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Two Ways Planners Can Increase Their Value Proposition

A recent study by Capgemini revealed that, despite robust portfolio returns, only 55.5 percent of high-net-worth investors feel a strong connection to their planners. If returns are on the rise, then where are planners falling flat?

We have recently experienced one of the longest bull markets in history (which despite recent market events, experts say is not yet at its end), and not only have investors been used to steady returns, they have continued to move toward indexing to get those returns at a lower cost. The reality is that investor satisfaction is less about market returns and more about the entire value the financial planner provides. The financial services profession is as impacted by technology, demographics and value provided as any other economic sector.

If you don’t continue to evolve your business model by creating more value for customers, you won’t sustain growth or even achieve the same level of success. However, some planners are resistant to making the changes necessary to enhance their business model and increase the loyalty of their clients because their existing model is what made them successful in the first place.

Our profession continues to be dominated by baby boomer planners, who are generally more resistant to adopting integrated technologies that can provide scale to their business and greater freedom to focus on client acquisition and relationships. Generation X and millennial planners, on the other hand, are proactively seeking out new technologies and ways to achieve stronger connections with their clients.

Planners who focus only on asset allocation as a core competency are most likely falling short of the broader value clients now expect and are willing to pay for. To improve their business models, planners should consider the following:

1.) Emphasize financial planning aimed at providing economic wellness, fulfillment and confidence—and the risk-adjusted strategies that can help clients get there.

While asset allocation is a key component of the wealth management process, it shouldn’t stand on its own as a planner’s core value proposition. Planners must shift their perspective and offer clients what they’re really looking for.

The need for value-add services, such as estate and tax planning, is being driven by the impending “Great Wealth Transfer,” as roughly $30 trillion is expected to switch hands from baby boomers to their heirs over the next 30 to 40 years, according to Accenture. Right now, most of these assets still rest with baby boomers but they are increasingly transitioning to spouses, Generation X and millennials.

Getting younger investors in the doors of your business starts with understanding how they view money. Remember that since many newer investors acutely felt the impact of the Great Recession at a formative period in their lives, they may have a greater emotional attachment to money than their parents. This has manifested as a strong tendency toward risk avoidance and a desire to focus on maintaining wealth rather than growing it.

Planners should therefore offer services and counsel that cater to this mindset, relating to clients on a personal level rather than just finding an appropriate asset allocation.

2.) Adopt and implement the types of financial technologies that investors are demanding in order to track their wealth.

As predicted, the advent of robo-advisers did not put financial planners out of business, but this technology has opened an important dialogue about the value a planner provides to the modern investor.

We live in an age when on-demand services like Amazon Prime and Uber have become the new normal, and financial services are no exception. Investors today want constant access to their accounts, so planners risk extinction if they continue to manage client relationships with a yellow pad and quarterly phone calls. Modern clients demand a digital portal where they can easily access their money and your advice 24-7.

Many planners are hesitant to adopt this technology because they fear it will diminish the need for their role, but that couldn’t be further from the truth. Clients might enjoy the ease of access a portal provides for quickly updating beneficiary designations, but when faced with a significant event like a death in the family, they will turn to you for professional guidance. No computer will ever be able to provide trusted counsel for complicated personal scenarios.

As a planner, understand that your greatest value-add may not be having a hand in every single touchpoint of your business. In fact, planners who focus on listening and serving the overall financial well-being of their clients, while delegating non-essential tasks to technology, will build the stronger connections necessary to increase client satisfaction.

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As president and chief executive officer of Kestra Financial, James Poer is dedicated to helping independent financial advisers fulfill client goals through a unique integration of technology and service. Kestra Financial serves independent financial advisory firms with varying business affiliations, including independent registered investment advisers (RIAs) and hybrid advisers.


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Re-Calibrating the Lens Through Which We View Success

Most content written for investors on financial education exists on a spectrum. On one end, you might have a white paper on Variable Distribution MLP risk and rate of return, which might include topics, language and analysis that are completely unintelligible to all but the most accomplished financial analysts. On the other, you might see an article or video with the title “5 Easy Steps to DIY Investing Success,” which, spoiler alert, might turn out to be a bit of an oversimplification.

In my opinion, the best financial writers are those writing content in the middle of the spectrum; content that’s prescriptive and offers substance, but that’s also consumable and engaging (something we hope people want to read). With this spectrum in mind, I began thinking about what success means in the investing world. Success in one instance might be the funds needed to reach a specific goal, while in another might be the dream of whiling away the “Golden Years” on a pristine, private white sand beach.

Yet, success is entirely a matter of personal environment, mindset and perspective. The question then becomes, “How do we step outside of the common definitions of “investing success” outlined above, and create our own version?” As a financial planner, you may benefit from asking this question to yourself or your team, and I believe there are myriad applications when it comes to your relationship with your clients.

To help answer the question, we can learn valuable lessons from Shawn Achor, a happiness researcher (I love that title), author and speaker, and tireless advocate for positive psychology. I’m basing the following tips on his TED Talk, The Happy Secret to Better Work, which is on TED’s list of the 20 most popular talks of all time.

Pursuing the “Happiness Advantage”

Happiness is an ethereal, often ambiguous and subjective concept. It tends to get downplayed or pushed to the side when the conversation turns to more tangible topics, like revenue, sales and investing. In a way, this makes sense. The definition of happiness differs wildly from individual to individual, making the measurement of how important happiness actually is to success in the way we normally define it enormously difficult.

As a result, we have decided that instead of making happiness a part of the recipe for success on the front end, being successful will bring us to happiness. In his talk, Achor explains the phenomenon as follows:

“Every time your brain has a success, you just changed the goalpost of what success looked like. You got good grades, now you have to get better grades, you got into a good school and after you get into a better one, you got a good job, now you have to get a better job, you hit your sales target, we’re going to change it. And if happiness is on the opposite side of success, your brain never gets there. We’ve pushed happiness over the cognitive horizon, as a society. And that’s because we think we have to be successful, then we’ll be happier.”

Achor believes that nothing could be further from the truth. Yet, when you look at the vast number of competitive environments (i.e., academics, sports, work, etc.) we are exposed to as we grow up, every single institution is designed that way. Work harder, longer, faster than everyone else, because when you succeed, it will bring you happiness. But what if our brains are actually designed to work in the opposite way? Achor’s research is centered on answering this question, and his findings are groundbreaking:

“If you can raise somebody’s level of positivity in the present, then their brain experiences what we now call a happiness advantage, which is your brain at positive performs significantly better than at negative, neutral or stressed. Your intelligence rises, your creativity rises, your energy levels rise. In fact, we’ve found that every single business outcome improves. Your brain at positive is 31 percent more productive than your brain at negative, neutral or stressed. You’re 37 percent better at sales. Doctors are 19 percent faster, more accurate at coming up with the correct diagnosis when positive instead of negative, neutral or stressed.” 

So why isn’t everybody already doing this? I think the answer is two-fold. First, manufacturing positivity isn’t easy, and requires far more maintenance and creativity than pushing people to “work hard” (which is pretty cut and dried). Second, many of us have the tendency to view positivity and success as opposite ends of a spectrum. You can either have one or the other. This is especially true for those who have already been successful in some way; if the routine that brought you success is the age-old model of working an 80-hour-week and lifting yourself up by your own bootstraps, it’s difficult to step outside of that definition and embrace change.

To help those who may fall into the latter category, it’s important to note that the “success = happiness” view is not necessarily wrong. Achor’s research tells us that there might be a better way, and that happiness doesn’t have to be a casualty of success.

The theory reminds me of the great revelation in the movie Monsters, Inc. that laughter is a more powerful fuel than fear. For a time, screams worked to fuel the city, and the monsters went about their business because they didn’t know any other way of doing things. In discovering the power of laughter, however, they unearthed the key to being both successful and happy.

Sure, it’s a cartoon movie, but it makes a powerful point, and one that Achor stresses in his talk: “If we change our formula for happiness and success, we can change the way that we can then affect reality.”

Reversing the Formula: Helping Your Clients Become More Positive Investors in the Present

How does all of this apply to saving and investing? While there are a wide range of applications of Achor’s theories to financial management and behavior, the following three resonate most with me:

1) The Importance of “Why” Reminders

One of my favorite messages in the talk centers on how we can train our brains for positivity, Achor’s examples are beautifully simple:

“Journaling about one positive experience you’ve had over the past 24 hours allows your brain to relive it. Exercise teaches your brain that your behavior matters … And finally, random acts of kindness are conscious acts of kindness. We get people, when they open up their inbox, to write one positive email praising or thanking somebody in their support network.” 

You can use these types of reminders to help clients move beyond the money they’re saving—or the amount their invested money grows or declines from year to year—and help them to focus on why they’re putting money away for the future. We’ve all learned that repetition is critical when training our brain to do something against its will.

Motivation and habit formation work differently for everyone, but all of us (including your clients) can at least commit to thinking about our why for saving and investing in the present. We are all taught that investing and saving will bear fruit over time, but it’s difficult for our brains to think that far forward; we’re wired for more immediate gratification.

I love Achor’s concept of sending one positive email every day—something your clients should try for investing. Encourage your clients to write down one reason every day or every week why they’re putting money away for the future, and send themselves an email. Better yet, encourage them to create an email account to which to send and house these reasons.

I think they will find that the reason will reflect something they’re passionate about, something they’re grateful for or something that, while it may only exist as a dream in the future, makes them happy in the present. We all experience the very same feeling when we purchase a lottery ticket; it’s not really about winning, it’s about thinking of what we’ll do with what we win.

After a few months, they will have compiled so many wonderful reasons to save and invest that, every time they go into that email account to look at their work, it will be difficult not to smile.

2) Remind Them That Their Plan is the Most Important, Because It’s Theirs

One of the most acute issues investors and savers face is the human penchant to compare ourselves with others. It’s difficult to focus solely on your own story. Beyond plowing through all of the literature available on behavioral psychology, perhaps the power of reminder is a place to start here.

In his talk, Achor reveals that, while many of us assume that our external world is predictive of our happiness levels, the reality is the opposite. Even if we know everything about a person’s external world, we can only predict 10 percent of their long-term happiness; 90 percent of our happiness is determined by how our brains perceive the external world.

These statistics mean that happiness is within our control. In your next client meeting help clients look at their strategy with a hefty dose of optimism. Sure, financial planning inherently includes quite a bit of uncertainty, which stresses investors out. I’m not saying that you need to help them suspend reality (finances are still a serious, tangible business), but you could help them be more productive with the emotions you know they are apt to feel.

As Achor urges, you may also attempt to help your clients treat stress as a challenge, not a threat. They have to believe they can reach their goals (or you would not have helped them set those goals in the first place); every challenge, then, is just another step in a journey they know they can complete.

Finally, research has shown that our social support system can be an important predictor of both happiness and success. You’re already making a big difference with your presence in their financial lives. Take the social support mechanism a step further by reminding your clients that they don’t have to go it alone, and by encouraging taking them to advantage of the network (including you) that’s there to support them.

3) Learning Can Make Us Happy, and Happiness Can Help Us Learn

A final useful tie-in to saving and investing in Achor’s research is its potential impact on financial education and empowerment. Just as he believes happiness can scientifically drive success, he also believes it can help us learn:

“…Dopamine, which floods into your system when you’re positive, has two functions. Not only does it make you happier, it turns on all of the learning centers in your brain allowing you to adapt to the world in a different way.”

Here, he hits on one of the oft-overlooked barriers to building financial education and knowledge. When investors seek out financial education, it’s often as a result of a life transition, some of which are completely unexpected. As such, your clients are likely not approaching financial education with positivity; in fact, they are likely exhibiting stress and fear.

If we could only approach the educational component of the investing and saving process as a form of financial empowerment, and with an understanding that we are building knowledge for positive reasons, I think we would see a large uptick in the number of investors who chose to take advantage of the tools already available. Perhaps one of the answers lies in creating the financial education programs we offer as an industry accessible and interesting to those investors who are not currently undergoing a transformative transition. I don’t profess to have a solution, but at the very least, the research is thought-provoking.

In Summary

What we are talking about is not one solution to one problem, but an entirely different way of thinking.

Happiness and success are two things that every human being fundamentally wants, yet if we put them in the wrong order, we could end up losing both. It doesn’t matter if we’re talking about success at our jobs, in our relationships or in the context our financial planning strategy—the message is clear, and possibly even life-changing: focusing on happiness first can actually drive success, however your clients choose to define it.

Achor says, “And by doing these activities and by training your brain just like we train our bodies, what we’ve found is we can reverse the formula for happiness and success, and in doing so, not only create ripples of positivity, but a real revolution.”

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

 


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Connecting with Clients Who Aren’t Tech Savvy

Many of us tend to stereotype clients of a certain age as “too old” to be tech savvy. After all, the average age in terms of tech savviness gets younger every day. But what if you take a different perspective? Perhaps clients are never too old. Indeed, maybe they would even welcome the opportunity to step up their use of technology!

Let’s start with this scenario: You want your clients to be knowledgeable and comfortable using technology for a review meeting. That way, if they relocate to a warmer climate or are no longer physically able to come to the office, for example, you can still stay connected. Plus, you may believe (as some planners do) that technology-based review meetings are not only more concise but also higher quality. So, what does it take to prepare clients who may not seem tech savvy for a technology-based review meeting?

Beta Best Practices

A good place to start is with a beta approach. Here, there are a few best practices to keep in mind. First, brainstorm a list of two to five clients who you think would be good candidates for a beta test. Reach out to them, explaining to each one the value of conducting a remote review meeting using technology. Then, simply ask them if they would like to participate. If no, end of story. If yes, it’s time to get started.

For this example, we’ll use the iPad as our technology of choice, although there are certainly other options that could work. You’ll need to set up your iPads using the appropriate links so they provide a secure connection. Remember, less is more. The goal is to make it easy for clients by having only the essentials available on the iPad.

Once the iPads have everything they need for clients to connect to a meeting, send them to beta users for the sole purpose of the review meeting. To help familiarize clients with how to use it, include easy-to-understand instructions either with the iPad or directly on it. You might also schedule a phone call to provide a short training session. Now, it’s time to put it to the test.

Try the iPads for one meeting shortly after the training—maybe even the next day. Ask for feedback! If your clients like it, plan on using the iPad for the next review meeting. If not? Simply have them return the iPads to you.

Hidden Benefits and Risks

Of course, there are some clients who don’t even own a computer. You might find that these individuals are the ones who may ask you to talk with their tech-savvy kids. That’s a good thing—and a great opportunity. The kids may see you as taking a novel approach to supporting their parents. On the other hand, what if this strategy is so wildly successful that clients start contacting you 10 times a day? As mentioned above, be sure to establish that the iPad is for review meetings only. Any communication in between meetings can be handled the traditional way—a phone call.

Finally, what if your clients talk to others about how they have reviews with their planner via iPad and from the comfort of their own homes? Positive word of mouth is always a good thing. Plus, innovation presents your firm as young and vital.

Technology Supports Human Connection

Individuals born with technology in hand will be more sophisticated than those who adopt it in their 40s. But millennials are actually the ones who have the most to gain from ideas like this. Who knows where the concept of providing an iPad could lead? What would it mean for clients who adopt this idea to be reminded of you with a beautiful photo, a joke of the day or an inspirational quote? These simple reminders can support the human connection if the foundation is properly laid—in this case—by using an iPad as an enhancement to human relationships.

Now, I know this particular approach won’t be for everyone. If not, what novel idea can you try that can help you stay connected to—and show how much you care about—your clients?

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