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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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The Science of Service

In our industry, it can sometimes be easy to lose sight of the primary purpose of our business, which is to service the financial needs of our clients. Personal, professional and even corporate goals may lead some of the best financial planners to occasionally place their focus in a direction that isn’t in the client’s best interest but in theirs. When this happens, it goes against the “science of service.”

In the short-term, this shift of focus may help the planner accomplish a goal but typically in the long-run it can only be counterproductive because it goes against what should be all about a planner’s integrity. Once this “line” is crossed it is that much easier to cross it again because a planner’s definition of what that “line” is becomes blurred by excuses.

Mahatma Gandhi said it best when he said, “The best way to find yourself is to lose yourself in the service of others.” I believe this is very true. However, that begs the question of, “What constitutes service?”

Understanding the Science of Service

Most planners and agents think that the definition of service is to answer incoming client calls, hear what they need, drop everything and attend to their requests. However, that is a very reactive client servicing system. And, while this type of servicing is obviously necessary at times, it isn’t the only thing that clients need.

Step 1: Have a High Level of Integrity

Over twenty years ago, I asked John M., the most seasoned financial planner in the office a simple question, “Can you run a financial advisory practice with integrity and still make a great living?” He simply smiled and said, “You will make more money than you could ever imagine as long as you continue to do the right thing.”

Unfortunately, we have all met prospects who owned products that were inappropriate for them. Instead, the planner who sold them these types of products probably did so because they were thinking of their own best interests.

Ironically, the science of servicing begins even before a prospect becomes a client because recommending an inappropriate product(s) is doing the prospect and yourself a disservice.

A level of impeccable integrity must continue when they do become a client.

Step 2: Have a High Level of Product and Market Knowledge

Clients entrust their hard-earned money to you because they believe you not only have their best interest at heart but that you fully understand the right investment strategies for them. That’s why it’s so important to take the time to keep abreast of your product and market knowledge.

An example of this is Paul C., a financial planner client of mine who spends at least 30 minutes each morning reading something related to the stock market, the economy and/or various products that he recommends to his clients. He says that by doing so he feels well-versed to answer any questions that his clients or prospects have.

Step 3: Have a Proactive Client Servicing System

Most financial planners want to service their clients in the best way possible, but many fail to understand how to service clients effectively because they don’t understand what great service means.

David P., another client of mine, was putting out fires all day long which made him feel exhausted more often than not. That is until we designed a proactive client servicing system by segmenting his book, clearly defining his client servicing levels, systematizing his client servicing activities and delegating many of the day-to-day interruptions to his staff. It didn’t take long before David felt back in control of his day.

Why Servicing is Not an Art

Hopefully by now you can relate to the planners in each one of the examples and realize that what they’re doing is not subjective. To John M., integrity is the cornerstone of service; to Paul C., knowledge is imperative to keeping his clients informed and having the right investments; and to David P., having a proactive client servicing system gives his clients and himself peace of mind. To these planners, their activities are not open to interpretation. Instead, they have adopted a “science of service” mindset.

If you are ready to take your business to the next level, schedule a complimentary 30-minute coaching session with me by emailing Melissa Denham, director of client servicing.

Dan Finley
Daniel C. Finley is the president and co-founder of Advisor Solutions, a business consulting and coaching service dedicated to helping advisers build a better business.


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5 Ways to Connect at a Conference

With the Financial Planning Association’s Annual Conference coming up in a few days at Music City Center in Nashville, it might be helpful to brush up on some tips for successful communication.

Chances are this isn’t your first rodeo, but for the first-timers, students, interns and the socially anxious among us, tips we recently gleaned from reading How to Talk to Anyone: 92 Little Tricks for Big Success in Relationships by Leil Lowndes, could come in handy, both during one-on-one meetings at the upcoming conference and with your clients.

While we won’t recap all 92 tricks, we can boil it down to the top five recurring themes in Lowndes’ book. These might seem like no-brainers, but it doesn’t hurt to have a refresher.

1.) Use smiles, eye contact to convey genuine interest: Lowndes introduces what she calls the “flooding smile technique”—don’t automatically smile the same bright smile for everybody. In fact, don’t smile automatically at first when you meet somebody, wait a split second and then have a “flooding smile” that makes the person you are talking to feel you are the smile is unique for them.

2.) Use good posture and fidgeting to convey confidence: Maintain eye contact with the person who is speaking until they are finished. Lowndes calls this “sticky eyes.” When you must look away, try to do it slowly. This will convey your genuine interest.

Standing up tall will make you seem confident and limiting fidgeting (messing with your hair, touching your face, etc.) makes you seem more trustworthy.

3.) Match the mood, actions and tone of voice of the person you’re talking to. If you want to connect with somebody, it is helpful to match them on several levels. If they are rushing to a session, don’t stop them and launch into a long story. If you have impeccable manners and always hold your tea cup with one pinky out while your opposite hand holds the saucer, but the speaker doesn’t, match the way they do things to make them feel comfortable. Echoing their tone of voice is another way to make them feel more comfortable.

4.) Be specific. You are guaranteed to get two questions when you meet new people—where are you from and what do you do. Lowndes writes that you should never have a “naked” response to these standard questions. For example, she says that when somebody asks you where you are from, you shouldn’t simply say your city, add a unique fact about your city. Be specific about what type of financial planning you do or why your practice is named what it’s named (if there’s an interesting story there).

Also, if you’re thanking somebody, tell them why. For example, if you’re chatting up a presenter, tell them, “Thank you—your session gave me some great takeaways for my practice.”

5.) Be inquisitive, interested and curious. People like to talk about themselves and if you want to make a connection, ask lots of questions and encourage them to keep talking. Learn about them and don’t just “umm” along—build off what they are saying and ask them questions. Also, remember what they say, that way when you are in a group, you can introduce that person to the others and encourage them to tell a story they’ve told to you.

Hopefully some of these tips will help you make great connections at conference. We’re looking forward to seeing you in Nashville!

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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.