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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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10 Steps to a Great First Meeting

Engaged team members need to know how they influence the success of the business. (4).pngYou’ve finally gotten a meeting with that top prospective client you’ve been trying to meet for weeks, maybe even a couple of months. Congratulations!

Now what? If you’re like many planners, you’re excited to have finally landed the appointment, but perhaps a little apprehensive about making sure the meeting goes well.

Here are 10 steps you can take to pave the way for a successful introductory conversation.

  1. Do your homework. Google, LinkedIn, Facebook and other online resources can provide a wealth of information about your prospective client. However, keep in mind that you’re not compiling a dossier but simply looking for potential areas to explore—their employment, where they live, their family, organizations they’re part of and activities they enjoy.
  2. Determine the specific result you want to have from the meeting. What do you want your prospective client to think, or more importantly to do, as a result of having met with you? Is your goal that you mutually agree that you’re a good fit? Do you want them to schedule a discovery meeting or send you their statements? Be specific.
  3. Write out an outline or structure for the meeting that you believe will enable you to achieve your desired result. Think about creating the best flow. The better you plan for the meeting, the more likely it will be successful.
  4. Confirm the meeting with your prospective client. Send a calendar invitation, and then follow up to confirm the day before your meeting with an email, text message or phone call. Reiterate how much you are looking forward to your time together.
  5. Be intentional about what you take along to the meeting. A notepad is a must. A couple of simple one-pagers (your bio, your differentiators, your process) that support your story can be much more valuable than a slick marketing brochure or research piece.
  6. Focus on learning about them. Demonstrate a client-first mindset. Ask questions. Show genuine interest in their story. The more you learn about your prospective client, the more you will be able to connect your story to theirs.
  7. Know what you plan to say. If they aren’t a good fit for what you do, communicate that. Share that based on what they’ve shared about themselves and what they need from a financial adviser or planner, as well as how you typically serve your clients, you don’t think you’d be a good fit for them (or, cost effective for them) at this point. Be kind. Communicate that you’re not right for them, not that they’re not right for you.
  8. Describe what differentiates you. If they are a good fit for you, tell them how you’re different from other advisers and how you believe you can help them. Conclude with, “Based on everything you’ve told me about yourself and what you need, and how I typically serve my clients, I think we’d be a good fit to move forward to our discovery process.” Then stop and wait for their response.
  9. Set expectations. Assuming they agree (and why wouldn’t they?), set clear expectations for next steps and gain their agreement.
  10. Always follow up with a note of thanks, recapping the key takeaways from the meeting and confirming those next steps. Your note can be handwritten on a card (more personal) or by email (much faster).

Remember, everything you say and do communicates a message to your prospective client. Make certain it’s the message you intend.

Enjoy a productive meeting with your next client!

Susan Kornegay Headshot

Susan Kornegay, CFP®, is a partner at Pathfinder Strategic Solutions. After more than 30 years as a financial adviser, branch manager and practice management consultant, Kornegay enjoys helping financial planners define a comprehensive and consistent client experience and then market that experience in clear, client-friendly language. She is a coach, along with Adam Kornegay, RCC™​ in the Messaging and Marketing Strategy FPA Coaches Corner.


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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.