Posts Tagged ‘Rule Of Thumb’
Thursday, August 16th, 2012
by Bob Simpson, Synchronicity Performance Consultants
This article is a fourth in a series about building a great business. The first three articles discussed setting goals and objectively analyzing the current state of your business:
These steps are designed to help you gain clarity about your business – where you are now and where you plan to be in the future.
Before you start taking steps to put plans in place, you need to identify issues that are holding you back from focusing completely on achieving your goals and building a sustainable growth business.
We all have issues that drive us crazy:
- Bad habits
- Team members who are not productive
- Difficult clients
- Bad investments
- Technology that is hard to use and frustrating
- Compliance issues
I have a rule of thumb – three to five percent of issues or clients cause you 90% of grief. Just think about this for a minute. How many of your clients are stressful to work with? What technological solutions require constant attention? What personal or business problems occupy your thoughts when you are at work, at play or spending time with your family?
We call these issues your Principal Frustrations. Before you can move forward, you need to deal with these clients or issues.
The problem with many Principal Frustrations is that they are often too complex to resolve. In fact, when most advisors make a list of their Principal Frustrations, the list is comprised of such things as:
- I need more clients
- I lose clients due to my inability to provide the level of service they expect
- My client portfolios are not generating positive results
Before you can identify solutions to these frustrations, you need to break them down into less complex components. Let me give you an example:
Problem: I need more clients
Potential components of the problem:
- I do not have a good lead generation system
- I do not allocate time and money to generate leads
- I am not generating enough referrals
- I am not delivering client experiences that encourage clients to refer friends and colleagues
- My client relationship management processes are too intangible
- My clients do not understand what I do so how can they talk to friends and colleagues about me
- I don’t conduct educational workshops or events that encourage clients to invite friends and colleagues
- I don’t have a good website or marketing material to help convert leads into clients
- I don’t do a good enough job of following up on leads
- I don’t have personal or team capacity to attract more clients
Now we have something to work with. Some of the items in the list above can be broken down further. The goal is to break items down until you have small problems for which you can create solutions. It is much easier to fix a series of small problems than to try to tackle a big one.
A great way to identify these frustrations is through client complaints. When a client complains about something, he is doing you a favour. He is giving you the opportunity to resolve a problem that is causing him frustration. Solve the problem and you increase satisfaction. Fail to resolve it and you create a detractor – somebody who sends out negative messages about you to friends and colleagues.
Here is our process for dealing with Principal Frustrations:
- Quantify the potential cost of Principal Frustrations
- Prioritize your Principal Frustrations
- Choose a single Principal Frustration
- Identify action steps to resolve the problem
- Track progress of solutions for each frustration
1. Quantify the potential cost of your Principal Frustrations
Before you start trying to solve your problems, you should prioritize your frustrations, based on a problem value. Problem value is a calculation of the total cost that you may incur as a result of the frustration. Let’s use the loss of a client due to a servicing issue as an example.
In this example, you lost a client who has $500,000 in a 1% fee-based account. At first glance, you may assume that this frustration cost you $5,000 but your loss is much greater than that. If you had better serviced this client, she may have worked with you for another seven years and she is growing her account by 10% per year, including investment return. At that rate, her account will be just under $1 million and would have generated over $57,000 in fees over the seven-year period.
This is only the start of your costs. If you don’t fix this problem, you may lose additional clients. If you lost five clients due to poor client servicing, this problem could cost you over a quarter of a million dollars.
2. Prioritize Your Principal Frustrations
Based on the above analysis, develop a prioritized list of your frustrations, based on problem values.
3. Choose a Single Principal Frustration
Based on your analysis in step one, you should choose one of your high priority frustrations. Ideally, you will start at the top and work your way down the list. As you identify additional frustrations, add them to your list, based on problem values.
Note: You will accomplish more if work on a single frustration rather than trying to resolve multiple frustrations.
Let’s continue with the example of losing a client due to client servicing issues. Try to drill down to find out what the root of the problem is. Is it that you are not contacting clients frequently enough? Are you not returning calls promptly? Do your meetings lack direction? Are your quarterly reports too detailed or not detailed enough? As highlighted in the example above, by focusing on the smaller issues, you can solve the major problem more quickly.
By doing so, you may expand your list of frustrations. Pick the most important one and add the others to your list for future review.
4. Identify action steps to resolve the problem
Some problems may be simple to resolve, whereas others are more complex. The goal is to find a solution that permanently eliminates the problem. If it is a simple problem that can be resolved in one step, then go ahead and solve it. If it is more complex, you may need to look at a variety of options. Create a plan to solve the problem, including the necessary resources. Then assign responsibility to an individual in your team and determine a due date.
5. Track progress for each frustration
The steps above are logical steps in a typical project management approach. Make sure to follow-up with the individuals in your team who have been assigned responsibility for resolution of frustrations. As the owner of your business, you are ultimately responsible. If you fail to keep your team members accountable for creating solutions, you will find it increasing difficult to get things done.
When we work with clients, we start by analyzing Principle Frustrations. We do this for two reasons:
- It helps us to get a better idea of key issues that need to be resolved and helps us structure a program
- Until some Principal Frustrations have been dealt with, many advisors do not have the ability to be present in meetings, work on assignments and be more proactive in dealing with issues to build a great business
As I stated earlier in this article, three to five percent of issues or clients cause you 90% of grief. If you can clear up theses issues, you will feel free. Only then can you be ready to take proactive steps to building a great business and achieve sustainable growth.
We are so convinced that our Principal Frustrations Process is so powerful in helping advisors to solve problems and get back on track to building a great business that we offer a series of free 15-minute sessions. We conduct these sessions on Thursdays and Fridays between 9:00 a.m. and 3:00 p.m. Eastern.
To book a session, simply choose a date and e-mail us three times that work for you and we will e-mail you back a confirmation. Please include the telephone number at which you can be contacted for your session.
All discussions are one-on-one and confidential. There is absolutely no cost or obligation.
To book your session, e-mail us at firstname.lastname@example.org or call us at 905−502−0100.
Direct Line: 905−502−0100
Toll Free: 866−646−6002
Text Message: 905−502−0100
Join our Discussion Group on LinkedIn: www.linkedin.com/groups/Advisor-Collaboration-4248725/about
Tags: 100 Million, Achieving Your Goals, Bad Habits, Bob Simpson, Business Problems, Client Portfolios, Compliance Issues, Constant Attention, Current State, Frustrations, Grief, Growth Business, Performance Consultants, Rule Of Thumb, Setting Goals, Spending Time With Your Family, Sustainable Growth, Synchronicity, Taking Steps, Technological Solutions
Posted in Advisor Collaboration, Synchronicity | Comments Off
Wednesday, February 29th, 2012
“Once an accident, twice a coincidence, three times a trend” is a rule of thumb among observers of political campaigns.
That’s why I was struck by articles last week in the Globe and Mail, New York Times and the Wall Street Journal.
These articles describe turmoil among high-net worth investors …. and have profound implications for financial advisors.
First came Business Week. A story in late June outlined how the number of affluent Americans looking to switch advisors has tripled in one year, leading to a spike in investors seeking out second opinions. (Links to all of these stories can be found at the bottom of this article.)
Many find this process excruciatingly difficult. “My planner was a friend, a good guy …. but I had to stop the bleeding” said one investor who had moved. “It was almost like a breakup …. you know, I’ll take the dog, you take the silverware.” Among the advice in the Business Week article was for investors to take any second opinion with a grain of salt and to work hard on the relationship before splitting, just as they would a marriage.
Wall Street Journal
Last Wednesday, the Wall Street Journal weighed in on how affluent investors are shifting from Wall Street brokerage firms to independent advisors using firms such as Charles Schwab, Fidelity and TD Ameritrade to provide a back-office platform. The key attraction behind the move: The perception that independent advisors will be more objective and more likely to put their interests first.
The article talked about the fact that independents operating as Registered Independent Advisors are held to a “fiduciary” standard in the advice they provide, in which they are obligated to operate in clients’ best interests; this is a higher level than brokers at Wall Street firms, who are guided by “suitability rules” in which they are merely prohibited from recommending inappropriate products. (The Obama administration has made noises about extending the fiduciary standard to all financial advisors.)
Just as in Canada, American investors struggle with the “Who Can I Trust?” question, plagued by the lack of consistent regulatory oversight and the same alphabet soup of credentials we have here. A sign of the times, the article’s closing piece of advice urged investors looking to move to hone in on potential conflicts of interest.
Globe and Mail
On Thursday, the Globe and Mail gave this a Canadian spin. In a front-page story in the Report on Business, it detailed how wealthy Canadians are rethinking relationships that have sometimes been decades in the making. It talked about the scrutiny that once-passive investors are bringing to the investment philosophies guiding their portfolios, the fees they’re paying and communication from their advisor. And it also pinpointed the dramatic spike in aggressive marketing to high net worth clients by other advisors seeking their business.
New York Times
And on Friday of last week, the New York Times focused on a Pricewaterhouse Coopers survey of 238 private banks and wealth managers serving clients with assets of $500,000 to $20 million. The study highlighted a huge gap in the training, skills and tools that client relationship managers are equipped with — driven in large measure by the priority these firms give to attracting new clients as opposed to serving existing ones.
One consultant quoted in the story summarized it this way: “In the past, people were incredibly loyal to their advisors even through periods of dissatisfaction. Today that’s changing.”
Given the level of paranoia that dominates the psyche of many American investors in today’s post Madoff world, more important than advisors’ brand, performance or pedigree is the level of transparency in how they do business and how they manage clients’ money. “Even if you think you’ve found an advisor you can trust, check and check again” the article concludes.
A five point response
Among the fallout from articles such as those in Business Week, the Globe and Mail, New York Times and Wall Street Journal will be an increase in the number of clients exploring their options — some investors who have been on the fence will conclude that if others are looking at moving, perhaps they should as well.
In some cases, disillusioned investors are going the discount broker route; over the past while the self-directed channel has picked up significant share in both the U.S. and Canada.
More often, clients will be moving to another advisor. Note that investors making a move will be asking tougher questions than in the past. A Globe and Mail column in June set out a process that investors could use in selecting an advisor, including questions they might ask. One advisor used these questions to his advantage. You can read more about this here:
Telling your story to prospects
In light of the increasing media coverage on investor movement, you have two choices: You can fume about know-nothing journalists, ungrateful clients and “media whore” advisors seeking out the limelight. Or you can accept these articles as reality and focus on the things under your control.
Since January, I’ve been running workshops that have received the best response of anything I’ve done in twenty years working with advisors. Here’s a five point strategy you might consider, drawing on ideas from those workshops and bringing together some of the things I’ve been writing about over the past year.
Step One: Revisit your value
In today’s value driven world, Canadians are taking a hard look at the value they get from everyone with whom they do business.
Like it or not, more and more investors will be pushing hard to understand how much they’re paying in fees and what they’re getting in return . This has already started at the top of market, as Investment Counsellors charging as little as half a percent annually have forced some advisors to change the way they operate in order to compete. Increasingly, the market is capping fees for million dollar plus clients at one and a half percent or less.
Historically, some advisors have promoted their investment and asset allocation discipline as their key point of differentiation — although for many, the last year’s events have called into question the ability to define value in this fashion.
Another approach to value lies in the total wealth approach that more and more high end advisors are taking. This was a recurring theme by speakers at last spring’s Top Advisor Summit.
Five takeaways for advisors
Still another example is the peace of mind and sense of control that can come from a planning approach, summarized in this post from last fall:
Translating crisis into opportunity
Or perhaps you have gone the route of specialization and built expert knowledge in a narrow product area or bring deep understanding and strong credentials in the needs of a defined niche market.
Whatever approach to value you offer, being able to clearly articulate your value proposition and what clients get from working with you will become the necessary cost of doing business going forward. Now’s the time to take a hard look at how you describe the value you bring.
Step Two: Start with defence.
Identify your top clients, the ones most likely to be approached by competitors. Think about when you last met and consider whether a meeting is overdue.
What happens when you meet is key. In that meeting, you need to provide perspective on what you’ve learned from the events of the past year, a point of view on where we are today and clear guidance on what clients should be doing going forward.
Many clients are looking for a departure from the investment approaches that failed them in the past year and have frequently led to disappointing returns over the past decade. Given that many investors are looking for changes from the status quo, focus on modifications in the strategy you’re recommending. Even saying something like: “The core strategy we had a year ago still makes sense, but I’d like to talk about a few changes responding to today’s market opportunities in investment grade corporate bonds” will be well received by many clients.
If you’re advising a stay the course approach, emphasize why it still makes sense and ensure clients understand the alternatives you’ve considered before arriving at a do-nothing recommendation.
When you meet, make it a priority to dig deep for how clients really feel and focus on hearing them out. A recent article outlined five steps to an effective meeting, with particular emphasis on getting clients engaged in meetings.
Five steps to high-impact meetings
Even if you haven’t conducted a formal client survey, consider asking key clients to complete a short report card before the meeting and use that as a jumping off point for your conversation.
And here’s a comfortable way for clients to tell you how they really feel:
Getting a reading on where you stand
Step Three: Make trust your top priority
At one time, trust was given by clients — increasingly today it’s earned.
Recognize that rebuilding client trust is your number one priority — erosion of trust is a cancer that inevitably undermines your relationship.
Research by consultant Charles Green has identified four drivers of trust — credibility, reliability, intimacy and client focus. For strategies on building trust, take a look at his http://www.trustedadvisor.com/ website — you can also read more about rebuilding trust below.
Rebuilding trust — today’s #1 client challenge
Step Four: Tackle perceived conflicts head-on
Investors today are paranoid about conflicts of interest — in many cases the pendulum has swung from indifference about conflicts to fixation on them.
Consider publishing a code of conduct and sharing that with clients; this was an idea profiled in this post by a U.S. industry insider published earlier this year.
The case for an advisor code of conduct
And think about being proactive in embracing a “fiduciary approach”, in which you commit to taking the initiative in disclosing potential conflicts and putting client interests first in everything you do. At one time, advisors would have been concerned that talking about a fiduciary approach would create suspicion among clients and raise concerns where none existed; in today’s hyper-vigilant world, we need to pre-empt the concerns that may be weighing on clients but that they aren’t comfortable raising.
Step Five: Shift to offence
No matter how good a job you do, today’s reality is that you will inevitably lose some clients.
You need to put steps in place to replace them. Start by carving out a regular time block in your schedule — say two ninety minute periods each week, during which you focus on one prospecting strategy.
You could use that time to meet with professional advisors of existing clients. Or systematically reach out to people you know, offering to send them the articles you email clients, with the goal of increasing the number of prospective clients in your pipeline.
Alternatively, you could focus on client development via the client sandwich lunch initiative outlined in this article and free one hour webinar:
Getting client development into first gear
Free webinar: Building a client lunch prospecting program
Or you could seize on opportunities to position yourself as to the go-to resource for people who face corporate downsizing; this was the topic of my August column in Investment Executive:
Turning downsizing into prospecting success
And don’t ignore planting referral seeds when meeting with clients. If you’re unsure about how to raise the topic of referrals, try this at the end of a meeting: “In the next twelve months, I have the capacity to take on 10 new clients. I have recently identified the profile of the clients I find I can help the most and work with the best — a profile that you fit almost exactly, by the way. I wonder if I could take two minutes to walk you through the qualities of the clients I work with best, in case you’re talking to a friend who is considering making a change.”
The four articles that appeared recently and others like them are a wakeup call for advisors. The only question is whether you answer that call or press the snooze button.
If you decide to respond, schedule some time in your calendar right now, perhaps along with your team or colleagues. In that time slot, you might go through this article in detail and pick one or two areas to focus on in the period ahead, clearly defining the steps you need to take in the next 30 days.
Just remember: Advisors are no different than automakers or retailers. Those who embrace fundamental change in response to an altered competitive landscape and shifting customer reality can position themselves for future success. Those who fail to do so risk being left in the dust.
P.S. For those who want to send this article to a team member or colleague, note that the email forwarding system on the platform for this blog has developed a glitch.
Copy and send this link instead:
To forward this article: http://www.strategicimperatives.ca/blog/?p=198
Links to articles:
Business Week — June 25 Thinking of Switching Financial Planners?
Wall Street Journal — July 29 WSJ.com — Wary Investors Are Seeking Out Objective Voices
Globe and Mail Report on Business — July 30 “Wooing the Wealthy” <http://www.globeinvestor.com/servlet/story/GAM.20090730.RHIGHNETWORTH30ART1944/GIStory/Email>
New York Times — Aug 1 Wealth Matters: In Search of Competent (and Honest) Financial Advisers
Tags: Affluent Americans, Brokerage Firms, Business Week Article, Charles Schwab, Financial Advisors, Globe And Mail, Globe Mail, Grain Of Salt, High Net Worth Investors, Independent Advisors, Independents, New York Times, Obama, Political Campaigns, Profound Implications, Rule Of Thumb, Second Opinion, Silverware, Wake Up Call, Wall Street Journal
Posted in Dan Richards | Comments Off
Wednesday, March 30th, 2011
Many advisors are struggling with a strategy to communicate with prospective clients.Last week, I conducted a webinar with U.S. advisor site Horsesmouth, outlining a simple approach to prospecting using a series of low cost client lunches that advisors can host in their boardroom.
You can listen to the webinar at the link below — there’s no cost, you simply have to enter your email address.
For much more information, please visit http://www.clientinsights.ca.
Sorry, it turns out the webinar referred to above is no longer available, however, here is the transcript of the presentation by Dan Richards:
Surprising informal survey conducted by Dan Richards…says that the most common answer is “None” when advisors are asked, “How much time did you spend in your office last week talking with clients?”
Dan suggests advisors can host a regular roundtable luncheon series with their clients. It’s important that they do this regularly.
Only requires about three hours a week–two 90-minute time blocks. Book room for lunch, call people to invite.
Can hold them in your boardroom, or a country club or a private room at a restaurant. No need to do it elaborately.
Dan recommends holding it in your office and catering with sandwiches.
Timing: Do it from 12:30–1:30.
Says do two or three of these luncheons in your first campaign.
Goal for guests: eight or nine. Suggests that is optimum for dynamics. It’s a workshop, not a presentation. Invite six or seven client and two or three prospects.
Looks and feels like a client event. That’s what you want. So you only want 33% prospects.
Rule of thumb for invites: Invite 10–15 prospects to get two or three.
Stay away from folks who are anxious or dominate discussions. Avoid them for this approach.
What advisor should say on invites: “I’m hosting a series luncheons this summer. Hope you can come.” Say, “Next lunch is July 8. Does that work for you?” If no, go on to next two days.
Call them “informal sandwich luncheons to talk about the market.”
Says one advisor he knows does one lunch at his downtown office and then does other luncheons at firm’s branch offices in suburbs. Can also do other lunches at a hotel or restaurant in suburbs.
Stress it’s very informal, 10– to 15-minute talk in the beginning and then opening it up for questions and conversations.
Prospects not typically cold. You know them, but not that well. May play golf with them. Share membership in an organization. They’re not cold.
Break this cardinal rule of prospecting: Actually leave message on voice mail if you’ve got a good relationship with the person. They will call you back if it’s a good relationship.
Emphasize you’re limiting the luncheon to 10 people. Ask them on phone if they’re on some questions or topics they’d like addressed. Ramps up commitment level. Also ask what type of sandwich they want.
This is a low-stress invite. You give them three dates. If they say no to all three dates, then you can evaluate whether they’re really interested. Perhaps invite them by e-mail next time you do the campaign.
Write down now two to three names of people you can see potentially inviting.
Connect with clients by phone who’ve agreed to come. Call to ask them about questions they may have and get sandwich order. If you have an opening, go ahead and ask them if they know anyone who might want to attend…
Structure talk around questions asked by attendees…Makes it personal. Makes it more participatory.
If new to business, you can ask branch manager or wholesaler to be present to help with questions. You deliver the talk.
Finalize open remarks. Practice your remarks; you want to sound confident. Send confirmation e-mails. Consider sending an article along or link to something you’ve read that pertains to talk.
Final details: It’s critical to follow up with people who attend.
Tips: Think about seating. Have pen and pad, and copy of slides if you use slides. Might ask someone to ask first question. Be sure to have folks complete evaluation. Keep it short and sweet. Use scale 1–4 on luncheon, talk, comments and a line for their name. Short and sweet.
Follow-up call with clients. Review evaluation form. Any specific questions. Ask how they might suggest you change or improve the lunches. Respond to any questions they have. Ask them if they want to attend one later in the future.
Follow-up call with prospects. Similar as above but…
Overall: Make prospecting a priority. Be sure to time block…Integrate prospecting into ongoing client communication. Pick one strategy as a focal point. Refine and repeat and get really good at it. Don’t be scattershot.
Dan says some clients like to come to such events a couple of times a year. So it’s OK to invite clients to come again later in the year.
Tags: Advertisement, Amp, Boardroom, Campaign Goal, Email Address, Free Webinar, Informal Survey, L3, Lunch, Luncheon Series, Luncheons, Minute Time Blocks, Momentum, Private Room, Prospective Clients, Prospects, Register, Roundtable, Rule Of Thumb, Sandwiches, Wid, Www Ca
Posted in Dan Richards | Comments Off