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Wealth Management Advice

Stop When You Get to Yes!

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That’s classic sales management advice, yet I have seen countless sales professionals ignore it at their peril.

The advice applies outside of sales too, and I just witnessed it yesterday in a whole new context on my flight to San Francisco.

We are all buckled into our (relatively) comfortable exit row seats and the flight attendant had just finished giving us the instructions for operating the doors. As per FAA regulations, she said that she needed to make sure that each and every one of us understood the instructions and that we were ready, willing and able to assist in the event of an emergency, and then she began checking with us one by one.

When she motioned to me in the window seat, I looked her in the eye and said “Yes”, as did the poor guy stuck in the middle seat next to me.  When she turned  to the man seated in the aisle seat, he looked up quizzically and said “Hmm?”.

The flight attendant asked him again if he understood the instructions and if he was ready, willing and able to assist in the event of an emergency.

The passenger replied in a thick accent “Yes. My English is not that bad”.

The flight attendant replied that she was concerned that he might not be able to understand instructions in the chaos of an unlikely emergency and that she was going to have to move him to another seat.

He protested with a few sentences in fluent, if heavily accented, English; trying to assure her that he did understand.

It was too late. the flight attendant had to make a judgment call on the potential safety of passengers, so she moved him.

The guy in the middle seat shrugged and slid over into the now vacated aisle seat, giving both of us the next best thing to first class– reclining exit row seats with an empty middle seat between us.

He knew how to stop when he got to yes.

And I did too.

Why Should Your Clients Trust You?

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In my March 24 post (Want Client Loyalty? Do Something You Don’t Have To Do) I wrote about trust being the number one driver of client loyalty, and how important it is to put your clients’ needs before your needs and your firm’s needs.

But what is trust and how can you increase it?

My favorite definition of trust is the formula given in the book The Trusted Advisor (David H. Maister, Charles H. Green and Robert M. Galford):

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(Credibility + Reliability + Intimacy)

__________________________

Self Interest

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Let’s break that down from the client’s point of view:

Credibility = You know what you’re taking about

Reliability = You do what you said you were going to do

Intimacy = You have taken the time to really understand me

(All divided by)

Self Interest = You give the appearance that you are more interested in what’s in it for you that what’s in it for me

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Notice how the the elements in the numerator are additive, but even their combined effect are quickly diminished by the single element in the denominator.

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Think of the stereotypical sleazy used car salesman in the loud plaid sport coat:

Even if he knows every feature and benefit of every model on the lot and is a 10 out of 10 on credibility…

Even if he followed up on every question and returned all of your calls promptly and is a 10 out of 10 on reliability…

Even if he asked great questions about what you were looking for, who would be the primary drivers and how much you wanted to spend, so you’d have to give him a 10 out of 10 on intimacy…

…You just couldn’t shake the feeling that he had x-ray vision that saw through you directly to your wallet. Unfortunately, he’s also 10 out of 10 on self interest.

Let’s do the math:

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(10 + 10 + 10)

             __________    =  3

10

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A final trust score of 3 out 10 is a far cry from being a trusted advisor. Even though our salesman was best in class in three out of four factors, it hardly matters if his customers feel like they can’t trust him.

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So…

Even if you know everything there is to know about the economy, the investment markets and every nuance of financial and estate planning…

Even if you have flawless execution in transactions, reporting and follow-up…

Even if you have assiduously documented every personal and financial fact and nuance about your clients in your comprehensive CRM system…

…you will not have long-term success if your clients don’t feel like they can trust you.

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Why should your clients trust you?

Want Client Loyalty? Do Something You Don’t Have To Do

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In my March 17th post I quoted from the research of industry expert Mike Kostoff. Mike has been a consultant to some of the world’s leading wealth management firms for over twenty years, and he noted that the drivers of client loyalty to a firm differ than the drivers of client loyalty to an advisor.

The number one driver for loyalty to a firm is quality of advice, but two other factors rank higher as drivers for loyalty to an advisor— trust and proactive communication.

The most important element of trust is putting the clients’ interests above the interests of the advisor and firm. A very powerful way of demonstrating this is by doing something you don’t have to do.

When training and coaching others on how to build trust, I often relate some of my favorite personal stories of how others have won my loyalty by doing things they didn’t have to do:

  • The car dealer who insisted on talking me through a simple repair over the phone to save me the cost of an expensive long distance tow and repair bill. I bought four cars from that dealer and serviced five there over the years.
  • The janitor cleaning the restroom at Disney World who inquired about my daughter’s minor head bump, then quietly sent a stuffed animal to arrive at our room before we did. We have been back four times since.
  • One of my favorite restauranteurs who randomly deletes entrees from my bill and then applies a 20% discount that wasn’t requested or expected. It’s not about the money, it’s about demonstrating thoughtfulness, appreciation and generosity. I recommend his restaurant all the time.

Now I have a new experience to add to the list.

Last week the dreaded day arrived to put our fifteen year old Chocolate Lab to sleep. The back half of Molly’s body had stopped working a few months ago and we had been carrying her around when she needed to eat, drink or eliminate; but she couldn’t scratch herself, she couldn’t seem to find a comfortable position any more and she had started to whimper in pain and frustration.

We didn’t want her to suffer and we knew it was the right thing to do, but it was still a painful day.

We love the whole staff at our veterinarian’s office and they had come to know Molly well through her frequent visits and boardings.

Our loyalty to the office rose to a whole new level when we received a sympathy card from the veterinarian who gave Molly her last injection.

Then another card arrived from Molly’s usual vet, who was out of town on Molly’s last day.

Then we received this card, signed by the entire staff:

The clinic didn’t have to send any cards at all, and I would have still felt very good about the quality of care and the people we deal with on a regular basis.

By the way, we switched to this clinic from another veterinarian who was competent and personable, but it felt like he was always finding a way to sell us another service or product.

We were happy with our new clinic even though they were 5 times further away than the old one, because we didn’t get that feeling. I’m not sure we even saved any money.

But now that they have demonstrated their empathy and concern during our darkest moments, now that they have connected to us in this very emotional way, what are the chances we will ever consider another veterinary clinic?

The pressures to grow assets and revenue today are very real, and doing little things for your clients without revenue is not a quick-fix solution. It requires patience, genuine care and a commitment to build your practice for its long-term value.

But that’s why you’re reading this, isn’t it?

Put Your Hand Up, Not Out

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Thanks to everyone who had comments on my March 6 post Free Advice From a Mentor, I have had some stimulating conversations.

One person who knows me well was surprised that I didn’t include one of my other oft-repeated golden rules: “Put your hand up, not out.”

I often advise others that they should seek more responsibility, not more pay.

Putting your hand out– asking for more pay because you want it, because you need it, because you’re worth it and doggone it, people like you– doesn’t create a value exchange for your boss or your company.

At least not a sustainable one. You might whine your way to one raise, but that’s rarely a repeatable strategy.

Putting your hand up– to volunteer for more responsibility, to help a colleague swamped with a huge project, to ask your boss if you can take a few things off of her plate– makes you immediately more valuable.

And it makes you the kind of person people want to help be successful.

Have faith that your generosity and increased value will be rewarded (or “monetized” in today’s e-parlance) in due course.

You may have to be a little patient about that. Don’t expect an immediate quid pro quo.

If you are convinced that your efforts will go unrewarded, you are in the wrong job, working for the wrong boss or at the wrong company. Maybe all three.

If that’s the case, a raise isn’t going to make it any better. Trust me.

Otherwise, take a chance.

Put your hand up.

ABA Wealth Management Conference

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Here are the sessions I am looking forward to over the next three days at the ABA Wealth Management Conference in Scottsdale, Arizona. I’ll be back here next week with observations and potential implications on the intersection of leadership, advice an technology. Let me know if you’re going!

1) Financial Services in a Mobile World
Jon Bluth, Senior Vice President of Product Management, SunGard
Eileen VanScoy, Executive Vice President of Product Management, SunGard
The mobile landscape is rapidly evolving, and the financial services industry is striving to keep pace. Similar to the Internet’s early days, fragmentation, security concerns, legacy infrastructure, monetizing solutions and ROI considerations present challenges and opportunities that must be analyzed and addressed to fully capitalize on the sweeping changes brought about by an increasingly mobile world. This presentation looks at financial firms’ emerging and actual opportunities and risks in deploying mobile technology, and discusses various approaches they can take to cost-effectively and responsibly leverage its many benefits to their business and their clients.

2) Leveraging Operational Benchmarks To Achieve Sustainable, Profitable Growth
Michael Kostoff, Partner, WISE Gateway LLC
In these difficult economic times, it is clear that wealth management executives must “do more with less”–they must drive increased revenue growth while simultaneously reducing costs. This presentation will outline how managers can leverage operational performance benchmarking to accomplish this goal, and deliver profitable growth that is sustainable in any kind of economy.   Strategies for improving staff productivity, ensuring support structure cost efficiencies and enhancing sales performance will be discussed.

3) Family Wealth Management
Pat Armstrong, Senior Vice President and Managing Director, Family Dynamics, Wells Fargo
Arne Boudewyn, Senior Vice President and Senior Director, Family Dynamics, Wells Fargo
This breakout is designed to explore strategies for engaging high net worth families in conversations about the qualitative, non-financial dimensions of wealth, sometimes referred to as the human, intellectual or social capital.  Drawing on research and best practices in the area of family dynamics, the presenters will focus their discussion on challenges and opportunities facing wealth advisors as they work with various family profiles on a range of business and estate planning concerns.   The presenters will illustrate how to surface and leverage family motivators through an interactive discussion with participants, highlighting conversation starters that can enhance the planning process.

4) Luncheon with Speaker

The Art of Vision
Erik Wahl

Your best sustainable edge in business is your ability to visibly differentiate yourself from your competition. The Art of Vision is an entertaining and highly practical program that uncovers new ways to make your organization more creative and ultimately more profitable. It is no longer enough to have good customer service and a good product. The truly great companies have altered the landscape to create a unique experience for the customer. Whether its sales, service or leadership principles; professionals at all levels can achieve superior performance by creatively differentiating themselves from the competition.

5) Expert Teams Produce Extraordinary Results

Stephen Doty, Investment Executive, Northeast Division, U.S. Trust, Bank of America Private Wealth Management

David R. McCune, Region Director, Wells Fargo Wealth Management Group 

HNW client demands are clear – they want to be served by a team of professionals. Clients seek a team of advisors with specific roles and complementary skills and talents, aligned and committed to a common purpose of putting the client first, and who consistently exhibit levels of creativity and collaboration that produce extraordinary results.  But how do we get teams to perform at this level? How do we integrate uniquely qualified individuals to think and act as a team? This interactive session will explore the philosophies that make the team approach successful and share actual experiences of a winning team.

6) General Session
Making it Personal – Relationships and Wealth Management

Joseph Michelli, PhD,
Author and Organizational Consultant

Delivering financial performance for your clients is not enough.  Learn the tools that will engage, retain, build loyalty, and grow referrals.

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7) Client Acquisition in a Wired World
Kathleen Pritchard,  Director, Head of Program Marketing and Customer Insights, Legg Mason
In today’s competitive business landscape, financial professionals who fail to leverage the power of the Internet to acquire new clients are doing themselves a serious disservice. By cultivating an online presence that showcases your specific expertise and service offering, you not only create opportunities to meet qualified prospects, but also build credibility and rapport that increases your chance of winning their business. Key topics include best practices for websites and email campaigns; building a network of contacts to facilitate referrals, both as an individual and a professional; using online search tools to identify potential clients, understand their individual needs/interests and use that information in initial meetings to open more new relationships; managing your online reputation; delivering a consistent message that reflects your value proposition; recognizing compliance concerns; and more. Also featured is a discussion on how financial professionals can enhance their client acquisition efforts by using popular online “social networking” services like LinkedIn, Facebook, and Twitter.



…and They Don’t Hire Advisors Very Well Either

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In my February 25th post They Can Always Spend More… I referenced several massive financial failures of the rich and famous. Forbes continued the hit parade yesterday in Robert Laura’s article What Broke Athletes And Celebrities Can Teach Retirees:

The statistics are startling:  Sports Illustrated estimates that 78% of former National Football League players are bankrupt or under financial stress within two years of retirement.  An estimated 60% percent of former National Basketball Association players are broke within five years of retirement, and recently a host of MLB players fell victim to an alleged ponzi scheme at the hands of Robert Allen Stanford.

Laura offers this advice for retirees:

If they’re not meeting expectations or able to illustrate the value they add to your relationship, then start shopping for a free agent.

How many of your clients are shopping for a free agent right now?

In countless surveys, “I don’t hear from my advisor often enough” is typically the top reason clients leave or consider leaving their advisor.

In my February 14th post How Sticky Are Your Relationships? I noted that Valentine’s day was a great day to reach out to your clients (just like any other day).

Today is Leap Day, truly a quadrennial opportunity to reach out and keep yourself off of the free agent list.

They Can Always Spend More…

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Whitney Houston may have been broke before she died, and now her estate may have problems.

NBA star Allen Iverson may be broke, too.

And as this story in today’s Huffington Post relates, he has lots of familiar company in Mike Tyson, Lenny Dykstra, Dorothy Hamill, Terrell Owens and many, many others.

In 2009, Sports Illustrated ran a story called How (and Why) Athletes Go Broke, which tells the tales of woe of several athletes, and details some of the common causes of high profile bankruptcies.

My personal favorite is the story of MC Hammer’s bankruptcy. One of many causes was the construction of a $30 million mansion. I remember reading at the time that Mrs. Hammer had the architect tear down and rebuild their marble and gold-fixtured master bath, not once, but twice, because it simply wasn’t fabulous enough. The architect knew something was wrong when she got an unexpected call from Mrs. Hammer asking how much money they could save by cutting back to ceramic tile and stainless steel fixtures…

What’s the lesson here for financial advisors?

No matter how much your clients make–

and you can add as many zeroes as you like–

they can always spend more.

I learned that lesson first hand as a young private banker. Wealthy clients never have a shortage of hangers-on and would-be beneficiaries, and they multiply exponentially if your client is famous.

I remember several years ago, sitting at the kitchen table with a 17 year old high school student and her mom because the student’s boyfriend, my 23 year old major league baseball player client,  wanted to buy a new house. It’s probably more accurate to say that the girl’s mother wanted him to buy a new house. “Joint tenants with rights of survivorship” she instructed me to title the property.

I was disgusted with the entitled way the girl’s mother treated the player. They had ordered pizza before I arrived, and when the doorbell rang she slapped the player on the chest with the back of her hand and held out her open palm. He dutifully reached into his wallet and gave her money to pay for everyone’s pizza.

I was not surprised when the player called me the next day and said “put the house in my name as sole owner”.

I was also not surprised that he left the girl and her mother behind when he was traded to a new team later in the season.

Famous or not, your clients are likely to have a lot of open palms held in front of their faces. While they may need a good financial plan, a comprehensive estate plan and appropriate asset allocation to help make sure money lasts, the one thing they may need most is a rational voice in their ear.

That should be you.

No matter how much they make, they can always spend more…

See also: …and They Don’t Hire Advisors Very Well, Either.

Are You Using Technology to Engage and Collaborate With Your Clients?

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I created this blog to explore the intersection of leadership, advice and technology to improve the lives of financial advisors and their clients. Leadership is a critical element for any organization, and there are many great sources to tap for inspiration and further exploration.

But setting leadership aside for the moment, I have lately found myself thinking more deeply on how technology can enhance the advisor/client relationship– and how rarely it actually does.

In my last post, I reflected on banking as the second oldest profession in the world; and for much of the industry’s history it was not what we would call today a very “scalable platform”. It was a person to person business, and despite much innovation, in many respects it still is. Especially in the high net worth and ultra high net worth space.

Technology has been employed on a very large scale in transaction processing, record-keeping, funds transfer and numerous back office functions for analytics, risk management and compliance. But front office investments in technology have all too often been focused on cutting costs or improving advisor productivity. Good for shareholders, but what about the client experience?

Dodd-Frank and other legislation is quickly pushing compliance spending to the top of the priority list. A 2011 survey by Aite Group and Wall Street & Technology found the 25% of CIOs ranked compliance their top priority– up from 10% in 2010.

As tablets move into the workplace, the traditional advisor/client face to face conversations are moving to more collaborative “shoulder to shoulder” conversations, and many firms and advisors are not prepared for what I believe is truly a seismic shift.

Financial technology firm Balance Financial had a blog post entitled “What Facebook Taught Us About Personal Finance Tech“. The post described some of the challenges advisors and firms face:

Again, personal finance is a naturally collaborative chore.  Even more, professional financial services rely on collaboration.  If you are a financial advisor or CPA, you must interact and engage with your client to deliver services.  You have to get to know your clients, collect information, stay informed of changes to their life and find ways to stay relevant in an ever changing world. 

In the future, look for tools and solutions that use technology to help make the naturally engaging & collaborative process of professional financial services more efficient and rewarding.  The most powerful technology being developed today makes the natural interaction and communication between humans more transparent, more efficient and more frequent. 

I first learned of Balance Financial at Finovate 2011, and I recently had the chance to sit down with Balance CEO Devin Miller to learn more about how his company is using technology to improve the lives of advisors and their clients.

It seems like so much of the recent innovation in the financial industry has been to empower the do it yourself investor and borrower. I think that’s a really good and healthy thing for the industry, but so many clients don’t want to do it all themselves. They want a trusted advisor, but they don’t want to give up the cutting edge technology to get it.

In order to retain and win clients and assets in 2012 and beyond, advisors will need to engage and collaborate more with their clients. Technology can be a great enabler when it’s designed with the right end in mind.

How are you using technology to engage and collaborate with your clients?