Executive Effectiveness: Becoming Highly Productive

Wednesday, March 7th, 2012

by Michael Beck

For an exec­u­tive to be highly effec­tive, they need to become highly pro­duc­tive.  In addi­tion, how they attain high pro­duc­tiv­ity is as impor­tant as the pro­duc­tiv­ity itself.  High pro­duc­tiv­ity is essen­tial for exec­u­tives because it serves three impor­tant pur­poses.  The first, most obvi­ous, is that it enables us to get our work done.  No small task given the pace of busi­ness and the extra load bud­getary con­straints impose.  The sec­ond, no less impor­tant ben­e­fit, is that by com­plet­ing our work in a highly pro­duc­tive man­ner, it keeps our stress and anx­i­ety lev­els under con­trol.  Con­trol­ling stress and ten­sion is crit­i­cal, since per­sis­tently high feel­ings of stress cause health prob­lems, sap our strength, ham­per cre­ativ­ity, and neg­a­tively impact our abil­ity to com­mu­ni­cate effec­tively.  Each of these fac­tors, of course, affects our effec­tive­ness as a leader.

The third ben­e­fit of being highly pro­duc­tive is often over­looked.  And that ben­e­fit is that being pro­duc­tive sets an exam­ple for the rest of our team.  Gen­er­ally, we tend to focus on our words and actions dur­ing “impor­tant” events such as meet­ings or speeches, but the truth is that peo­ple observe us all the time, even in our “insignif­i­cant moments”.  In fact, the impact we have dur­ing those impor­tant exchanges is always col­ored by the image we’ve painted over time with our words and actions in those “insignif­i­cant moments”.  Con­se­quently, how we attain high pro­duc­tiv­ity is as impor­tant as the pro­duc­tiv­ity itself.  Sac­ri­fic­ing one’s per­sonal life, health and fam­ily isn’t the most admirable exam­ple to set.

The key, there­fore, is to become highly pro­duc­tive and at the same time, reduce stress and set the exam­ple you’d like dupli­cated by your team.  There have been scores of books writ­ten and courses taught about time man­age­ment.  The strate­gies pro­moted focus on things like pri­or­i­ti­za­tion, list-making, and cal­en­dar man­age­ment.  And most of them make sense except for one thing.

I don’t know any­one who’s achieved sus­tained pro­duc­tiv­ity using these methods.

Don’t get me wrong – pri­or­i­ti­za­tion and cre­at­ing lists are impor­tant fac­tors to becom­ing highly pro­duc­tive.  But unless another crit­i­cal fac­tor is addressed, all the pri­or­i­ti­za­tion and list-making in the world won’t help.  And that issue is energy.  The issue of per­sonal energy man­age­ment has gar­nered grow­ing atten­tion in the last years.  It’s some­thing I’ve done intu­itively for many years and is nicely sup­ported in a book enti­tled, “The Power of Full Engage­ment” by Jim Loehr and Tony Schwartz.

The energy I’m refer­ring to has four com­po­nents to it, and the man­age­ment of that energy per­tains to our abil­ity to main­tain and replen­ish those reserves.  These four energy reserves are Phys­i­cal, Emo­tional, Men­tal and Inspi­ra­tional.  Address­ing each reserve is essen­tial for high pro­duc­tiv­ity.  Let me briefly dis­cuss each energy reserve and then offer some strate­gies to help keep them buoyed up.

Our phys­i­cal energy affects our abil­ity to push for­ward.  It helps our drive and our self-discipline.  It improves the func­tion­ing of our organs, which, in turn, allow us to get oxy­gen to our brain, nutri­tion into our body, and tox­ins out of our body.  If you’ve ever had a “mid-afternoon crash”, then you’ve expe­ri­enced the impact a low phys­i­cal reserve can have on productivity.

Our emo­tional energy impacts our abil­ity to deal with stress, to com­mu­ni­cate well, to think clearly, and to inter­act with oth­ers effec­tively.  It’s not uncom­mon to become short with peo­ple when we’re feel­ing stressed or tense (which is caused by a low emo­tional reserve).

Our men­tal energy affects our abil­ity to think clearly, to con­cen­trate and focus, to solve prob­lems, and to be cre­ative.  Clearly, a low men­tal reserve ham­pers productivity.

And finally, our inspi­ra­tional energy is the fuel that moti­vates us.  It is our pas­sion, pur­pose, and inspi­ra­tion that spark self-discipline, extra effort, and new direc­tion.  In the absence of moti­va­tion and inspi­ra­tion, we end up just going through the motions.  Low inspi­ra­tional energy saps the pro­duc­tive juices right out of us.

Main­tain­ing our reserves is crit­i­cal if we’re to be highly pro­duc­tive on a con­sis­tent basis.  I like to draw an anal­ogy to a four-legged stool when­ever I dis­cuss the topic of energy man­age­ment.  We’re all famil­iar with the anal­ogy of a three-legged stool.  All three legs need to be present in order to use the stool.  With­out all three legs the stool is use­less.  But the story is dif­fer­ent with a four-legged stool.  Unlike the three-legged stool, a four-legged stool can still be used even if one of the legs is miss­ing.  A per­son can sit on a four-legged stool miss­ing a leg by exert­ing a bit of effort and bal­ance.  It’s not espe­cially com­fort­able and requires an ongo­ing expen­di­ture of energy to main­tain.  But it is func­tional.  The same goes for our four energy reserves.  We can func­tion even if one of our reserves is depleted or all four reserves aren’t at the same level, but it’s inef­fi­cient, drain­ing, and can’t be sus­tained for very long.

It’s not that dif­fi­cult to main­tain rel­a­tively high reserves, but it does take some inten­tional effort.  There are a num­ber of very effec­tive steps that can be taken to recharge your reserves.  Here are a few of them:

1. Take breaks through­out the day.  Break every 2–2.5 hours to recharge and reju­ve­nate.  What you do dur­ing those breaks makes a difference.
2. Eat “strate­gi­cally”.  Eat about six times a day.  Make sure to bal­ance pro­tein, car­bo­hy­drates and fats.
3. Main­tain your atti­tude.  If you don’t decide what goes into your head, some­one else will.  Intro­duce pos­i­tives and elim­i­nate negatives.
4. Get rest­ful sleep.  Avoid caf­feine late in the day – it really does work to keep you awake.  Avoid eat­ing a big meal late in the evening – your body can’t rest if it’s work­ing hard to digest.

Don’t be fooled by the sim­plic­ity of these strate­gies.  For years they’ve allowed me to accom­plish about 50% more than most peo­ple do.  Man­ag­ing your energy reserves com­bined with pri­or­i­ti­za­tion of tasks will make you a pro­duc­tiv­ity superstar.

Copy­right © Michael Beck

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Tags: Anxiety Levels, Budgetary Constraints, Calendar Management, Cause Health Problems, Controlling Stress And Tension, Creativity, Executive Effectiveness, Feelings, Hamper, Important Events, Life Health, Michael Beck, Pace, Personal Life, Productive Manner, Productivity, Speeches, Stress And Anxiety, Stress Cause
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New Research on How Advisors Can Improve Client Returns

Wednesday, January 4th, 2012

New research on how advi­sors can improve client returns

There’s a grow­ing body of “behav­ioural finance” research on what investors can do to improve the per­for­mance of their portfolios.

But how about advi­sors — what can they do to improve investor returns?

Recently I came across research on the spe­cific advi­sor behav­iours that lead to supe­rior client returns. To my knowl­edge, this is the first time that the impact of advi­sor behav­iour has been quantified.

The results of this research were strik­ing — six advi­sor behav­iours were asso­ci­ated with bet­ter client per­for­mance, with one in par­tic­u­lar that stood out.

Research back­ground

The study took place from 2001 to 2004. Twenty-two advi­sors with Ameriprise Finan­cial (the US equiv­a­lent of Investors Group) were stud­ied, each with at least thirty baby boomer clients with port­fo­lios of $100,000 to $500,000. In depth inter­views were con­ducted with each advi­sor, explor­ing their thoughts, feel­ings and behav­iour in client inter­ac­tions. Note that the focus was on advi­sor behav­iour, not their exper­tise or invest­ment approach.

Over the four years stud­ied, twelve of the advi­sors’ baby boomer clients had first quar­tile returns, aver­ag­ing total returns of 25% com­pared to 14% for the mar­ket as a whole. By con­trast, the other ten advi­sors had client returns in line with the index.

In the inter­views, the 22 advi­sors in the study demon­strated 12 dif­fer­ent com­pe­ten­cies — of these, 11 related to behav­iour and 1 to the advi­sor thought process. Of these com­pe­ten­cies, six were widely shared by all advi­sors; these were “thresh­old” com­pe­ten­cies. The other six behav­iours tended to be demon­strated only by the advi­sors whose clients out­per­formed; these were “dis­tin­guish­ing” competencies.

These six dis­tin­guish­ing com­pe­ten­cies accounted for 70% of the vari­a­tion in per­for­mance of client port­fo­lios. And of these, three espe­cially stood out.

The traits linked to client outperformance

Here’s where it gets interesting.

Below are the twelve traits that were iden­ti­fied in the research — remem­ber six were thresh­old com­pe­ten­cies com­mon across all advi­sors, six were dis­tin­guish­ing com­pe­ten­cies that only the advi­sors whose clients out­per­formed tended to share.

You could skip to the answers below, to see which of these twelve com­pe­ten­cies the dif­fer­en­tia­tors were.

Or you could take a few min­utes to go through the list and do two things:

1. First beside each trait, indi­cate if you think it’s a thresh­old com­pe­tency that all advi­sors shared or one of the things that set apart advi­sors whose clients outperformed.

2. Once you’ve iden­ti­fied the dif­fer­en­ti­at­ing com­pe­ten­cies, go back and tick off the three that you think were the most important.

Achieve­ment Ori­en­ta­tion: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

Wants, plans, acts to meet or sur­pass a stan­dard of excel­lence; mea­sures out­comes against goals; inno­vates to improve; takes cal­cu­lated risks to do some­thing new or better.

Exam­ple: Advi­sor is instru­men­tal in set­ting up a stream­lined screen­ing process to increase the like­li­hood that ini­tial client con­tact meet­ings will be infor­ma­tive and pro­duc­tive. Suc­cess­fully decreases the num­ber of ini­tial “no shows” and increases the ratio of ini­tial con­tacts that even­tu­ally become clients.

Client Ser­vice Ori­en­ta­tion: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

Implies a desire to help or serve clients, to meet their needs. It means focus­ing one’s efforts on dis­cov­er­ing and meet­ing the client’s needs.

Exam­ple: The advi­sor helps a cou­ple by iden­ti­fy­ing sev­eral good attor­neys to choose from to help with their estate plan­ning needs. Through a series of prob­ing ques­tions the advi­sor demon­strates to the clients that what they want to have hap­pen to their estate is not reflected in their cur­rent plans. The advi­sor con­tin­ues to work in col­lab­o­ra­tion with the clients, their new attor­ney and their accoun­tant to bet­ter under­stand and serve the needs of the client regard­ing estate planning.

Con­cep­tual (Strate­gic) Think­ing: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

The abil­ity to iden­tify pat­terns or con­nec­tions between sit­u­a­tions that are not obvi­ously related, and to iden­tify key or under­ly­ing issues in com­plex sit­u­a­tions. It includes using cre­ative, con­cep­tual or induc­tive reasoning.

Exam­ple: Uses com­plex learned the­o­ries and tech­niques to see pat­terns in clients’ port­fo­lios and iden­tify dis­crep­an­cies and oppor­tu­ni­ties. Applies spe­cific tools and tech­niques to for­mu­late and mod­ify clients’ finan­cial plans based on sev­eral factors.

Con­cern for Qual­ity and Order: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

Reflects an under­ly­ing drive to reduce uncer­tainty in the sur­round­ing envi­ron­ment. It is expressed in such forms as mon­i­tor­ing and check­ing work or infor­ma­tion, insist­ing on clar­ity of roles and plans.

Exam­ple: The advi­sor designs and imple­ments a sys­tem to help mon­i­tor client port­fo­lio per­for­mance on a weekly basis. Main­tains detailed records of all client con­tacts in the form of a com­puter data­base that the advi­sor can eas­ily access.

Develops/Teaches: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

Involves a gen­uine intent to fos­ter the long-term learn­ing or devel­op­ment of clients with an appro­pri­ate level of need analy­sis and other thought or effort. Focus is on devel­op­ment and learn­ing rather than on a for­mal role of training.

Exam­ple: In response to a client con­sid­er­ing sell­ing in a “panic” after a mar­ket down­turn, the advi­sor shows the client a 50-year his­tory of stock indices, demon­strat­ing how sud­den down­turns can reverse quickly, even are buy­ing oppor­tu­ni­ties, hence teach­ing the client the impor­tance of long-term per­spec­tive vs. “panic” selling.

Ini­tia­tive: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

Refers to the iden­ti­fi­ca­tion of a prob­lem, obsta­cle or oppor­tu­nity and tak­ing action in light of that to address cur­rent or future prob­lems or oppor­tu­ni­ties. As such, ini­tia­tive can be seen in the con­text of proac­tively doing things and not sim­ply think­ing about future actions.

Exam­ple: The advi­sor is proac­tive in com­mu­ni­cat­ing with a spe­cific client whose port­fo­lio is cur­rently under­per­form­ing, and takes the ini­tia­tive to call the client right after he/she would have received the most recent state­ment show­ing a sig­nif­i­cant drop in port­fo­lio value. The advi­sor does so to reas­sure the client and address any ques­tions and con­cerns he/she might have.

Impact and Influ­ence: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

Actions to per­suade, con­vince, influ­ence or impress oth­ers, in order to get them to sup­port the speaker’s agenda; or the desire to have a spe­cific impact or effect on others.

Exam­ple: Advi­sor sees that the cou­ple that has come to him/her for advice has a his­tory of dis­agree­ment on how they have approached finan­cial deci­sions in the past. After observ­ing this the advi­sor encour­ages the cou­ple to rethink how they go about future deci­sions so that they can avoid such disagreements.

Integrity: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

Actions are con­sis­tent with what one says is impor­tant, that is, he or she “walks the talk”. Com­mu­ni­cates inten­tions, ideas and feel­ings openly and directly, and wel­comes open­ness and hon­esty, even in dif­fi­cult dis­cus­sions with clients.

Exam­ple: After sev­eral attempts to con­vince a client not to aban­don their finan­cial plan an advi­sor rec­om­mends that the client seek advice from another advi­sor because the advi­sor can­not, in good con­science, help the client imple­ment a plan they believe puts the client at sig­nif­i­cant finan­cial risk.

Inter­per­sonal Under­stand­ing: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

Implies want­ing to under­stand other peo­ple. It is the abil­ity to accu­rately hear and under­stand the unspo­ken or partly expressed thoughts, feel­ings and con­cerns of oth­ers. It mea­sures increas­ing com­plex­ity and depth of under­stand­ing of oth­ers and may include cross-cultural sensitivity.

Exam­ple: Advi­sor sus­pects that a client’s dis­sat­is­fac­tion with his/her port­fo­lio is not related to the objec­tive per­for­mance of the port­fo­lio, but related to the fact that, even with stel­lar returns, he/she will not be as finan­cially well-off as some of his friends and peers… a fact that the client acknowl­edges when sug­gested by the advisor.

Rela­tion­ship Build­ing: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

Builds or main­tains friendly, rec­i­p­ro­cal, and warm rela­tion­ships or net­works of con­tacts with people.

Exam­ple: Advi­sor estab­lishes strong per­sonal rela­tion­ship with a spe­cific client. The nature of their rela­tion­ship also includes fre­quent con­ver­sa­tions about top­ics other than invest­ing and finan­cial advice as well as enjoy­ing recre­ational and social activ­i­ties together.

Self-Confidence: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

A belief in one’s own capa­bil­ity to accom­plish a task and select an effec­tive approach to a task or prob­lem. This includes con­fi­dence in one’s abil­ity as expressed in increas­ingly chal­leng­ing cir­cum­stances and con­fi­dence in one’s deci­sions or opinions.

Exam­ple: Advi­sors demon­strate con­fi­dence in their advice and knowl­edge by con­struc­tively chal­leng­ing clients regard­ing incon­sis­tent and irra­tional beliefs and behav­iour, which poten­tially affects their port­fo­lio per­for­mance. Advi­sor speaks up when in dis­agree­ment with the client instead of “rolling over” and tak­ing the path of least resis­tance and clearly artic­u­lates ratio­nale for advice.

Team­work & Col­lab­o­ra­tion: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

Implies the inten­tion to work coop­er­a­tively with oth­ers, to be part of a team, to work together, as a mem­ber of a group.

Exam­ple: Solic­its feed­back from col­leagues and other pro­fes­sion­als to help inform how they view the client’s cur­rent finan­cial sit­u­a­tion. Shows a will­ing­ness to part­ner with other pro­fes­sion­als such as client’s accoun­tant or lawyer to bet­ter ser­vice the client.

The dif­fer­en­ti­at­ing qualities:

Here are the six dif­fer­en­ti­at­ing qual­i­ties, grouped based on the extent to which their pres­ence cor­re­lated with client outperformance.

Remem­ber, this research mea­sured the qual­i­ties that dif­fer­en­ti­ated advi­sors whose clients out­per­formed and which were miss­ing in those whose clients had merely aver­age returns — if a trait was dis­played by all advi­sors, it would not be on the list.

Tier One — the high­est cor­re­la­tion with port­fo­lio outperformance:

1. Integrity

Actions are con­sis­tent with what one says is impor­tant, that is, he or she “walks the talk”. Com­mu­ni­cates inten­tions, ideas and feel­ings openly and directly, and wel­comes open­ness and hon­esty, even in dif­fi­cult dis­cus­sions with clients.

Tier Two — next in terms of dri­ving port­fo­lio outperformance:

2. Client ser­vice orientation

Implies a desire to help or serve clients, to meet their needs. It means focus­ing one’s efforts on dis­cov­er­ing and meet­ing the client’s needs.

3. Con­cern for order / quality

Reflects an under­ly­ing drive to reduce uncer­tainty in the sur­round­ing envi­ron­ment. It is expressed in such forms as mon­i­tor­ing and check­ing work or infor­ma­tion, insist­ing on clar­ity of roles and plans.

Tier Three — cor­re­lated with port­fo­lio out­per­for­mance at a lower level:

4. Team­work

Implies the inten­tion to work coop­er­a­tively with oth­ers, to be part of a team, to work together, as a mem­ber of a group.

5. Self-confidence

A belief in one’s own capa­bil­ity to accom­plish a task and select an effec­tive approach to a task or prob­lem. This includes con­fi­dence in one’s abil­ity as expressed in increas­ingly chal­leng­ing cir­cum­stances and con­fi­dence in one’s deci­sions or opinions.

6. Achieve­ment orientation

Wants, plans, acts to meet or sur­pass a stan­dard of excel­lence; mea­sures out­comes against goals; inno­vates to improve; takes cal­cu­lated risks to do some­thing new or better.

Mov­ing forward

The authors of the study made no attempt to ana­lyze why par­tic­u­lar behav­iours emerged as impor­tant. Intu­itively, how­ever, it does makes sense that demon­strat­ing integrity and client ori­en­ta­tion build trust and as a result lead to clients accept­ing and stick­ing to your advice.

One lim­i­ta­tion with this research is the small sam­ple size; my hope is that larger stud­ies will follow.

In the mean­time, this research could be the start­ing point to reassess how you inter­act with clients. Con­sider whether it makes sense to con­cen­trate on one of these com­pe­ten­cies in the next quar­ter, say from now to the end of June — per­haps dis­cuss this with other mem­bers of your team and con­sider focus­ing on one of these com­pe­ten­cies as a group.

The goal is to inte­grate this behav­iour into the way that you and your team work, so that it becomes auto­matic. Hav­ing done that, you could then focus on another com­pe­tency for the next quar­ter. In this fash­ion, you could change your behav­iour over time in a way that bet­ter serves your clients and that in the process will posi­tion you as a more effec­tive advisor.

For more infor­ma­tion on the research study, click here.

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Tags: Ameriprise, Ameriprise Financial, Baby Boomer, Client Interactions, Client Performance, Client Portfolios, Competencies, Depth Interviews, Feelings, Finance Research, Focus, Investment Approach, Investor Returns, Investors Group, Knowledge, Lead, Research Background, Threshold, Variation
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Getting a reading on how clients feel

Wednesday, December 14th, 2011

Recently I spoke to an advi­sor still agi­tated after a client had pulled his account.”What really annoyed me” the advi­sor said “is that just a cou­ple of months ago I asked this client how he felt about his account and he said he under­stood that every­body was down and he was okay with it.”

This advi­sor had made a com­mon mis­take. While he’d started off doing the the right thing by solic­it­ing  feed­back, he had fallen down in the way he had asked.

There are two keys to get­ting feed­back from clients. First, you need to ask for feed­back on the right dimen­sions. And sec­ond „ you have to ask in a way that really tells you how they feel.

What you ask about

There is cer­tainly some value in ask­ing clients how they feel about the recent per­for­mance of their port­fo­lios — this is obvi­ously an impor­tant issue. By ask­ing how they feel about the per­for­mance of their port­fo­lio, you’re able to bring issues to the sur­face you were unaware of and you might be able to pro­vide addi­tional con­text and perspective.

Ulti­mately, how­ever, recent per­for­mance is beyond your con­trol — far bet­ter to then move on and also ask about some­thing that you can actu­ally influ­ence, such as the advice you’re pro­vid­ing today or the com­mu­ni­ca­tion clients have received.

How you ask

The next step is ask­ing in a way that gives you an accu­rate reading.

The prob­lem is that most peo­ple are polite, don’t want to hurt your feel­ings and want to avoid con­flict. Ask­ing clients if you’ve done a good job of com­mu­ni­cat­ing over the past will often get you a “sure”, a response that’s not all that help­ful in get­ting a sense of where you really stand and may in fact mask real unhappiness.

Sim­i­larly, ask­ing clients after a meet­ing how they feel about port­fo­lios that have been repo­si­tioned will often get you a “fine”, again not ter­ri­bly edifying.

Con­sider instead ask­ing clients to give you a report card from 1 to 10. At the con­clu­sion of a meet­ing (or if that’s not pos­si­ble, a phone call), one way to do this is to say: “I won­der if I could take a minute to get some feed­back on the com­mu­ni­ca­tion you’ve received from me over the past while. How would you rate the con­tact you’ve got from me on a scale from 1 to 10, where 1 is low and 10 is high?”

Or after you’ve met to revise a client’s port­fo­lio, say “Now that we’ve made these changes, how com­fort­able do you feel with your port­fo­lio on a scale from 1 to 10, with 1 being low and 10 being high.”

Few clients will give you a score that they see as a fail­ing grade, but some who feel a lit­tle uncer­tain might give you a 5, 6 or 7, think­ing that’s an accept­able score that won’t hurt your feel­ings. In real­ity, if the response is 7 or below, clients are telling you they’re not all that happy. You need to fol­low up with by learn­ing more.

So you could say “Tell me, what aspects of your port­fo­lio still leave you uncom­fort­able?” or ” What kind of changes would you like to see to the com­mu­ni­ca­tion you get from me over the next while?”

If, on the other hand, you get an 8, 9 or 10, then you can move on with the con­fi­dence that you are in fairly good shape with this client.

Even if you get a great score, con­sider one final ques­tion that can yield eye-opening results.

That ques­tion: “What one thing could I do in the period ahead to improve your expe­ri­ence work­ing with me and my team?” Hav­ing asked that ques­tion, sit back and allow the client to fill the silence that fol­lows — you might be sur­prised by what you hear.

One final note. Not every client is con­sis­tent and ratio­nal. Just because some­one has given you a grade of 8 or 9 doesn’t mean a friend won’t tell them about an advi­sor who moved them to cash early last year and they won’t switch accounts.

Those kinds of events are beyond our con­trol. What we need to focus on are the things we can influ­ence — such as ask­ing clients for feed­back on the right dimen­sions and in a way that gets them to tell us how they really feel.

For more infor­ma­tion, please visit http://​www​.get​keep​clients​.com.

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Tags: Advertisement, Communication, Conclusion, Conflict, Feedback, Feelings, Good Job, Mask, Mistake, Perspective, Phon, Portfolios, Report Card, Unhappiness
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Four new imperatives for effective client communication

Wednesday, November 16th, 2011

The invest­ment land­scape has altered fun­da­men­tally since last fall.

One of the impor­tant changes is a basic shift in what investors look for  in terms of com­mu­ni­ca­tion from their advisors.

In my Octo­ber col­umn in Invest­ment Exec­u­tive, I out­lined four new imper­a­tives for client com­mu­ni­ca­tion that advi­sors ignore at their peril.

Since last fall, I have talked to more than 500 investors in round-table focus groups and one-on-one inter­views about their response to the mar­ket downturn.

Some of the things that investors seek from their finan­cial advi­sors have stayed con­stant . Investors still look for advi­sors who lis­ten, demon­strate they care, put their clients’ needs first and pro­vide advice tai­lored to each investor’s needs  along with the abil­ity to rec­om­mend solu­tions that choose from the widest range of offerings.

At the same time, a fun­da­men­tal shift has occurred in some other things that investors look for from their finan­cial advi­sors – and four new imper­a­tives have emerged.

Imper­a­tive one: Demon­strate empathy

In many cases, the first pri­or­ity for finan­cial advi­sors is to estab­lish a bond of empa­thy and to tap into client feel­ings – often, clients are unable to lis­ten to their advi­sor until they first feel lis­tened to.

If an advi­sor hasn’t had an indepth con­ver­sa­tion about how a client feels, one of the bet­ter ways to start a meet­ing is to say some­thing like: “Many investors have lost sleep because of the mar­ket events last fall. Tell me, how have you been affected by the mar­ket over the past while?”

Imper­a­tive two: Pro­vide guid­ance and direc­tion… with an out­look of bal­anced optimism

While almost no one is happy with what’s hap­pened to their port­fo­lios in the past, most investors aren’t blam­ing their advi­sors for this – they see every­one they know in the same boat.

What is caus­ing dis­sat­is­fac­tion among many investors is what’s hap­pen­ing today.  Many clients say that their advi­sor is overly pas­sive and not pro­vid­ing direc­tion on what they should be doing going for­ward. Today, investors are look­ing for guid­ance on how to move for­ward – and if they don’t get it from their exist­ing advi­sor, they’ll look else­where. Even given the uncer­tainty of today’s envi­ron­ment, advi­sors need to sit down and talk to clients about the dif­fer­ent sce­nar­ios for the period ahead and the impli­ca­tions for their portfolios.

Imper­a­tive three: Incor­po­rate fresh perspectives

A com­mon com­plaint among investors is that their port­fo­lios are unchanged since the mar­ket melt­down began last fall – a com­ment I hear a lot is “If my port­fo­lio made sense then, given every­thing that’s changed, I don’t see how it can be right now.”

In cases where investors are in mutual funds or man­aged money, of course, their port­fo­lios have been actively man­aged – and it’s incum­bent on the advi­sor to help clients under­stand how their invest­ments have changed.

In other instances, it might make sense to intro­duce a new ele­ment into client port­fo­lios, such as invest­ment grade cor­po­rate bonds. Clearly, any rec­om­men­da­tion has to be appro­pri­ate and you never want to make change for the sake of change – but fail­ing to rec­om­mend appro­pri­ate changes runs the risk that clients will see their advi­sor as tak­ing them for granted.

Imper­a­tive four: Ramp up  communication

The final new imper­a­tive for advi­sors relates to the demand for communication.

The events of last fall have dra­mat­i­cally height­ened demand for fre­quency of con­tact  – what­ever level of con­tact clients wanted a year ago, it’s almost cer­tainly higher today.

And it’s not just demand for quan­tity that has increased – many investors are look­ing for more sub­stan­tive com­men­tary on prospects for the mar­ket and for their portfolio.

Many advi­sors can’t meet this demand sim­ply by increas­ing the num­ber of meet­ings and phone calls. New com­mu­ni­ca­tion vehi­cles need to be be used to sup­ple­ment the tra­di­tional per­sonal con­tact – email­ing arti­cles, con­fer­ence calls and group sand­wich lunches in a board­room to name just three.

The events of last fall have caused invest­ment man­agers to re-examine their prac­tices and adopt new approaches – in a sim­i­lar vein, to be effec­tive invest­ment advi­sors need to fun­da­men­tally rethink their approach to client com­mu­ni­ca­tion, bear­ing these four new imper­a­tives in mind.

To read the full arti­cle, look at the Octo­ber issue of Invest­ment Executive.

And to watch a video sum­ma­riz­ing these changes, click play on the fol­low­ing video:

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Tags: Array, Client Communication, Dissatisfaction, Empathy, Feelings, Financial Advisors, First Priority, Focus Groups, Fundamental Shift, Guidance, Hasn, Imperatives, Indepth Conversation, Investment Executive, Investment Landscape, Investors, Market Downturn, Offerings, Optimism, Peril, Portfolios
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Making Yourself Referable

Wednesday, June 1st, 2011

The fol­low­ing is based on one of Norm Trainor’s clients, Tom Perrone.

How do you feel when you meet some­one who just nat­u­rally makes you feel at ease? There are peo­ple who seem to have the gift of engen­der­ing trust. Tom Per­rone is one of those peo­ple. One of the things I have learned in work­ing with Tom is that his abil­ity to make peo­ple feel com­fort­able is based upon two things: 1. Effort, and 2. Skills. Tom really makes an effort to ensure that the peo­ple he meets feel at ease and safe. Over the years, he has honed skills that he applies in a seem­ingly effort­less way in his inter­ac­tions with others.

Tom focuses on the Seniors Mar­ket. One of his core val­ues is that seniors feel safe. It is impor­tant to him that his clients feel safe finan­cially and emo­tion­ally. The core of his Value Propo­si­tion is that his clients make the right deci­sions long term. Tom has been known to say “I would like a nickel for every dol­lar of com­mis­sion I gave up to do the right thing.” Tom takes the Long View. It starts when he meets a prospec­tive client for the first time. He focuses on get­ting to know them through ask­ing feel­ing ques­tions. Tom under­stands that peo­ple treat facts as fac­tors, but make deci­sions based upon feel­ings. All deci­sions are val­ues based.

The ini­tial meet­ing is a Dis­cov­ery i.e. an in-depth explo­ration of what is impor­tant to the client(s). He fol­lows up each of these meet­ings with a hand­writ­ten Thank You card in which he reit­er­ates what they want in life. Later, many clients tell Tom that this per­sonal touch affirmed their deci­sion to become a client. Tom includes per­sonal notes at each stage of the client inter­ac­tion e.g. before send­ing the Engage­ment Agree­ment, he sends a per­sonal card. If a client or fam­ily mem­ber gets sick, Tom will send a per­sonal note. He believes in small acts of kind­ness. Clients who have been sick will receive tick­ets to go to the movies and have a night out. As a result, his clients feel very well treated.

After each meet­ing, Tom asks his clients to com­plete a brief Sur­vey. In the Sur­vey, he high­lights that his busi­ness is refer­ral based. A sheet is included where they can add the names of peo­ple whom Tom would ben­e­fit from meet­ing. In some instances, clients will include eight to ten names. Tom assures his clients that the peo­ple whom they refer will always be in con­trol of whether or not they talk to him. Then, a let­ter with an arti­cle of inter­est goes out to each refer­ral. His sec­re­tary includes a flyer that says if they do not want to receive this infor­ma­tion, they will not be sent any­thing fur­ther. Every­thing that goes out includes a ref­er­ence to the per­son who rec­om­mended them. Each refer­ral receives 8–10 high qual­ity let­ters or emails a year. Four of them are unique newslet­ters that include recipes, sto­ries about clients and arti­cles of inter­est to seniors. The intent is to dif­fer­en­ti­ate the newslet­ter from the typ­i­cal finan­cial piece that advi­sors send out.

Tom believes that if you pro­vide peo­ple with good infor­ma­tion and stay in touch over a three to four year period, peo­ple will expe­ri­ence a Trig­ger Event that will lead them to call and book an appoint­ment. Recently, a prospect whom Tom had in his sys­tem for over three years, sold his busi­ness and called Tom for help in man­ag­ing the new wealth. Through ran­dom acts of kind­ness and thought­ful ges­tures, prospec­tive clients get a feel for Tom as a warm and car­ing human being. Recently, Tom sent a get well card to a prospect recov­er­ing from back surgery. The cou­ple called and soon after, became clients.

Each quar­ter, Tom will iden­tify 50 clients and send them a sur­vey. The incen­tive to com­plete the sur­vey is par­tic­i­pa­tion in a draw. The prize could be a $100 gift cer­tifi­cate for din­ner at a restau­rant of their choice, tick­ets to the the­atre or a sport­ing event, etc. Typ­i­cally, he gets a 50% response rate. Just last week, he received 18 refer­rals from a recent client sur­vey. Over the last year, Tom spent more time focused on clients. He hand­picks two or three clients a week to take for lunch or din­ner. Each client is given a sur­vey to com­plete. Tom has learned that it is less stress­ful for every­body if his prospects do not feel as if they are being solicited.

Tom’s goal is to add 150–200 intro­duc­tions per year to his DRIP sys­tem. At any point in time, he will have 250–300 prospects receiv­ing infor­ma­tion. The impor­tant thing to note is that Tom has a sys­tem that con­sis­tently gen­er­ates 15–20 new clients per year. He calls this con­cept “Friends help­ing Friends”.

Norm Trainor is the founder of The Covenant Group, a com­pany spe­cial­iz­ing in prac­tice devel­op­ment for advi­sors. For fur­ther infor­ma­tion, visit his Web site at www​.covenant​group​.com.

Fol­low The Covenant Group at:

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Tags: Acts Of Kindness, Client Interaction, Core Values, Decisions, Depth Exploration, Discovery, Do The Right Thing, Family Member, Feelings, Nickel, Norm Trainor, Perrone, Personal Card, Personal Note, Personal Notes, Personal Touch, Prospective Client, Seniors, Small Acts Of Kindness, Value Proposition
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New Research on How Advisors Can Improve Client Returns

Tuesday, April 19th, 2011

New research on how advi­sors can improve client returns

There’s a grow­ing body of “behav­ioural finance” research on what investors can do to improve the per­for­mance of their portfolios.

But how about advi­sors — what can they do to improve investor returns?

Recently I came across research on the spe­cific advi­sor behav­iours that lead to supe­rior client returns. To my knowl­edge, this is the first time that the impact of advi­sor behav­iour has been quantified.

The results of this research were strik­ing — six advi­sor behav­iours were asso­ci­ated with bet­ter client per­for­mance, with one in par­tic­u­lar that stood out.

Research back­ground

The study took place from 2001 to 2004. Twenty-two advi­sors with Ameriprise Finan­cial (the US equiv­a­lent of Investors Group) were stud­ied, each with at least thirty baby boomer clients with port­fo­lios of $100,000 to $500,000. In depth inter­views were con­ducted with each advi­sor, explor­ing their thoughts, feel­ings and behav­iour in client inter­ac­tions. Note that the focus was on advi­sor behav­iour, not their exper­tise or invest­ment approach.

Over the four years stud­ied, twelve of the advi­sors’ baby boomer clients had first quar­tile returns, aver­ag­ing total returns of 25% com­pared to 14% for the mar­ket as a whole. By con­trast, the other ten advi­sors had client returns in line with the index.

In the inter­views, the 22 advi­sors in the study demon­strated 12 dif­fer­ent com­pe­ten­cies — of these, 11 related to behav­iour and 1 to the advi­sor thought process. Of these com­pe­ten­cies, six were widely shared by all advi­sors; these were “thresh­old” com­pe­ten­cies. The other six behav­iours tended to be demon­strated only by the advi­sors whose clients out­per­formed; these were “dis­tin­guish­ing” competencies.

These six dis­tin­guish­ing com­pe­ten­cies accounted for 70% of the vari­a­tion in per­for­mance of client port­fo­lios. And of these, three espe­cially stood out.

The traits linked to client outperformance

Here’s where it gets interesting.

Below are the twelve traits that were iden­ti­fied in the research — remem­ber six were thresh­old com­pe­ten­cies com­mon across all advi­sors, six were dis­tin­guish­ing com­pe­ten­cies that only the advi­sors whose clients out­per­formed tended to share.

You could skip to the answers below, to see which of these twelve com­pe­ten­cies the dif­fer­en­tia­tors were.

Or you could take a few min­utes to go through the list and do two things:

1. First beside each trait, indi­cate if you think it’s a thresh­old com­pe­tency that all advi­sors shared or one of the things that set apart advi­sors whose clients outperformed.

2. Once you’ve iden­ti­fied the dif­fer­en­ti­at­ing com­pe­ten­cies, go back and tick off the three that you think were the most important.

Achieve­ment Ori­en­ta­tion: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

Wants, plans, acts to meet or sur­pass a stan­dard of excel­lence; mea­sures out­comes against goals; inno­vates to improve; takes cal­cu­lated risks to do some­thing new or better.

Exam­ple: Advi­sor is instru­men­tal in set­ting up a stream­lined screen­ing process to increase the like­li­hood that ini­tial client con­tact meet­ings will be infor­ma­tive and pro­duc­tive. Suc­cess­fully decreases the num­ber of ini­tial “no shows” and increases the ratio of ini­tial con­tacts that even­tu­ally become clients.

Client Ser­vice Ori­en­ta­tion: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

Implies a desire to help or serve clients, to meet their needs. It means focus­ing one’s efforts on dis­cov­er­ing and meet­ing the client’s needs.

Exam­ple: The advi­sor helps a cou­ple by iden­ti­fy­ing sev­eral good attor­neys to choose from to help with their estate plan­ning needs. Through a series of prob­ing ques­tions the advi­sor demon­strates to the clients that what they want to have hap­pen to their estate is not reflected in their cur­rent plans. The advi­sor con­tin­ues to work in col­lab­o­ra­tion with the clients, their new attor­ney and their accoun­tant to bet­ter under­stand and serve the needs of the client regard­ing estate planning.

Con­cep­tual (Strate­gic) Think­ing: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

The abil­ity to iden­tify pat­terns or con­nec­tions between sit­u­a­tions that are not obvi­ously related, and to iden­tify key or under­ly­ing issues in com­plex sit­u­a­tions. It includes using cre­ative, con­cep­tual or induc­tive reasoning.

Exam­ple: Uses com­plex learned the­o­ries and tech­niques to see pat­terns in clients’ port­fo­lios and iden­tify dis­crep­an­cies and oppor­tu­ni­ties. Applies spe­cific tools and tech­niques to for­mu­late and mod­ify clients’ finan­cial plans based on sev­eral factors.

Con­cern for Qual­ity and Order: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

Reflects an under­ly­ing drive to reduce uncer­tainty in the sur­round­ing envi­ron­ment. It is expressed in such forms as mon­i­tor­ing and check­ing work or infor­ma­tion, insist­ing on clar­ity of roles and plans.

Exam­ple: The advi­sor designs and imple­ments a sys­tem to help mon­i­tor client port­fo­lio per­for­mance on a weekly basis. Main­tains detailed records of all client con­tacts in the form of a com­puter data­base that the advi­sor can eas­ily access.

Develops/Teaches: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

Involves a gen­uine intent to fos­ter the long-term learn­ing or devel­op­ment of clients with an appro­pri­ate level of need analy­sis and other thought or effort. Focus is on devel­op­ment and learn­ing rather than on a for­mal role of training.

Exam­ple: In response to a client con­sid­er­ing sell­ing in a “panic” after a mar­ket down­turn, the advi­sor shows the client a 50-year his­tory of stock indices, demon­strat­ing how sud­den down­turns can reverse quickly, even are buy­ing oppor­tu­ni­ties, hence teach­ing the client the impor­tance of long-term per­spec­tive vs. “panic” selling.

Ini­tia­tive: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

Refers to the iden­ti­fi­ca­tion of a prob­lem, obsta­cle or oppor­tu­nity and tak­ing action in light of that to address cur­rent or future prob­lems or oppor­tu­ni­ties. As such, ini­tia­tive can be seen in the con­text of proac­tively doing things and not sim­ply think­ing about future actions.

Exam­ple: The advi­sor is proac­tive in com­mu­ni­cat­ing with a spe­cific client whose port­fo­lio is cur­rently under­per­form­ing, and takes the ini­tia­tive to call the client right after he/she would have received the most recent state­ment show­ing a sig­nif­i­cant drop in port­fo­lio value. The advi­sor does so to reas­sure the client and address any ques­tions and con­cerns he/she might have.

Impact and Influ­ence: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

Actions to per­suade, con­vince, influ­ence or impress oth­ers, in order to get them to sup­port the speaker’s agenda; or the desire to have a spe­cific impact or effect on others.

Exam­ple: Advi­sor sees that the cou­ple that has come to him/her for advice has a his­tory of dis­agree­ment on how they have approached finan­cial deci­sions in the past. After observ­ing this the advi­sor encour­ages the cou­ple to rethink how they go about future deci­sions so that they can avoid such disagreements.

Integrity: ( ) Thresh­old ( ) Dif­fer­en­ti­at­ing ( ) Top three

Actions are con­sis­tent with what one says is impor­tant, that is, he or she “walks the talk”. Com­mu­ni­cates inten­tions, ideas and feel­ings openly and directly, and wel­comes open­ness and hon­esty, even in dif­fi­cult dis­cus­sions with clients.

Exam­ple: After sev­eral attempts to con­vince a client not to aban­don their finan­cial plan an advi­sor rec­om­mends that the client seek advice from another advi­sor because the advi­sor can­not, in good con­science, help the client imple­ment a plan they believe puts the client at sig­nif­i­cant finan­cial risk.

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Tags: Ameriprise, Ameriprise Financial, Baby Boomer, Client Interactions, Client Performance, Client Portfolios, Competencies, Depth Interviews, Feelings, Finance Research, Focus, Investment Approach, Investor Returns, Investors Group, Knowledge, Lead, Research Background, Threshold, Variation
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