plan held up?
• Have you had a second opinion on your family’s portfolio?

Mark had considered attending one of our Rainmaker Weekends, but he couldn’t pull the trigger –“Maybe it’s just the wealthy people in my market, but I don’t see them looking to change advisors.” Now let me walk you through a real life example of how Bill, a veteran advisor who attended a Rainmaker Weekend, successfully applied our affluent client acquisition process – the one Mark was clueless about. Incidentally, Mark’s wealthy clients are in the $5 to $10 million dollar range, the same range Bill is targeting.

The following is a live example that occurred during a social encounter – a holiday party – a time period where most advisors (Mark) are not marketing their services. I’m going to break Bill’s real-life example into its affluent client acquisition component parts:

1. Affluent Playing Field: Bill has changed his routine in order to significantly increase his face-to-face interaction with his affluent clients and prospects. He attended numerous social events and holiday parties, including a party thrown by a top client.

2. Pre-Work: By asking the host of the party (his client) who was attending, Bill was able to identify a handful of qualified names which enabled him to engage in a little information gathering homework (Google search for each).

3. At the Event: Positioning is always very important. Bill carefully made certain that he was engaged in social conversation with his client at specific intervals; those times when his client was interacting with one of the individuals from his pre-work list.

4. Recognizing / Orchestrating Opportunities: One of the pre-work attendees, an oral surgeon, after the host introduced Bill as “the guy who oversees his family’s financial affairs” started talking about the confusing nature of the stock market.

5. Proper Execution: Rather than engage in a conversation about the markets and investing, Bill simply smiled and said “That’s why we’re spending a lot of time providing second opinions on portfolios.” To which his prospect responded, “I could probably use a second opinion.”

6. Mini-Close: Instead of letting the discussion linger, providing too much information, or suggesting that he’d call and schedule an appointment, Bill mini-closed on the spot. He scheduled an early breakfast meeting for two days later.

7. First Meeting: The breakfast meeting, the first official meeting, served as a platform to strengthen rapport, and further the discussion initiated at the party. The oral surgeon didn’t bring all of his statements and admitted that he didn’t have a financial plan. At the appropriate time, Bill used this initial meeting to explain how he operates, the requirements he has for taking on a new client, and the next step he thought they should take (he had to take a thorough look at everything). At this point, the affluent prospect asked “How do we get started?”

Within two weeks over the holidays Bill had acquired new affluent clients and opened-up an entire new center-of-influence; his new client has already offered to introduce Bill to a close friend, another oral surgeon. Bill understands the affluent sales secrets and is capitalizing on the opportunity awaiting every advisor who is similarly prepared; 9 of 10 affluent investors would welcome a second opinion, 8 of 10 would consider changing advisors! It doesn’t get much better than that.

While poor Mark is wallowing away in excuses; ignorant of today’s affluent investor and prospecting opportunities. Which is one of the reasons Rainmakers like Bill have so little competition. Be like Bill -- go for it!

Holiday Greetings: The Gift of Giving

2009-12-22T16:46:00.002-05:00

Greensboro: I must confess, over the years I’ve become less enamored with the holiday season. Even in the midst of this financial crisis retailers began their “Christmas” marketing well before Thanksgiving. I know I’m not alone.

Yet, although annoyed, I keep finding myself swept up in it; “Did we get a present for Mary?” “Oh my gosh, I think we forgot to send a card to the Growlers.” “So honey, what do you want for Christmas?” and the beat goes on.

Which leads me to a gift I received via an article by Tara Parker-Pope in the December 1st article in the New York Times titled “In a Month of Giving, a Healthy Reward.” Parker-Pope writes about Cami Walker, diagnosed with multiple sclerosis three years ago and how her “health and spirits plummeted – until she got an unusual prescription from a holistic health educator.”

Ms. Walker’s treatment was to give a gift a day for 29 days – simple thoughtful acts of kindness, such as making a supportive phone call or giving a flower to a stranger. It didn’t cure her illness, but it appears to have had a remarkable effect on her quality of life. She is now more mobile and less dependent on medication and has written about her journey in a book similarly titled, “29 Gifts: How a Month of Giving Can Change Your Life” and created a very persuasive website, 29gifts.org that will help you become a giver.

But for those doubters out there, science upholds Ms. Walker’s holistic health educator. Studies at major universities support the premise that there is a positive physiological impact when we become less self-centered; simple random acts of kindness shift focus from ourselves, to helping others.

Parker-Pope cites a study of 150 heart patients where researchers found that people in the study with more “self-references” (those who were more self-absorbed) had more serious heart problems and performed worse on the treadmill tests.

Selfishly, the idea of writing this holiday message caused me pangs of guilt. Why? Because I thought I could easily perform one act of kindness a day without keeping a journal. Alas, my acts of kindness have strayed, albeit only slightly.

Now sitting on my desk is a spiral notebook that I’ve labeled “Kindness Journal.” My intention is to document these daily acts of kindness, which hopefully will make me a better person, with the ancillary benefit – a positive impact on my physiology.

You can do the same. To me this goes far beyond the holiday season or any structured religious services, because when it becomes a personal habit, it truly is a gift that keeps giving. Visit Ms. Walker’s Web site, read her book, or better yet, get your spiral notebook and label it “Kindness Journal” and let’s start the giving habit today.

Happy Holidays!

The Power of Strategic Networking

2009-12-01T13:33:00.002-05:00

This is the season for social prospecting and strategic networking. There probably isn’t a better time to rub shoulders with affluent investors, whether they’re clients, prospects or strategic referral alliances. The holiday season is upon us, and yet somehow, for some reason most financial advisors do not understand the importance of social prospecting and strategic networking. Which is probably one of the reasons so many advisors struggle at Rainmaking.

The following is a real story of social networking under pressure. I’m going to let Stephen Boswell, one of our top-notch performance coaches, share a coaching experience with a veteran advisor who had moved his family across country and is now rebuilding his practice.
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Portland: Ring Ring – I answered the phone to find Jim, an advisor who, like many others, desperately wanted to build his practice. He said, “I just sold my practice in Tennessee, I moved to Portland, and I’m starting all over”. I assured him we’d seen this situation many times, yet he insisted, “You don’t understand, I really need to build my practice. I convinced my wife to make the move and she was against it all the way. I promised her that I would rebuild our lifestyle, but with this market downturn I think I’m in over my head.”

The market downturn was the least of Jim’s worries. His poor sales skills were a much bigger issue, hence his call to our office. Convinced we could help, he entered into our Performance Coaching and committed himself to doing everything possible to rebuild his practice the right way.

Jim was fighting an uphill battle. Even though his new market was wealthy, his in-town connections were minimal. They sparsely consisted of two clients and a couple of wholesalers. In his own words, he was forced back into "rookie mode" -- with one clear exception. He knew full well that the way he built his first practice wasn't the way to rebuild in today's environment. Times have changed and the affluent are more cynical and skeptical than ever. Any attempt at cold calling just wouldn't bring in the type of clients that he was now capable of servicing. Jim had to do something – and fast.

I'm about to outline one of the core methods used by this advisor to start the rebuilding process with a bang. This will be useful, not only for rookies or those rebuilding a practice, but for anyone looking for more affluent clients. The answer, believe it or not, is strategic networking.

Notice that I said “strategic” networking. This isn’t your ordinary meet and greet or card-swapping party. This is getting on the affluent playing field, going where the affluent go, doing what the affluent do. This is your entry point for strategically (and seamlessly) selling your professional services.

Granted, this seems like a pretty basic principle. Which begs the question, why do so many people have a negative feeling about networking? The main reason is that most people aren’t good at networking.

Strategic networking is highly effective. We hear it every day in our coaching and we see it in our research. 35% of advisors brought in at least one new million dollar client last year through networking. If everyone really networked the right way, we know this statistic would be far higher.

Getting Started

Get involved with 2 to 3 strong networking activities. This could be at a weekly poker group, a Rotary club, a country club, a charitable organization. Look for groups that:
• Put you in contact with affluent prospects
• Have regular meetings – once per quarter isn’t enough interaction to build
meaningful relationships
• Give you time to interact with people at the meetings/events
• Will allow you to get involved; showcasing your competence
• Involve the kind of people and activities that you enjoy!

There is a six month rule of thumb regarding social networking. Develop relationships, get involved and make a good impression before proactively marketing your services. So…

For the first six months, ease your way into these groups, become involved and think in terms of:
1. Targeting specific people that fit your ideal client profile.
2. Developing meaningful relationships with them.
3. Unless they bring up business before then, work hard for six months then
start proactively putting them in your pipeline.

Jim understood the task at hand; he had to start making a footprint in the new community that he’d targeted. He started reaching out to various charities and community groups that would allow access to the movers and shakers. After a half dozen calls and a handful of trial meetings, he had a much better idea of where the affluent congregated in his community. Not to mention, within his first month (not six), he landed a $1.2mm client (was going through a divorce and needed help), connected with the top real estate agent in town (a great COI), and played three rounds of golf with an Indy racing team owner. The last time we touched based with Jim he estimated a little of $10mm in his pipeline as a result of his networking efforts. Was that a bit of social prospecting and strategic networking? You bet.
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Most likely your situation is much less stressful than Jim’s – however, the importance of social prospecting and strategic networking must not be overlooked. Think in terms of social holiday lunches, connecting with people in the organizations where you are a member, and accepting invitations to holiday events.

Whenever you are in a social setting, defenses go down and your Rainmaking skills can work wonders.

President Lincoln's Thanksgiving Proclamation

2009-11-24T11:53:00.006-05:00

As we approach Thanksgiving, it is important that we take time for reflection, time to truly give heartfelt thanks for our blessings. And because Thanksgiving is my favorite holiday and I am a devoted follower of Abraham Lincoln, I wanted to share the following with you.

The following is President Abraham Lincoln's Thanksgiving proclamation. This proclamation set the precedent and regularity for America's national day of Thanksgiving. It proclaims the last Thursday in November be "a day of Thanksgiving and Praise."

This financial tsunami has presented many challenges, especially for those of us in the world of financial services. As President Lincoln points out, even amidst great adversity, it is essential for us to take time to reflect on the past year and be thankful.

Proclamation of Thanksgiving
By Abraham Lincoln, 16th President of the United States of America
October 3, 1863 in Washington, D.C.

The Year that is drawing to a close, has been filled with the blessings of fruitful fields and healthful skies. To these bounties, which are so constantly enjoyed that we are prone to forget the source from which they come, others have been added, which are so extraordinary a nature, that they cannot fail to penetrate and soften even the heart which is habitually insensible to the ever watchful providence of Almighty God.

In the midst of a civil war of unequaled magnitude and severity, which has sometimes seemed to foreign States to invite and to provoke the aggression, peace has been preserved with all nations, order has been maintained, the laws have been respected and obeyed, and harmony has prevailed everywhere except in the theater of military conflict; while that theater has been greatly contracted by the advancing armies and navies of the Union.

Needful diversion of wealth and strength from the fields of peaceful industry to the national defense, have not arrested the plough, the shuttle or the ship; the axe has enlarged the borders of our settlements, and the mines, as well of iron and coal as of the precious metals, have yielded even more abundantly than heretofore.

Population has steadily increased, notwithstanding the waste that has been made in the camp, the siege, and the battle-field; and the country, rejoicing in the consciousness of augmented strength and vigor, is permitted to expect continuance of years with large increase of freedom.

No human counsel hath devised nor hath any mortal hand worked out these great things. They are the gracious gifts of the Most High God, who, while dealing with us in anger for our sins, hath nevertheless remembered mercy.

It has seemed to me fit and proper that they should be solemnly, reverently and gratefully acknowledged as with one heart and one voice by the whole American People.

I do therefore invite my fellow citizens in every part of the United States, and also those who are at sea and those who are sojourning in foreign lands, to set apart and observe the last Thursday of November next, as a day of Thanksgiving and Praise to our beneficent Father who dwelleth in the Heavens.

And I recommend to them that while offering up the ascription's justly due to Him for such singular deliverance's and blessings, they do also, with humble penitence for our national perverseness and disobedience, commend to His tender care all those who have become widows, orphans, mourners or sufferers in the lamentable civil strife in which we are unavoidably engaged, and fervently implore the interposition of the Almighty hand to heal the wounds of the nation, and to restore it as soon as may be consistent with the Divine purposes to the full enjoyment of peace, harmony, tranquility, and Union.

In testimony whereof, I have hereunto set my hand and caused the seal of the United States to be affixed.

Done at the City of Washington, this Third day of October, in the year of our Lord one thousand eight hundred and sixty-three, and of the Independence of the United States the Eighty-eighth.

By: Abraham Lincoln

Please take time to be thankful for all of your blessings, enjoy time with your family, and have a wonderful Thanksgiving!

An Early Start to Holiday Gift Giving

2009-11-19T15:22:00.010-05:00

San Diego: “Is it just me or does it seem a little mechanical to send out the same holiday gift to every client?” remarked Bob in a recent coaching call. “It seems everyone in my office is starting to make plans for this year’s fruit cake or wine basket. That’s not a best practice club I want to join.”

I don’t blame him. There are certainly more effective ways to spend your client gifting dollars. For starters, you don’t have to wait until December. Thanksgiving is a perfect time to start sharing goodwill.

We’ve had the pleasure of dealing with some real pros when it comes to sending small gifts to affluent clients. We call this concept “Surprise and Delight”. Clients are surprised that you bought them a gift and delighted that it was so thoughtful and personal. We’ve seen this seemingly small part of the overall service model work wonders for both client retention and client acquisition.

Let me share a few examples that might spark a few early gifting ideas for your top affluent clients:

One top producer sent 5 of his best clients an oven roasted turkey from a local organic grocery store with a card that said “To the biggest turkey I know”. He had people with more money than they could spend in three lifetimes calling and saying “Thank you so much. What a great surprise.” Not to mention, it was too much turkey to eat alone, so one client invited the advisor to join the dinner party with three of her friends. Wow – what a great introduction.

Another advisor hand delivered a Surprise and Delight gift for one of her best clients at a nursing home. The client complained about the nursing home food in their last review meeting and the advisor took notice. She knew this client’s favorite home-cooking restaurant and hand delivered a nice meal for her and a few friends. The client actually had tears in her eyes when she realized what was happening.

We’ve even had an advisor who hosted a holiday cooking class for a handful of his top clients and their friends. He organized a top chef from the area to come to his house for a quick lesson on preparing the perfect holiday meal. The clients loved it and so did the guests. This simple (and inexpensive) gesture put two new prospects in his pipeline.

These are three of many examples. You just have to get creative and think about gifts that your clients would really enjoy. And remember, Surprise and Delight is not just for clients; it can make quite the impact on prospects and COIs as well.

Here are a few websites with great Thanksgiving-time gifts:
Godiva.com – Chocolate Comforts Gift Basket - $55
1800Flowers.com – Thanksgiving Centerpiece - $39
GiftsofWine.com – Wines with Personalized Labels - $39
FreshMarket.com – 10lb Fully Cooked Turkey - $35
Chocolate.com – German Chocolate Cake - $40

Affluent client relationships, as any business expert will tell you, are the lifeblood of a successful business. The old adage that it costs less to keep clients than to find new clients is only part of the reason. As importantly, your current clients should be a wellspring of new business opportunities. But this doesn’t happen all by itself. You’ve got to stimulate positive word-of-mouth influence and Thanksgiving, a time when American’s really do reflect and give thanks, is a perfect venue for providing a personal touch.

Few things have the impact of a timely Surprise and Delight. Be on the lookout for our Surprise and Delight Mini-Guide that’s due out in December. It’s full of great client gifting ideas.

Out of Comfort Zone Opportunities

2009-11-03T15:38:00.016-05:00

The other day I was speaking with one of our performance coaches, Kevin Nichols, and he relayed a story to me about one of his coaching clients that speaks volumes for today’s opportunities. This advisor has transformed this financial tsunami into a perfect storm for new assets, and all it took was a shift in mindset and getting outside of his comfort zone. Rather than paraphrase this performance coaching case-study, I thought it best if I let Kevin share it with you in its entirety. You might want to take notes.

By Kevin Nichols

As we ended our coaching session, David made a rare boast, “I’m really starting to get outside of my comfort zone; it’s an invigorating feeling. I’m going after more business than ever and people are actually taking me up on it. I figure, the chances of them asking me to manage their portfolio are pretty slim. So I’m taking the guess work out of it, I’m asking.”

For David, this was a revelation on two fronts. First, David realized that in order to become a Rainmaker he must commit himself to specific high-impact marketing activities. Secondly, in order to fully execute those activities it was going to require venturing outside of his comfort zone.

Before this transformation, David was like many advisors not fully capitalizing on the current confusing financial waters. He was doing his best to keep his own head above water, concerned about getting his personal portfolio in line and trying to appease any disgruntled clients. But now, after a small renaissance, he is singing a different tune. He is not only welcoming financial conversations and needling questions from affluent prospects, the types of conversations that make most advisors cringe; he is out in traffic actively soliciting them.

But this didn’t happen overnight, it took some coercion, commitment to action, and convincing David of two important statistics from our 2009 research. These statistics heighten the importance of getting out of your comfort zone and prospecting like there is no tomorrow. The first is the fact that a dismal 15% of advisors are spending more than half of their time on offense. The majority of advisors are not actively prospecting; this leaves more opportunity for the rest of us. Secondly, our research indicates that most advisors have not put together a recovery strategy for their clients and even less are communicating it. Combining these two telling statistics, we have a competitive landscape that is ideal for prospecting and an underserved target market.

Here are the tough times statistics:

Percentage of Time Spent on Offense (Prospecting)
No time spent on offense 6.7%
25% or less 49.0%
25-50% 30.0%
50-75% 12.3%
75-100% 1.9%

Client Portfolio Recovery Strategy
No recovery strategy 17.5%
Not comfortable w/ recovery strategy 30.0%
Clear recovery strategy, but don't talk about it 14.3%
Clear recovery strategy and communicate w/ confidence 38.2%

David took heed once he heard these statistics and it was the boost he needed to convince himself that an unprecedented opportunity abounds, especially for the advisor who lives and breathes outside of his comfort zone.

David went on an “out of comfort zone” warpath. He started asking for introductions, planting himself in the right affluent circles, approaching social contacts with whom he had never before spoken business, and holding regular recovery plan events. He committed himself to action and removed any insecure hurdles in his mind because the need was evident; the affluent aren’t being serviced properly and advisors are at a standstill.

The biggest problem that advisors face when marketing is threefold: (1) they aren’t doing enough activity (2) when they are active, they aren’t doing the right activities and (3) even when they execute the right activities, they don’t execute with the necessary affluent sales skills.

Take an advisor who is targeting the affluent, like David, who is willing to jump outside of his comfort zone, get him doing the right activities, add a dash of seamless affluent sales skills, and you have a recipe for new assets.

Are you taking full advantage of this opportunity?

If you are ready to get on the affluent playing field and start doing the high impact activities required to bring in affluent prospects, here is a glimpse at the action plan that helped get David started...

1. Identify the Opportunity: Take a chance to talk business with that social prospect, ask for an introduction through one of your best clients, or take that CPA to lunch. Revitalize those opportunities you let slip away.

2. Commit Yourself to Action: Determine your plan of attack and get the wheels in motion. Be prepared to step out of your comfort zone and sharpen those sales skills. Revel in the comfort of being uncomfortable.

3. Be Consistent: Set a weekly goal for getting out of your comfort zone and hold yourself to it. Eventually, your comfort zone will expand. The initial activities that really make your hair stand up will become second nature.

As David and I concluded our session I asked him if activities like offering affluent prospects a “second opinion” took him outside of his comfort zone. He boldly responded, “Of course, but I’m ok with that.” He rhetorically continued, “Am I doing activities that take me outside of my comfort zone? Absolutely. Am I bringing in more business than ever before? Absolutely.”

The transformation Kevin just shared with you is available for virtually every financial advisor willing to grow. Today’s environment is ideal for affluent client acquisition. However, the psychology of achievement requires each of us to venture outside of our respective comfort zones if we expect to grow. So, let’s capitalize on the environment; get outside your comfort zones and bring in those new affluent clients.

Today’s opportunities will not last forever. Go for it!