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Make Your Practice Stand Out: Don’t Let Contentment Become Complacency

What kinds of experiences do your clients have with you? Would they say that you’re reliable and that they’re satisfied with your services? If so, watch out. In a highly competitive industry, keeping a client “satisfied” may not be enough. Lack of conflict or complaints doesn’t necessarily equal loyalty. It could just mean the relationship is forgettable, and thus, vulnerable to disruption.

According to a study by Russ Alan Prince and David A. Geracioti, only 33.5 percent of “satisfied” clients and 13.4 percent of “moderately satisfied” clients said they would give their primary financial advisers additional investable assets. Yet 94.5 percent of those who identified as “loyal” said they were extremely or very likely to stick with their advisers. This study was published in 2005 in Cultivating the Middle-Class Millionaire; Why Financial Advisors Are Failing Their Wealthy Clients and What They Can Do About It.

Think of your own experiences as a customer at a luxury restaurant, hotel or department store. Chances are your mind jumped to interactions that were either extraordinarily good or extremely bad. But experiences that are just okay? Those typically rank low on recall.

What Are Your Clients “Saying” About You?

The quality of your relationship to each individual client matters more than ever. Today, 72 percent of online adults use social networking sites, with the 65-plus population tripling in the last four years to 43 percent, according to Pew Research Center. Your clients talk, and now they can talk to hundreds and thousands of their peers at once. What do you want them saying about you?

Sending your client a signed holiday or birthday card is a nice gesture. But it’s also a predictable one—the “go-to” for any service professional. So think about your practice from the perspective of an outsider and consider creative and consistent ways to make positive impressions.

The Difference Between You and Everyone Else

According to Thomas Fross of Fross & Fross Wealth Management, one of the most successful independent financial planning firms in the nation, there is no silver bullet for client management and retention. Key to your success is varying your strategy based on how your client likes to be engaged.

“Just as a balanced investment portfolio should include a variety of investments, a balanced practice management strategy needs to include multiple ways to engage clients and prospects,” Fross says. “Different clients will respond to different actions.”

However you choose to engage, there are three underlying principles that Fross recommends to help your practice stand out above the rest:

  1. Image is (almost) everything. It isn’t everything, but it matters more than you might think. Think about how your image would be perceived by current and prospective clients. Do you exude professionalism? Having an office, wearing a tie and taking the time to craft a consistent personal brand are all important to your bottom line.
  2. Talk to your clients. Your clients need information and reassurance on an ongoing basis, especially in a volatile market. Make it a priority to engage in frequent and meaningful communication with investors. If you don’t, studies show that they will move on to an adviser who will.
  3. WOW them. Do you make your clients feel special? Do you acknowledge them in unique ways? Average isn’t good enough. But when clients feel valued and important, they are more loyal and more likely to refer you.

Providing extraordinary service can also expand your client roster. According to the Prince and Geracioti study, those “loyal” clients provided nearly 12 referrals to their primary advisers, compared to just 2.1 from “satisfied” clients and 1 or fewer from “moderately satisfied.” So that time and effort spent going above and beyond truly pays off in more ways than one.

John L. Evans

John L. Evans Jr., Ed.D., is executive director, Knowledge Labs™ Professional Development at Janus Henderson Investors. In this role, Dr. Evans works with the Professional Development Team and provides extensive consulting, training and practice management expertise. He is a sought-after expert and keynote speaker. He regularly contributes to The Orlando Sentinel newspaper on business and politics and is featured in the Advisor Center section of Barron’s magazine. Dr. Evans has authored books on client retention and client acquisition, including The Book of WOW and “A Genuine Persuasion System.” He also serves on the board of advisers for the James Madison Institute in Tallahassee, Florida, and Elevate USA in Denver, Colorado. Prior to joining the financial services industry, Dr. Evans was special assistant to former U.S. Senator Connie Mack and director of business development for the state of Florida’s No. 1 registered investment advisory firm, according to Wealth Manager Magazine, for 2007. Dr. Evans holds an MBA from the University of Miami and an Ed.D. in organizational leadership from Pepperdine University. 

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Implement the SCARF Model with Your Clients

Say a client has been overspending on his credit card. You have a chat about it, and he leaves your office, assuring you that he’s going to rein it in. But at your next meeting, he hasn’t decreased excessive spending and he seems frustrated.

Why is your client acting like this? Perhaps it’s because he felt threatened when you told him to curb his spending at the previous meeting. In this case, the SCARF model might come in handy.

David Rock developed the SCARF model, which is rooted in neuroscience, in a 2008 paper titled, “SCARF: A Brain-Based Model for Collaborating With and Influencing Others,” published by the NeuroLeadership Institute.

According to Rock, status, certainty, autonomy, relatedness and fairness (SCARF) are the five areas that activate our brains to think we are either being threatened or rewarded.

In Daniel Crosby’s keynote speech at the 2018 FPA Annual Conference, he spoke about how our brains are wired for survival and the decisions we make are to ensure that we do just that. Because of this, our brains can’t tell the difference between a well-meaning person who’s offering constructive feedback and somebody threatening our safety. So, here’s how SCARF can help you.

According to the Mindtools.com article, “David Rock’s SCARF Model: Using Neuroscience to Work Effectively with Others,” you can minimize threats and maximize rewards in the following ways to better help colleagues and clients:

Status

This is our importance relative to other people. People like to feel important. Talk to your clients patiently and gently or frame your constructive feedback in a way that eliminates the so-called threat.

Certainty

This is our ability to predict what’s going to happen next. If we are uncertain, we feel threatened and we can’t focus because we’re too busy trying to make sense of things. If what you’re explaining to your client is too complex and causes uncertainty, break it down for them.

Autonomy

This is our sense of control over things. Show your clients that you trust their judgment. Delegate, include them in decision-making, let them take on more responsibility and let them try new things.

Relatedness

This relates to how safe we feel with others. Connect with people. Build up a strong bond by scheduling regular meetings or check-ins.

Fairness

This relates to how fair we think exchanges are between people. When people think things are unfair, they feel incredibly threatened. Minimize this by being honest and having clear expectations.

Ana TL Headshot_Cropped

Ana Trujillo Limón is senior editor of the Journal of Financial Planning and the editor of the FPA Practice Management Blog. Email her at alimon@onefpa.org, or connect with her on LinkedIn


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Reviewing Financial Infidelity in A Financial Planning Context

Financial infidelity is one of the more complicated issues that financial planners face when meeting with couples. The hurt and betrayal that often comes up in the planning room is made even more complicated by the different perceptions that planners have about it.

Therefore, here is a quick overview. Financial infidelity does not have any real set definition, but Brad Klontz, Kristy Archuleta and Anthony Canaly broadly defined it in Financial Therapy: Theory, Research, and Practice as, “purposeful financial deceit between two or more individuals wherein, there is a stated or unstated belief in mutual honest communication around financial matters.”

Financial infidelity can include financial cheating including, “hiding purchases from spouses, having secret credit cards or keeping secret personal bank accounts,” according to a 2018 Journal of Financial Therapy article titled, “Financial Infidelity in Couple Relationships.”

Understanding your beliefs about what is and is not financial infidelity will have a huge impact on how you handle it when it comes up and how much your clients will trust your help. So let’s dig into this a bit.

It is important not to minimize “small” incidents of financial infidelity as it can reflect larger relationship problems. It may be more about how individuals assert their needs, manage conflict and trust each other more than the actual money.

Rates of financial infidelity vary by definition, but the 2018 Journal of Financial Therapy article referenced above found that 27 percent of individuals admitted to keeping a financial secret from their partner. The effects of the financial infidelity can vary from financial planning problems, interest on hidden debt and postponing major life events, to decreased marital satisfaction, loss of trust, depression and defamation of character.

Steps to Address Financial Infidelity

What can you do if you discover financial infidelity? Here are some steps that are likely to help you as you help your clients move forward:

1.) Ground yourself. Notice your own feelings with this issue. Are you angry? Sad? Scared? We all bring ourselves into our work with clients. It is important to process your own feelings and thoughts so that you can be grounded when you interact with your client.

2.) Be direct, there is no point in delaying. If it does not come out in session, it will later. So do not postpone a conversation because it is uncomfortable.

3.) Try to be open-minded. It is best if you can look at the reasons why this happened without judging the person. The more you know about the clients’ emotions and thoughts, the better you are going to be at addressing their needs and helping ensure that it does not happen in the future.

4.) Normalize and validate. Both partners are likely feeling hurt and need to know their feelings are normal and okay to have. Try to empathize with both partners’ experiences, while holding accountability and not taking sides.

5.) Problem solve. This is an opportunity for you to instill hope. Most tangibly, you will help them come up with a plan, but you need to know everything to help them. This will not only make them feel more hopeful about their work with you, but also help them see their role of disclosing as part of the healing. Remember everyone (at some level) wants to be the “good guy” so let them help you by coming clean.

6.) Tell them to do their research before disclosing to their partner. The partner who has not disclosed is probably fearful of the reaction. It is crucial that you discuss and prepare them to approach the topic in a way that will not incite violence.

Financial infidelity does not look the same and does not come from the same motivations. It can come from addiction, abuse, an affair, fear, shame or pride. Your actions will not be one-size-fits-all but should reflect what your clients need from you. Doing your own research on how to handle these topics or by watching a replay of our webinar for the Financial Planning Association and Financial Therapy Association (which will be available soon), you can gain skills in approaching these situations.

This is a challenging topic, but as you address your own emotional reactions and learn to connect with clients in pain, you can effectively navigate this issue and others. Most importantly, you can and will provide your clients with support in a helpful way.

On a final note, remember that you do not have to do this alone. Financial infidelity is a complex issue that may provide the need for a couple counselor or marriage and family therapist. There is still a stigma against therapy in many places, so you can be an invaluable resource to your client by doing your own research and finding a mental health professional you trust near you that can serve as a referral source.

Editor’s note: The authors of this post explored this topic more in-depth in a Financial Planning Association and Financial Therapy Association webinar called: “Difficult Conversations 3: Couples Dealing with Financial Infidelity.” The other two parts of the three-part webinar series dealt with ambiguous loss from Alzheimer’s disease and financial enabling. All three webinars will be available on-demand for members in the fall of 2019.

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Nathan Astle is currently pursuing a master’s in couple and family therapy from Kansas State University with a graduate certificate in Financial Therapy. He is currently researching the interplay of couple attachments, financial transparency, and money scripts on financial stress.

McCoy

 Megan McCoy, Ph.D., LMFT, is an adjunct faculty member at Kansas State University where she teaches courses for the financial therapy certificate program. Her research focuses on financial therapy and has been published in several journals including the Journal of Financial Therapy and the Journal of Financial Planning. She serves on the board of the Financial Therapy Association and is associate editor of book reviews and profiles for the Journal of Financial Therapy.