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Best of 2018: Advisers: Recognize Your Walk-Away Moment

Editor’s note: This is the last of our top blog posts of 2018. Sometimes you have to fire a client. John Anderson of SEI Advisor Network gives our readers some tips on how to recognize that walk-away moment. A version of this post appeared on SEI’s blog Practically Speaking. You can find it here

In business—as in life—the lessons are often in the mistakes we make. But sometimes the better knowledge is seeing the mistake coming and avoiding it altogether. A routine exercise for business owners is the “what worked” and “what didn’t work” review of their practice. For many advisers, when considering the “didn’t work” part of the equation, the overriding theme is “I knew better but…”

Here are a few scenarios:

  • Adviser A: Had a client ask him to manage half of his assets, while the client self-managed the other half.
  • Adviser B: Built his practice with farmers and ranchers, then found himself working with two ultra-wealthy clients that were taking all his time.
  • Adviser C: Was amazed when he got a call from an $80 million lottery winner. He was managing only $35 million at the time.

Each of these advisers got to a point where either they were fired or they fired the client. On paper, or with the benefit of hindsight, it is easy to say they should have never taken on the client. But how do you prepare yourself if you’ve taken on a client who’s not a good fit? What can you do to identify your walk away moment?

Why Walk Away? Two Sides of a Bad Relationship

Each scenario was a challenge for the adviser who was involved—a challenge that upset their business. It is easy to see the adviser’s side of the bad relationship, what we often miss is the other side. The effects it has on the office:

1) Staff. The staff has to deal with major interruptions that an ill-fitting client brings to the table. Requests that are outside of normal process and procedures take time to learn and process. It drags down efficiency and because it is new, opens up potential for mistakes

2) Marketing and client relationship management. Time spent on ill-fitting clients takes away from marketing and new client acquisition for many advisers. What could the adviser be doing better with his/her time?

3) Revenue. For the adviser who lives in an AUM world, we know that with planning, onboarding, etc., the revenue earned is backloaded over time. In other words, the time you spend upfront with a client is earned back over the years from the advisory fees. A short-term relationship typically does not pay for itself

Avoiding in the First Place

One of the challenges for most advisers is to understand their target. I have often written that creating a persona or an avatar of your ideal client as the way to specialize your practice, and to focus on a niche. Some advisers however, are not ready for that level of specialization and a few may not go that deep. No matter where you come down on identifying the ideal client, I think it always starts with a few things:

  • What is the target? Simply stated, in the broadest terms possible, everyone in the “class” of people that you want to work with. The class could be the type of business that you find most interesting such as legacy planning or income planning or it could be retirees in general etc.
  • What is the ideal? Again, in broadest terms, what do they value or what will they value from your relationship?
  • What is the deal breaker? What will they not value, or what would cause you to walk away?

Note: Each of these is a subset of the others. The “deal breaker” is a subset of your ideal clients; the ideal clients are a subset of the target. Knowing the deal breaker before they walk in the door makes it easy to say no, or to direct them to someone else that can fit their needs.

What Happened Next

The client fired Adviser A (above) after a year. The client’s reasoning, “I know you outperformed me but I just can’t give up managing my own assets. I guess I’m not much of a delegator.” All of Adviser A’s pre-work, planning and effort was wasted.

Adviser B terminated his relationship with the ultra-high-net-worth clients. He found them a home with another adviser that had a more investment-focused service model. The staff was thrilled to go back to their type of clients—ones who appreciated planning and were less demanding.

Adviser C could not compete with the constant second-guessing by competitors and family members trying to get a foothold into the $80 million lottery winner’s life. Every waking moment was spent defending and babysitting the assets and the client. He gladly went back to his recently ignored book right after the new client fired him.

We all know when something does not feel right. Maybe we should be prepared beforehand, in writing, so we are more prepared to walk away when it doesn’t.

John Anderson

John Anderson is the managing director of Practice Management Solutions for the SEI Advisor Network. He is responsible for all programs focused on helping financial advisers grow their businesses, create efficiencies in their operations and differentiate their practices. He is also the author of SEI’s practice management blog, Practically Speaking.


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Best of 2018: Things You Shouldn’t Say to Grieving Clients

Editor’s note: Until the end of the year we will be publishing the top blog posts of 2018. This post is about what not to say to your grieving clients, which I wrote shortly after my dad passed away in July and I witnessed how our parents’ financial adviser was a shining example of how to interact with a client’s family after a death. 

The unthinkable happened this year.

My dad died.

We’re still living this nightmare that started when he got sick. Oftentimes, kind‐hearted well‐wishers unknowingly make it worse with the things they say, but my parents’ financial adviser is not one of those people.

I remember Mr. Vincent Rogers since I was a little girl. I was frightened of him for a long time simply because when my parents took out life insurance policies on us when I was 9, I was terrified to have blood drawn and I blamed Rogers for my fear.

Rogers was not just a financial adviser, he was also a friend to my dad, as he relayed to me when he paid his respects at my dad’s funeral.

“Do you remember me?” he asked.

“Of course,” I responded before thanking him for joining our family to celebrate our dad’s life.

“Your dad was my great friend,” he told me.

He relayed a story about how when he was a young newlywed, my dad made his wife (who was from Colombia and at the time spoke limited English) feel comfortable because he spoke in Spanish to her. Oftentimes, Rogers said, my dad and he had philosophical conversations about life and marriage. He told me that he will miss my dad—and I could tell he meant it.

There is one guarantee in this life and that is death. Given that fact, there is a very high chance that your clients are going to experience the loss of a loved one in the course of your working with them.

A time of loss is also a time of heightened sensitivity. Understandably, it’s stressful to approach a grieving person for fear of saying the wrong thing. Death in a family can cause your clients to cut out their own family members, and if you say something offensive to them, they just might cut you out too.

Clients might hold you to a higher standard when it comes to communication skills, and especially during a time of loss. Avoid being offensive by steering clear of the following phrases:

“I can’t even imagine.” Andrea Raynor, hospice chaplain, writes in her book The Alphabet of Grief: Words to Help in Times of Sorrow, that this is one of the more hurtful things to say to clients who are grieving. She said that this is like telling your client that their situation is so horrifying that you can’t even picture yourself going through it.

“I know how you feel.” None of us know how each other feels, really, and especially not during a time of loss. We’ve all lost someone, so if you are trying to say you know how they feel because you too have lost someone, then tell them the specific story while also clarifying that you understand that we all grieve and feel differently.

A friend, who’d also lost her father not too long ago, reached out and instead of saying, “I know how you feel,” she shared a specific story of how she has coped with losing her dad.

“It gets better when you realize he’s always with you,” she told me. This has been incredibly comforting, and I think of it every day.

“I’m so sorry.” Amy Florian told the Wall Street Journal that your clients will likely hear this phrase thousands of times and it will likely not have any impact by the time you say it. She’s right. This phrase could open the door to a negative situation, also, Florian noted, like the client responding with “Not half as sorry as I am.” Instead, she adds, share a memory of their loved one if you knew them, the way Rogers did with me.

“Everything happens for a reason.” This is another one best avoided, David Kessler, author and lecturer on death and dying, told the Wall Street Journal.

“When you’re in deep grief, you don’t care about any reasons,” he said in the article titled, “What Not to Say to a Grieving Client.”

He advises to simply let your client talk. Allow for extra time for your meeting with them with the expectation that they’ll need more time to tell their story.

These are the four phrases that have been triggers for me, and upon further research I found them on several lists of what not to say to clients who are grieving. Simply avoid these phrases altogether, opting for an authentic, heartfelt story of your clients’ loved one. You’re not going to make them feel better, but you could avoid making them feel worse.

One last bit of advice: check in on your clients. They’re probably not OK one month, two months, even a year after their loved one’s death. You reaching out just to see how they are will mean the world to them.

Ana TL Headshot_Cropped

Ana Trujillo Limón is associate editor of the Journal of Financial Planning and the editor of the FPA Practice Management Blog. Email her at alimon@onefpa.org. Follow her on Twitter at @AnaT_Edits.


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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.

James Poer.jpg

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.