What to Say When a Friend Doesn’t Want to be Your Client

Wednesday, March 13th, 2013

by Dan Richards, Cli​entIn​sights​.ca

Many great client rela­tion­ships emerge from friendships.

That said, some investors are uncom­fort­able work­ing with advi­sors with whom they have close friend­ships – some­thing I was  reminded of last week by an email from a vet­eran advi­sor in New York City with a ques­tion that many advi­sors grap­ple with – how to respond when a good friend elim­i­nates the pos­si­bil­ity of work­ing together, pre­cisely because of your friendship.

Here’s the email:

“I won­der if you have any sug­ges­tions on how to respond when a close friend con­fides to you that they are look­ing for a finan­cial advi­sor but pre­fer to keep busi­ness and friend­ships separate?

For years now I’ve peri­od­i­cally been in this sit­u­a­tion but have not had a com­fort­able response.”

Mix­ing busi­ness and friendships

It’s not only clients who have con­cerns about mix­ing busi­ness and per­sonal friend­ships – I’ve talked to advi­sors who make a con­scious deci­sion not to mar­ket within their per­sonal net­work. In some cases this is because of con­cerns that mar­ket­ing to friends will be seen as intru­sive and posi­tion you as a sales­per­son, in other instances it’s because advi­sors don’t want to jeop­ar­dize friend­ships should peo­ple feel let down dur­ing choppy markets.

When friends say they’re uncom­fort­able mix­ing busi­ness and friend­ship, you have three alternatives:

1. Try to change your friend’s mind
2. Sug­gest that they con­sider work­ing with another advi­sor on your team (depend­ing on the size of your team)
3. Offer to intro­duce them to other advi­sors, either at your firm or at other firms.

Note that your response here is very much one of per­sonal pref­er­ence – and in some cases may depend on your rela­tion­ship with the per­son you’re talk­ing to.

Option 1: Chang­ing your friend’s mind

This would not nor­mally be my rec­om­mended course of action – I believe that as pro­fes­sion­als we all have to respect the stated pref­er­ences of our friends and fam­ily, no mat­ter how much we might want to work with them.

That said, if you want to try to change your friend’s mind, start by defus­ing the ten­sion they’ll often be feel­ing, with a response like:

“I appre­ci­ate your shar­ing how you feel. This is very much a mat­ter of per­sonal pref­er­ence, many peo­ple are com­fort­able work­ing with friends, oth­ers aren’t. And on this kind of deci­sion I really think you need to fol­low your instinct. So I’m absolutely fine with your deci­sion here.”

Pause to allow your friend to respond, then you could con­tinue with some­thing like:

“Just so I under­stand this bet­ter, I won­der if you could help clar­ify the back­ground to your deci­sion. Have you had bad expe­ri­ences in the past with friends with whom you began doing business?”

At this point, you need to sit back and lis­ten and con­cen­trate on acknowl­edg­ing what your friend has to say. I don’t sug­gest that you try to change their minds in this ini­tial con­ver­sa­tion, rather make a men­tal note of the con­ver­sa­tion for future ref­er­ence, for a time when you’re talk­ing to your friend in a con­text that lends itself to com­fort­ably rais­ing this topic..

At the end of your friend’s answer, I would con­clude the con­ver­sa­tion unless they truly seem to want to dis­cuss this fur­ther – you don’t want to appear to be beat­ing this topic to death. You might con­sider, how­ever, clos­ing by ask­ing your friend if they’d like to stay on your email list, per­haps with a sen­tence like:

“Thanks again for your hon­esty about this. Please let me know if I can be of assis­tance at any time – in the mean­while, would you like to stay on the dis­tri­b­u­tion list for my emails and invites to the lunches I hold, this is entirely your call, I’m happy to leave you on but am equally happy to take you off the list.”

A word of warn­ing here: Don’t try to sup­press your friend’s objec­tion with clichéd objec­tion han­dling tech­niques like “Feel, Felt, Found:”

“I under­stand how you feel.”

“I’ve talked to friends in the past who ini­tially felt the same way.”

“But what they found once we dug into this fur­ther is that we were able to come to a work­ing rela­tion­ship that fully met their needs and with which they were com­pletely comfortable.”

Lines like this one work because peo­ple feel under pres­sure to con­form to the expe­ri­ences of oth­ers. And in fact, on occa­sion you may have suc­cess with this approach for that rea­son. Ulti­mately, though, you haven’t addressed the con­cern, you’ve buried it – and it’s unlikely that this addresses your friend’s nag­ging doubts in the long-term. Mean­while, any inter­ac­tion where cur­rent or exist­ing clients feel undue pres­sure under­mines your rela­tion­ships, rather than enhanc­ing them and risks posi­tion­ing you as a product-pushing sales­per­son rather than a pro­fes­sional advisor.

Option 2: Work­ing with other advi­sors on your team

The advi­sor who sent me the email is one of three wealth man­agers with a 12-person bou­tique firm.

Again, first acknowl­edge the con­cerns that your friend has expressed:

“I can sym­pa­thize with your point of view here. This kind of deci­sion is very per­sonal – while some good friends have become my clients and some clients have become good friends, you should absolutely go with your instincts here.”

After paus­ing for a reac­tion from your friend (chances it will be one of relief for your under­stand­ing), this advi­sor could con­tinue on.

“There are a cou­ple of options here, if you’re inter­ested. First, I could intro­duce you to one or two advi­sors at other firms that I have respect for and con­fi­dence in. Alter­na­tively, I could intro­duce you to one of the two other wealth man­agers at my firm who might be a good fit for you.  These are out­stand­ing col­leagues who I’ve got a lot of respect for, I’m con­fi­dent that one of them could fit your needs. Just to be clear, you and I wouldn’t be work­ing together directly but you’d still get the ben­e­fit of my thinking.”

Hav­ing said this, again sit back and lis­ten. Note that phras­ing this as you have you give your friend a com­fort­able option should they feel that not only don’t they want to work with you, they don’t want to work with your firm.

The key is to put this in your own words, so that you can deliver this com­fort­ably. One sug­ges­tion – do try to keep your answer as short as pos­si­ble.
Option 3: Mak­ing a refer­ral to other advisors

In many regards this is the most com­fort­able response for both advi­sors and peo­ple in your net­work – all you’re doing here is offer­ing to help friends con­nect with some­one who can meet their needs, with no vested inter­est on your part.

Again start by val­i­dat­ing your friend’s concern:

“I can sym­pa­thize with your point of view here – you’re not unique, I run into quite a few peo­ple who feel the same way.”

Then go on to say:

“The good news is that I’m not the only good advi­sor in this com­mu­nity, there are lots of excel­lent advi­sors. Let me know if at any time you’d like me to intro­duce you to one or two advi­sors who you could sit down with to get a sense of their approach, these could be other advi­sors at my firm or advi­sors at other firms.”

And then leave it at that – at this point you’ve made the offer, now let your friend decide how to pro­ceed.  That said, if friends do take you up on your offer and you intro­duce them to other advi­sors, there’s noth­ing wrong with let­ting these advi­sors know that you’d wel­come rec­i­p­ro­cat­ing intro­duc­tions should they run into the same sit­u­a­tion that you did.

One of the rea­sons that advi­sors are unhappy with their response to a state­ment like “I want to keep busi­ness and friend­ships sep­a­rate” is that they haven’t thought their answer through before­hand. Even if you haven’t run into this sit­u­a­tion in the past, chances are you will in future – con­sider tak­ing time to rehearse how you’ll respond. Chances are a two minute rehearsal will pay div­i­dends in a much stronger answer when you do run into this comment.

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Tags: Choppy Markets, Client Relationships, Conscious Decision, dan richards, Email, Friend Doesn, Friends, Friendship, Good Friend, Instances, Investors, Marketing, New York City, Option 1, Personal Friendships, Personal Network, Personal Preference, Relationship, Salesperson, Team 3
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Going from 0 to 100 Clients in 18 Months

Thursday, January 31st, 2013

Fore­word by Dan Richards, Cli​entIn​sights​.ca

Ear­lier in Jan­u­ary, I exchanged emails with Kather­ine Vessenes, a lawyer and author of Build­ing your multi-million dol­lar prac­tice, who for many years has been a high pro­file con­sul­tant to suc­cess­ful Amer­i­can advi­sors and their firms.

About two years ago, she decided to return to her roots and began build­ing a finan­cial plan­ning prac­tice in Prov­i­dence, Rhode Island. In a recent arti­cle she described how in 18 months she went from zero to 100 clients, each of whom pays an annual plan­ning fee of $1200 or more.

The arti­cle out­lines nine keys to her suc­cess, but four stood out for me:

1.     Find the right niche – Vessenes chose to con­cen­trate on young pro­fes­sion­als and aca­d­e­mics at the local uni­ver­sity. While they had great future poten­tial, the fact that they were early in their earn­ing career meant they were cur­rently under­served and typ­i­cally there was no advi­sor in place to dis­place. And I was struck by the point about the “water cooler effect” when your clients are in the same build­ing and inter­act frequently.

2.     Focus on hot but­tons – Even under­served investors need an impe­tus for action. By offer­ing edu­ca­tional sem­i­nars focus­ing on tax sav­ing strate­gies, she was able to attract poten­tial clients out to hear her talks, each of which offered con­crete advice and spe­cific strate­gies. Of note, every­one who said they’d like more infor­ma­tion was called within two days.

3.     Stream­line your process – Vessenes talks about the PMS approach as key to her suc­cess, in which 80% of her time is spent in front of clients, con­cen­trat­ing on Prospect­ing, Mar­ket­ing and Secur­ing Client Rela­tion­ships. Some­thing that makes this pos­si­ble is a highly sys­tem­atized, con­sis­tent, process-driven approach to deal­ing with clients.

4.     Go above and beyond – It’s a cliché for advi­sors to talk about going above and beyond with clients, but Vessenes makes this a core part of her prac­tice. Despite not ask­ing for refer­rals, one-third of new clients have come from intro­duc­tions. The key is to look for tan­gi­ble ways to add value – whether it be by hav­ing a staff mem­ber spend two days call­ing every finan­cial insti­tu­tion in the state look­ing for the best rate on a loan or seek­ing out a lawyer with deep exper­tise to help a same-sex cou­ple adopt­ing a child.

Even if you have no inter­est in build­ing a busi­ness based on annual plan­ning fees or in deal­ing with smaller clients, Kather­ine Vessenes’ expe­ri­ence offers impor­tant lessons. Here’s her full arti­cle, out­lin­ing nine lessons on what it takes to attract clients today.

How We Brought on 100 Clients in Just 18 Months

By Kather­ine Vessenes, JD, CFP®, RFC

We just cel­e­brated a great day—102 of our tar­get mar­ket clients engaged us in just 18 months! No one was more sur­prised than me.  Here is how we did it:

1.     We stuck to the PMS model: If you have read our book, Build­ing the Mul­ti­mil­lion Dol­lar Prac­tice, then you know there is only one way to get your busi­ness to the Mil­lion dol­lar mark and beyond—advisors need to spend their time focus­ing on three things: Prospect­ing, Meet­ing with Clients and Secur­ing the Rela­tion­ship (PMS).  Every­thing else is del­e­gated. I have a fan­tas­tic team and these num­bers would not be pos­si­ble with­out a great deal of ded­i­cated sup­port. I spend about 80 to 90% of my time in front of clients.

2.     We treat the busi­ness like man­u­fac­tur­ing: I got some great advice from a mil­lion dol­lar advi­sor a decade ago. After meet­ing with three to four new clients per day (and leav­ing absolutely exhausted), she reminded me: This is an assem­bly line. We took that advice and added another piece to it: it is a very high touch assem­bly line. We have very defined processes and sys­tems. These include a set meet­ing sched­ule and we don’t devi­ate from it. These processes are designed to pro­vide a level of ser­vice to clients that they can’t get any­place else. We always do the same thing in a first meet­ing, sec­ond meet­ing, etc. That makes it much eas­ier for staff to pre­pare because we are not rein­vent­ing the wheel at every point in the process. Also we are con­stantly look­ing for ways to make our processes more effi­cient and more effective.

3.     We found the per­fect niche: young, edu­cated clients who like us and we like them. When we started our prac­tice in Prov­i­dence, Rhode Island, we started focus­ing on young pro­fes­sors at Brown Uni­ver­sity. We had exper­i­mented with a num­ber of other niches and found this one really clicked for us. There were a lot of rea­sons this niche worked: they appre­ci­ated my edu­ca­tion and law degree; they were under­served; they didn’t have deep rela­tion­ships with other advi­sors; and then there was the water cooler effect. I found niches work much bet­ter when the mem­bers are housed in the same build­ing and see each other every day. They must run out of things to talk about over lunch, because sooner or later they bring up finances and our name.

4.     Mar­ket­ing through edu­ca­tional events. Ini­tially our mar­ket­ing focused on edu­ca­tional events. We found it was impor­tant to have a topic that was not only of inter­est to our tar­get mar­ket, but also had a high pain fac­tor. It is not my style to do teaser pre­sen­ta­tion. So I make sure each of these events has great content—content they can use to make their lives bet­ter. Even if atten­dees didn’t want to come in and meet us later, I wanted them to have a great time and a good impres­sion of us—because the next time we did an event, they could still be a good cheer­leader for us. These meet­ings allow the future client to get to know us in a non-threatening set­ting and see if our phi­los­o­phy will fix their pain.

5.     Call backs after the event. You can have the best mar­ket­ing event in the world, but if you are not good at con­vert­ing event atten­dees into appoint­ments, then your sys­tem will never work. We have a proven sys­tem for fol­low­ing up with atten­dees. First, we never call folks who said they weren’t inter­ested in com­ing in. In fact, we don’t even put them on our ezine list. For the ones who are inter­ested and requested a call back, we call them within two days of the event and also send them a fol­low up email. The email just reminds them there is no cost or oblig­a­tion with the ini­tial meet­ing, just a chance to answer their ques­tions and get to know them. I don’t want them to feel any pres­sure. I found the greater the time lapse between the edu­ca­tional event and the call back, the harder it is to secure the meeting—so it is impor­tant to do these as quickly as pos­si­ble. We usu­ally make these calls in the evenings or Sat­ur­day mornings.

6.     The Pareto effec­tive in reverse. Of course you know of the 80/20 rule: where 80% of your income comes from 20% of your clients. Unfor­tu­nately, since we were just start­ing out, we couldn’t afford to be that picky. There was one place where I drew the line, though: there were cer­tain clients I just didn’t want to take on—I knew they would be dif­fi­cult, time con­sum­ing,  hard to please, or put a lot of extra stress on our sys­tems. Another way to think about this is about 80% of your prob­lems and stress come from 20% of your clients. As a result, we fire about 20%–I try hard to assess in our first meet­ing if the prospect is a good fit for us and if we can keep them happy. If not, then we take a pass on them.

7.     We stopped ask­ing for refer­rals. For those who have been read­ing my arti­cles for years, you are prob­a­bly won­der­ing if I have lost my mind. Yes I have writ­ten a lot on this topic, but I decided to try some­thing both eas­ier and more effec­tive: I stopped ask­ing for refer­rals. Instead, we just give a WOW level of ser­vice that is not avail­able from other firms. The strat­egy def­i­nitely worked. We started get­ting refer­rals the by the third month we were in busi­ness. Now over a 1/3 of our new clients come from happy, exist­ing clients.

8.     Focus on sav­ing taxes now and in the future. Most of our clients had no idea that they were going to be pay­ing more in taxes in the future. Although the recent leg­is­la­tion is wak­ing a few more up, we spend time show­ing clients the impor­tance of plan­ning for tax-free dis­tri­b­u­tion strate­gies in retire­ment. Once again this sets us apart from other firms, but it also allows me to sleep bet­ter at night know­ing clients will be bet­ter off in retire­ment if some of their income is tax-free.

9.     The WOW expe­ri­ence. I believe part of the key to get­ting more refer­rals is to pro­vide your exist­ing clients with a WOW expe­ri­ence they can’t get else­where. Here are a few of the things we have done in the last year, that we don’t see many other advi­sors doing:

a.     Young pro­fes­sional had a chance to buy into his practice—but I didn’t like the loan they were offer­ing. Solu­tion: one of our team mem­bers spent two days call­ing every bank and credit union in Rhode Island to see if we could find him a bet­ter rate. We found him a great HELOC at a local credit union, which not only allowed him to save in inter­est, but to deduct the pay­ments. Results—thousands of dol­lars in sav­ings every year.

b.     Young les­bian cou­ple wanted to adopt. We reviewed all the finan­cial plan­ning issues for same-sex cou­ples and found there were a lot of gaps in their finan­cial plan. Then I put my Chief of Staff on the phone to find an expe­ri­enced attor­ney in Mass­a­chu­setts who did adop­tions for same-sex cou­ples. The trick was find­ing an attor­ney who was expe­ri­enced with same-sex adop­tions. Result: very happy sat­is­fied clients who have sent me a lot of referrals.

c.     Female Korean pro­fes­sional wanted a life insur­ance pol­icy where the death ben­e­fit could go to her par­ents in Korea, and she could use the cash value for tax-free rev­enue in retire­ment. Unfor­tu­nately, OLD FOGY Assur­ance Com­pany didn’t like the arrange­ment because our client didn’t have a Green Card. They wanted her to set up a US trust for the ben­e­fit of her par­ents. It would have cost our client $2,000 to $3,000. Solu­tion: we went back to the insur­ance com­pany and lob­bied on her behalf. They relented and allowed her par­ents to be the direct ben­e­fi­cia­ries. Results: happy client was saved thou­sands in legal bills and sent us about 8 new clients in the last year.

In short, we found clients are hun­gry for the advi­sor who is will­ing to go above and beyond and pro­vide ser­vice and solu­tions that they can’t get elsewhere.

Kather­ine Vessenes, JD, CFP®, RFC, is the pres­i­dent of Vest­ment Advi­sors, the country’s lead­ing con­sul­tancy for build­ing the Multi-Million Dol­lar Prac­tice, accord­ing to Kaplan Press.  The author of three books, Kather­ine is a sought after indus­try speaker, leader and author. She also has her own finan­cial plan­ning prac­tice where she imple­ments the advice she gives other finan­cial advi­sors. You may reach her at Katherine@vestmentadvisors.com or 952−401−1045.

© Kather­ine Vessenes, 2013. May be reprinted only with permission

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Tags: Academics, Career, Client Relationships, Concrete Advice, Driven Approach, Educational Seminars, Financial Planning, Hot Buttons, Impetus, Investors, Katherine Vessenes, Lawyer, Local University, Niche, Providence Rhode Island, Recent Article, Roots, Underserved, Water Cooler, Young Professionals
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Are you the Apple of Financial Services? Part Four

Wednesday, November 14th, 2012

by Anthony Lam, The Covenant Group

As the head of pro­gram deliv­ery and client rela­tion­ships here at The Covenant Group, I spend a lot of time think­ing about how we sup­port our clients, and in turn, the ser­vice lessons that our pro­gram par­tic­i­pants can learn from us. Which is one rea­son why I think it is so impor­tant that entre­pre­neurswho want to address their com­pa­nies’ client ser­vice mod­els first reflect on their own expe­ri­ences as a client or customer.

When call­ing a util­ity, air­line or retail com­pany with a ques­tion or com­plaint, did you have to wait for a long time, lis­ten­ing to a corporation’s hold sound­track on loop? Were you passed from one rep­re­sen­ta­tive to the next, with none of them able to solve your prob­lem or give you a defin­i­tive answer?

In past posts for this series, I have talked about how orga­ni­za­tions can learn from Apple’s metic­u­lous prod­uct design process and cus­tomer ser­vice model. Now I’d like to talk about how Apple has extended con­trol of the expe­ri­ence for the client to its employ­ees and how that has put the com­pany among the best in its class.

If you have ever been an Apple cus­tomer, what was your expe­ri­ence? Apple’s retail stores are famed for their cus­tomer ser­vice. As a dis­tant observer, I can only con­clude that one of the rea­sons for the company’s suc­cess is because it has empow­ered its employ­ees, Geniuses or not, to do what­ever they can to offer solu­tions to cus­tomers’ tech ques­tions and chal­lenges. Essen­tially, Apple has grasped one of the tenets of client rela­tion­ship management.

Giv­ing employ­ees skills and permission

It enables cus­tomer ser­vice by cre­at­ing sys­tems that make it easy for employ­ees to deliver client sat­is­fac­tion with prod­uct replace­ments, deep knowl­edge of the items they are sell­ing and a gen­uine com­mit­ment to help­ing the peo­ple who walk through their doors.

I remem­ber stum­bling across a Giz­modo post about Apple’s so-called “secret employee train­ing man­ual,” the “Genius Train­ing Stu­dent Work­book.” Edi­tor Sam Bid­dle explained that one of the lessons Apple con­veys to its newest employ­ees is the process of sell­ing: (A)pproach, ℗robe, ℗resent, (L)isten and (E)nd. By his telling, the com­pany encour­ages work­ers to share their own desires, wor­ries and needs with cus­tomers in an effort to cre­ate a deeper rela­tion­ship. As Carmine Gallo writes on the Forbes blog, Apple also walks its employ­ees through var­i­ous sce­nar­ios that they will likely encounter on the floor, and equips them with strate­gies to not only solve tech­ni­cal issues but also com­mu­ni­cate in an effec­tive way.

Con­sider your own employ­ees. Are they capa­ble of doing their jobs at the basic level, as well as guid­ing clients through any prob­lems to a solu­tion? If not, it may be time for you to take a peek at the Apple train­ing guide.

Anthony Lam has spent more than 20 years hon­ing his cus­tomer rela­tion­ship man­age­ment skills. He has demon­strated his com­mit­ment to high-quality cus­tomer ser­vice in the retail, bank­ing and air­line indus­tries. Anthony is the Man­ager of Pro­gram Deliv­ery and Client Rela­tion­ships at The Covenant Group and coaches finan­cial advi­sors on client ser­vices through The Covenant Group’s finan­cial ser­vices train­ing.

Fol­low The Covenant Group

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Tags: Anthony Lam, Client Relationship Management, Client Relationships, Client Satisfaction, Covenant Group, Customer Service Model, Definitive Answer, Distant Observer, Experience Apple, Financial Services, Genius Training, Geniuses, Genuine Commitment, Product Replacements, Program Delivery, Program Participants, Retail Company, Retail Stores, Service Models, Tenets
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Four Steps to Deepen Client Relationships and Increase Referrals

Wednesday, October 24th, 2012

by Dan Richards, Cli​entIn​sights​.ca

Research shows that only 25% of clients are truly “engaged” as opposed to merely sat­is­fied – and those engaged clients are not only the most loyal and sat­is­fied but also pro­vide almost all referrals.

Today’s arti­cle by Julie Lit­tlechild of Advi­sor Impact lays out an Engage­ment Roadmap, out­lin­ing the spe­cific steps to turn client sat­is­fac­tion into engage­ment. It focuses on four spe­cific steps that are highly cor­re­lated with engaged clients:

1.     Seek struc­tured feedback

2.     Ensure you have the right client fit

3.     Cre­ate deeper connections

4.     Take the lead in help­ing clients man­age their finan­cial lives

Click to read the full article:

http://​www​.advi​sorone​.com/​2​0​1​2​/​0​9​/​2​5​/​4​-​w​a​y​s​-​f​o​r​-​a​d​v​i​s​o​r​s​-​t​o​-​b​e​t​t​e​r​-​e​n​g​a​g​e​-​c​l​i​e​n​t​s​?​u​t​m​_​s​o​u​r​c​e​=​t​o​p​s​t​o​r​i​e​s​1​0​0​7​1​2​&​a​m​p​;​u​t​m​_​m​e​d​i​u​m​=​e​n​e​w​s​l​e​t​t​e​r​&​a​m​p​;​u​t​m​_​c​a​m​p​a​i​g​n​=​t​o​p​s​t​o​r​ies

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Tags: Amp, Client Relationships, Client Satisfaction, Compendium, Fit, Four Steps, Julie Littlechild, Referrals, Take The Lead, Target, Utm
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Do Not Allow New Technologies to Impede Communications

Wednesday, October 24th, 2012

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Tags: Anthony Lam, Ceos, Client Emails, Client Relationships, Company Culture, Corporate Culture, Economy Trade, Employment Policies, Financial Structure, Japanese Firms, Management Structure, Meaningful Connections, New Communication Technologies, Norm Trainor, Performance Management, Professional Communications, Text Messages, Text Messaging, Video Chat, Zest
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How LinkedIn Can Benefit Financial Advisors

Wednesday, October 17th, 2012

by Shauna Trainor, The Covenant Group

LinkedIn’s mil­lions of users lever­age the pro­fes­sional social net­work­ing site to share their con­tent with business-minded peers and con­nect with decision-makers of com­pa­nies they might never get to meet in the “real world.” Indeed, an info­graphic from Imbue Mar­ket­ing described the site as “the Face­book for grown-ups.”

Research con­ducted by LinkedIn, in part­ner­ship with FTI Con­sult­ing and Cogent Research, found that finan­cial advi­sors can gen­er­ate con­sid­er­able suc­cess using the web­site. Specif­i­cally, more than six in 10 sur­veyed finan­cial advi­sors actively prospect­ing on the site over the past year were able to con­vert new clients, approx­i­mately one-third (32 per­cent) of whom had $1 mil­lion or more in new assets under man­age­ment from new clients.

Reach­ing out on LinkedIn

When you’re look­ing to estab­lish con­tact with new clients, LinkedIn’s Advanced Peo­ple Search fea­ture is a good port of call. Enter your office’s postal code, then plug in a real­is­tic radius based on how far you would be will­ing to travel to meet with a client and vice-versa. Once the site has gen­er­ated a list of names, parse through it to deter­mine your best prospects. Up until now, the process has been fairly rote, but this step involves a strate­gic ele­ment — namely, you will need to deter­mine whom you have com­mon con­nec­tions with, as well as who fits your ideal client profile.

Although LinkedIn can be an excel­lent tool in the process of tar­get­ing future clients, there comes a time to step away from the social net­work­ing site and get more per­sonal. In a recent blog titled “Man­ag­ing and Nav­i­gat­ing Client Rela­tion­ships Via Email,” my col­league Anthony Lam called email an “art form.” Finan­cial advi­sors often use the chan­nel to make pre­lim­i­nary con­tact with clients, but in our high-tech, fast-paced world, don’t dis­re­gard the value of engag­ing in phone con­ver­sa­tions — or even arrang­ing face-to-face meet­ings with prospects.

How are you using LinkedIn to help build your busi­ness and expand your cir­cles of influ­ence? Do you focus on get­ting your name out there, or pre­fer to take a back seat when it comes to self-promotion, instead using the site to tar­get prospects or zero-in on poten­tial future employees?

Shauna Trainor is The Covenant Group’s Mar­ket­ing Man­ager. She focuses on The Covenant Group’s own mar­ket­ing strat­egy and also helps entre­pre­neurs through finan­cial advi­sor train­ing to lever­age social media and other tech­nol­ogy to spread the word about their ser­vices and prac­tices and build relationships.

 
Fol­low The Covenant Group

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Tags: Art Form, Assets Under Management, Client Profile, Client Relationships, Covenant Group, Decision Makers, Disregard, Facebook, Financial Advisors, Grown Ups, Infographic, Linkedin, List Of Names, People Search, Phone Conversations, Port Of Call, Search Feature, Shauna, Social Networking Site, Ups
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Using Milestones To Achieve Sustainable Growth

Thursday, August 9th, 2012

by Bob Simp­son, Syn­chronic­ity Per­for­mance Consulting

We have begun a new series of arti­cles over the past month.  The focus of these arti­cles is to help advi­sors to achieve Sus­tain­able Growth Milestones.

We use mile­stones to help advi­sors to set and real­ize their goals.  They can help you focus your atten­tion on con­stant improve­ment of your prac­tice rather than get­ting involved in ran­dom, feel-good activ­i­ties that pro­vide lit­tle more than a tem­po­rary boost in performance.

In plan­ning your busi­ness, you need to have a clear vision of what you want your busi­ness to look like when it is com­plete.  For exam­ple, if your goal is to build a busi­ness with $100 mil­lion or $250 mil­lion in assets under man­age­ment, you need to be able to see what it will look like when you achieve this goal:

• What is your rev­enue model?
• How many fam­i­lies are you work­ing with?
• What is the min­i­mum and aver­age assets under man­age­ment per client?
• What plat­form are you using to facil­i­tate your business?
• Are you work­ing in an employee model or an inde­pen­dent model?
• Are you a gen­er­al­ist or a specialist?
• What is the makeup of your team?
• How are you man­ag­ing investments?
• Where are your offices and how are they designed?
• How do you man­age client relationships?
• What is the makeup of your per­sonal, busi­ness and client networks?
• What are your busi­ness devel­op­ment processes?
• How do you allo­cate your time – client-facing, admin­is­tra­tive, busi­ness management?

The prob­lem with tra­di­tional plan­ning is that longer-term goals are dif­fi­cult to visu­al­ize with a high degree of clar­ity.  There are sim­ply too many things that may alter your path on the way to your goals.

Let’s say that your time­frame for achiev­ing your $100 or $250 mil­lion goal is ten years.  I am con­fi­dent to say that most advi­sors have very lit­tle idea about what the world of finan­cial ser­vices will look like in ten years.  Tech­no­log­i­cal inno­va­tion may com­pletely change your indus­try.  On the other hand, three years is pre­dictable and much more manageable.

By estab­lish­ing a series of three-year mile­stones on your path to your ten-year goals, you can reset your plan every three years and estab­lish new strate­gies and tac­tics that are appro­pri­ate for the con­di­tions at the time.

Your goal should be sus­tain­able growth.  Many advi­sors are able to grow suc­cess­ful busi­nesses but are not able to sus­tain growth as the busi­ness matures.  The inabil­ity to main­tain above indus­try aver­age growth rates can cost mil­lions of dol­lars in pre-tax income, assum­ing the sale of the busi­ness at the end of a ten-year period.

To read arti­cles posted on Syn​chronic​ity​.ca in this new series, please click on the links below:

Build­ing a $100 Mil­lion Busi­ness – Set­ting Your Goals

Build­ing a $250 Mil­lion Busi­ness – Set­ting Goals

Build­ing a Great Busi­ness – Where are You Now?

Watch our web­site as we will be post­ing new arti­cles on a reg­u­lar basis in this new series.

I enjoy hear­ing from peo­ple who read my arti­cles by phone, e-mail or text mes­sage.  I respond to all inquiries the same day.  If you have a prob­lem and would like to dis­cuss it with some­body, I would wel­come your call;  I enjoy help­ing peo­ple solve prob­lems and build more suc­cess­ful businesses.

Bob Simp­son

Direct Line:  905−502−0100

Toll Free:      866−646−6002

E-mail:  bob.simpson@synchronicity.ca

Text Mes­sage:  905−502−0100

Web­site:  www​.syn​chronic​ity​.ca

Join our Dis­cus­sion Group on LinkedIn:  www​.linkedin​.com/​g​r​o​u​p​s​/​A​d​v​i​s​o​r​-​C​o​l​l​a​b​o​r​a​t​i​o​n​-​4​2​4​8​7​2​5​/​a​b​out

Bio:  www​.syn​chronic​ity​.ca/​a​b​out

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Tags: 100 Million, Administrative Business, Assets Under Management, Bob Simpson, Clear Vision, Client Networks, Client Relationships, Generalist, Growth Milestones, Independent Model, Managing Investments, Performance Consulting, Personal Business, Revenue Model, Sustainable Growth, Synchronicity, Technological Innovation, Term Goals, Time Client, Timeframe
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Practice Essentials: Investment Management Focus Days

Monday, July 30th, 2012

by Bob Simp­son, Syn­chroncity Per­for­mance Consulting

One of the goals that you should pur­sue is to opti­mize the time you spend in client-facing activ­i­ties.  We define client-facing activ­i­ties as time spent man­ag­ing exist­ing (ideal) client rela­tion­ships or in busi­ness devel­op­ment activ­i­ties to attract new (ideal) clients to your business.

Some indus­try stud­ies report that advi­sors who spend in excess of 60% of their time in client-facing activ­i­ties earn three to five times the income of those who do not.  This study also reported that only about 9% of advi­sors spend in excess of 60% of their time in client-facing activity.

If you study the industry’s most suc­cess­ful advi­sors, you will find they have good processes and teams to allow them to focus on man­ag­ing their client rela­tion­ships and build­ing their per­sonal, busi­ness and client networks.

One of my fond mem­o­ries of being an advi­sor was when I was out of my office and was stopped by three advi­sors in the branch who wanted to talk.  My assis­tant Sheri got up from her desk, approached the group, grabbed me by my sleeve and pulled me back to my office.  I asked her what that was about and she told me “I get a per­cent­age of your rev­enue.  When you are talk­ing with other advi­sors, you are not talk­ing with clients and you are not mak­ing any money.  Get back to work!”

Invest­ment man­age­ment is one of the core sta­bi­liz­ers of your busi­ness, you need to man­age the process so you make good deci­sions and rec­om­men­da­tions.  At the same time you need to be effi­cient so that you do not take away time from client rela­tion­ship man­age­ment and busi­ness development.

Here is a process that I think you should con­sider:  Invest­ment Man­age­ment Focus Days.

I have writ­ten in pre­vi­ous arti­cles about the inabil­ity of humans to multi-task.  The brain is sim­ply not wired to do more than one thing at a time.  So, by allo­cat­ing time specif­i­cally for invest­ment research and report­ing, you will get more done in less time.

Even more impor­tantly, the process of devel­op­ing port­fo­lios and client reports will help you orga­nize your thoughts and help you pro­duce bet­ter client results.

If you are a reg­u­lar reader, you may have seen my arti­cle enti­tled “A Sim­ple Method to Improve Your Clients’ Invest­ment Per­for­mance”.  In this arti­cle, I dis­cussed a process called Purpose-Based Asset Man­age­ment.  You can read the arti­cle for a full expla­na­tion, but the con­cept is help­ing clients to iden­tify a series of “buck­ets” rep­re­sent­ing future uses of money, iden­ti­fy­ing how much money will be required in each “bucket” and esti­mat­ing a time­frame for each “bucket”.  Then port­fo­lios, invest­ment pol­icy and report­ing processes will be devel­oped for short, medium and long-term port­fo­lios, cor­re­spond­ing to the “buckets”.

On your first Invest­ment Man­age­ment Focus Day, you should develop a series of port­fo­lios for a vari­ety of time­frames and risk tol­er­ances.  You may want to develop port­fo­lios for tax­able and non-taxable accounts.  Your goal should be to develop port­fo­lios that are appro­pri­ate for 80% of the cases that you encounter.

You will be pre­sented from time-to-time with cases for which there is not a fit within your port­fo­lios.  In these cases, you should review each new port­fo­lio to assess whether it should become one of your model portfolios.

Once your port­fo­lios have been devel­oped, you should back test them to judge volatil­ity and per­for­mance against bench­marks.  Then, you should pack­age the port­fo­lios so they are in a client-ready for­mat.  I would sug­gest that you cre­ate elec­tronic (pdf) ver­sions so you can e-mail them.

The next step is to write a quar­terly invest­ment report in which you dis­cuss such things as:

• Per­for­mance for the past quarter
• Out­look for the next year

Keep it sim­ple.  I have been involved in the finan­cial ser­vices indus­try for over thirty years and still don’t under­stand some of the reports that are sent out to clients.  Write your own.  It helps you to orga­nize your thoughts.  You may strug­gle with the first cou­ple but once you get in a groove, it gets a lot easier.

To com­plete all this work ini­tially, you will prob­a­bly need more than one day, but it will take much less time to update your port­fo­lios that to build them the first time.

On the other hand, this process will save you hours of time.  Rather than devel­op­ing port­fo­lios from scratch, you can sim­ply pull your port­fo­lio reports from a shelf (or print them from your com­puter).  You may even cre­ate a pre­sen­ta­tion binder (hard copy or elec­tronic) to dis­cuss with clients.  Clients love being given choices, espe­cially when they are easy to understand.

Make sure to stay focused – your ulti­mate goal is to spend a sin­gle day per quar­ter on invest­ment port­fo­lio and report­ing so you can spend more than 60% of your time in client-facing activ­i­ties.  Pre-book these days a year in advance.  Arrange with whole­salers or other indi­vid­u­als with whom you would like to col­lab­o­rate to meet on your Invest­ment Man­age­ment Focus Days.

I real­ize that if you man­age your own port­fo­lios that it is vir­tu­ally impos­si­ble to do all the nec­es­sary work in one day per quar­ter.  It is dif­fi­cult to man­age invest­ments rather than work­ing with invest­ment man­agers and break through the 60% client-facing thresh­old.  Model port­fo­lios will def­i­nitely help your cause.

We are prepar­ing to launch a new ser­vice to help you man­age your invest­ment processes.  Should you decide to imple­ment a pro­gram, like the one above, we will help you nav­i­gate through set-up and your invest­ment processes and port­fo­lios.  Then, we can, at your option, meet with you on your quar­terly Invest­ment Man­age­ment Focus Days to dis­cuss your port­fo­lios and reporting.

You can par­tic­i­pate in our new pro­gram, Invest­ment Processes and Port­fo­lios, based on your needs, pref­er­ences and pri­or­i­ties.  A vari­ety of options are avail­able from pay-by-the-minute to pre-booked ses­sions of as lit­tle as 15-minutes.

We hold you account­able, chal­lenge you on your port­fo­lios and strate­gies and proof your report­ing.  You iden­tify your needs and we help you.

To dis­cuss how this pro­gram can help you build or man­age your invest­ment man­age­ment pro­gram,  please con­tact Bob Simp­son at 905−502−0100 or bob.simpson@synchronicity.ca.

Bob Simp­son

Direct Line:  905−502−0100

Toll Free:      866−646−6002

E-mail:  bob.simpson@synchronicity.ca

Text Mes­sage:  905−502−0100

Web­site:  www​.syn​chronic​ity​.ca

Join our Dis­cus­sion Group on LinkedIn:  www​.linkedin​.com/​g​r​o​u​p​s​/​A​d​v​i​s​o​r​-​C​o​l​l​a​b​o​r​a​t​i​o​n​-​4​2​4​8​7​2​5​/​a​b​out

Bio:  www​.syn​chronic​ity​.ca/​a​b​out

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Tags: Bob Simpson, Brain, Business Development Activities, Client Networks, Client Relationship Management, Client Relationships, Decisions, Desk, Focus Days, Fond Memories, Investment Management, Investment Research, Management Development, Management Focus, Money, Personal Business, Practice Essentials, Practice Management, Sheri, Stabilizers
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Building a $250 Million Business – Setting Goals

Wednesday, July 25th, 2012

by Bob Simp­son, Syn­chronic­ity Per­for­mance Consulting

Last week, I posted an arti­cle “Build­ing a $100 Mil­lion Busi­ness – Set­ting Goals”.  Many of the con­cepts dis­cussed in this arti­cle apply to busi­nesses at any stage of devel­op­ment but the strate­gies and tac­tics to achieve the goals are quite dif­fer­ent for a busi­ness that has achieved $100 mil­lion in assets under man­age­ment and has set it sights on $200 or $250 million.

The major dif­fer­ence is that a busi­ness on its way to $100 mil­lion can be man­aged by a sin­gle pro­fes­sional and is much more focused on growth, whereas a $100 mil­lion plus busi­ness requires that more resources are focused on client reten­tion and sat­is­fac­tion and a team of pro­fes­sion­als is required to man­age the client relationships.

In Jan­u­ary, I posted an arti­cle enti­tled “What Is The Com­pound Growth Rate Of Your Busi­ness and What Is That Cost­ing You?”  I inserted a spread­sheet that allows you to enter infor­ma­tion about your cur­rent busi­ness and what-if sce­nar­ios based on com­pound growth rates.  In our exam­ple, a $62 mil­lion AUM busi­ness grow­ing at a three-year com­pound growth rate of 7.43% will grow to $127 mil­lion com­pared to $384 mil­lion at 20% com­pound growth over a ten-year period.  Pre-tax income for the 20% growth busi­ness is an astound­ing $8.8 mil­lion greater than the 7.43% growth busi­ness, assum­ing sale of the busi­ness at the end of the period.  Spend a few min­utes and do the cal­cu­la­tions for your business.

The prob­lem with $100 mil­lion plus busi­nesses is that they hit a ceil­ing of com­plex­ity that slows growth.  You are gen­er­ally deal­ing with large num­bers of clients and have more staff to man­age.  As a sin­gle pro­fes­sional, you are pulled in too many direc­tions and you sim­ply run out of time.

If, as a result, you can’t ded­i­cate the time nec­es­sary to build and strengthen rela­tion­ships with your best clients, your busi­ness growth will decline at a time that it should accel­er­ate.  Indus­try stud­ies show that a high per­cent­age (60 to 80%) of new clients come from client refer­rals so it is log­i­cal that the more clients an advi­sor works with, the more refer­rals he should receive.  But growth rates decline as busi­nesses mature.

A $100 mil­lion advi­sor that we worked with told me in a meet­ing that when he was new in the busi­ness, he pro­vided all his clients with great ser­vice but as his busi­ness matured, he was unable to ded­i­cate the time to his best clients and client refer­rals had almost stopped.  As a result, his growth stopped.  By mak­ing a few sim­ple changes, he was able to break the log­jam and his busi­ness exploded to over $300 mil­lion over the next four years.

The process of devel­op­ing a Sus­tain­able Growth Curve for a mature busi­ness is of equal impor­tance to a newer, devel­op­ing busi­ness.   Your Sus­tain­able Growth Curve is sim­ply the num­ber of ideal clients and aver­age AUM per client today, plus a series of three-year tar­gets through to your ulti­mate goal.  The fol­low­ing tables are exam­ples based on a 15% vs. 20% growth rate for a $100 mil­lion business:

* Bench­marks have been rounded to the near­est $25 million

In both exam­ples above, we have increased the num­ber of clients by 25 over the three-year peri­ods but we have higher aver­age AUM per client in the 20% growth exam­ple.  We pre­fer to increase qual­ity of clients vs. quan­tity of clients to pro­tect capacity.

Set­ting your 3-year bench­marks is only a start­ing point.  AUM can be con­verted into rev­enue by apply­ing an aver­age fee-rate.  You can take this a step fur­ther by apply­ing indus­try sta­tis­tics to esti­mate your major expenses.  Three major expenses incurred by advi­sors are offices expenses (10% of rev­enue), staffing (20%) and busi­ness devel­op­ment (5%).  These can vary based on the style of firm you clear your busi­ness through.

The biggest shift that a firm needs to make to sus­tain growth in a mature busi­ness is the shift from a solo model to an ensem­ble model.  A study by anthro­pol­o­gist Robin Dun­bar reports that the max­i­mum the num­ber of peo­ple that a per­son can know and keep social con­tact with is 150.  So, some­where between 100 and 150 clients, you need to take on an addi­tional pro­fes­sional and assign rela­tion­ship man­age­ment respon­si­bil­ity and make the shift to an ensem­ble (multi-professional) model.  I will dis­cuss this in a future article.

By tak­ing a few sim­ple steps, you will be able to break the log­jam and get your busi­ness on a more pos­i­tive growth path:

1. By iden­ti­fy­ing the num­ber of ideal clients you work with and aver­age AUM per client, you can find your loca­tion for your present con­di­tion on your Sus­tain­able Growth Curve
2. Take steps to sim­plify your busi­ness and reduce non-profitable clients to recover capacity
3. Iden­tify the num­ber of clients and aver­age AUM per client for a sin­gle or mul­ti­ple three-year benchmarks
4. Assign an aver­age fee rate and esti­mate your rev­enue for each benchmark
5. Esti­mate your costs using indus­try stan­dards and esti­mate your prof­itabil­ity for each benchmark
6. Develop Client Rela­tion­ship Man­age­ment and Busi­ness Devel­op­ment plans to retain and attract clients meet­ing your Sus­tain­able Growth Curve stan­dards to achieve your goal

I enjoy hear­ing from peo­ple who read my arti­cles by phone, e-mail or text mes­sage.  I respond to all inquiries the same day.  If you have a prob­lem and would like to dis­cuss it with some­body, I would wel­come your call.  I enjoy help­ing peo­ple solve prob­lems and build more suc­cess­ful businesses.

Bob Simp­son

Direct Line:  905−502−0100

Toll Free:      866−646−6002

E-mail:  bob.simpson@synchronicity.ca

Text Mes­sage:  905−502−0100

Web­site:  www​.syn​chronic​ity​.ca

Join our Dis­cus­sion Group on LinkedIn:  www​.linkedin​.com/​g​r​o​u​p​s​/​A​d​v​i​s​o​r​-​C​o​l​l​a​b​o​r​a​t​i​o​n​-​4​2​4​8​7​2​5​/​a​b​out

Bio:  www​.syn​chronic​ity​.ca/​a​b​out

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Tags: 100 Million, Assets Under Management, Bob Simpson, Business Goals, Business Growth, Business Sale, Business Week, Client Relationships, Client Retention, Complexity, Compound Growth Rate, Few Minutes, Growth Business, Large Numbers, Satisfaction, Scenarios, Setting Goals, Spreadsheet, Stage Of Development, Synchronicity
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