Fresh Insights on personal performance, client service, and Supernova

Retaining Existing Client

1. Shut off computer/TV for 2-4hours per day. This will help focus your attention on creating positive activity.
2. Talk to your clients. Force yourself to make those outgoing calls. If you subscribe to the Supernova Model then do your 12/4/2’s. Stick with your rituals. For those that have completely adopted Supernova, your rituals will really help you gain market share during this period of “deer in the headlight”. The market is coming to you; this is what you planned to happen, you are prepared.
3. Adapt your investment model to the new normal. If it is going to take two years for equities to regain their glow, then get creative and stretch out clients horizons
4. Be proactive:

            a. Dollar Cost Average 

            b. Reinvest Dividends

            c. Do tax swaps now to establish lower cost basis

            d. Introduce hedging Strategies

             e. Introduce Structured Products

              f. Rebalance Portfolios back to ideal models

Acquisition

1. Activate your referral model and make five outgoing calls/day for new sit down meetings
2. Set new goal of eight appointments per week with new prospects
3. Get out of the office. This is great for your moral during these tough markets and will revitalize your business.
4. Ask for advice. Review chapter 6 of “The Supernova Advisor” VIPS model by Bill Cates.
5. Close for follow-up face to face meetings. These will produce action and opportunities. You cannot expect to get new clients unless you are “playing in traffic”.
6. “Play to Win” by getting active  and getting out vs staying inside and “Playing Not to Lose”

Ted Boots was remembered by his family, friends and the Indianapolis community on February 20, 2008.  Ted’s family shared him with Merrill Lynch for over 42 years. I had the honor of speaking on behalf of Merrill Lynch at his Memorial Service. These are the things I didn’t get to say. Ted was extremely competitive yet very generous and helpful to all his associates. Ted gave very generously to Purdue University in the form of golf scholarships which will live on after him. Ted was innovative and very proud of the results he achieved for his clients at Merrill lynch. He was an early supporter of managed money, particularly Mutual Funds before they were well known by the public. Ted made people money. He transitioned comfortably to separate managed accounts as well as financial planning. Most FA’s as they age in the business get stuck in their favorite products, and services. Not Ted. He was anxious to learn and grow. Ted was particularly proud of the team he built to help transition his business to the next generation. His was generous with his time, knowledge and finances as this team matured. His team was as loyal as he was generous. I had the pleasure of coaching this team as they grew and matured. Ted had a right to be extremely proud of them. The transition went without a problem as Ted retired in December. Ted was an optimist that believed in free market capitalism and the equity markets. He was however careful to maintain diversified portfolios with proper asset allocations. He reminded clients that life is short and has its bumps. Therefore proper estate planning is essential to any overall plan. Ted was more diligent about this than any FA I ever had the pleasure of working with. I have heard it said that our job as parents, coaches, teachers and Advisors is to help our clients grow up and make better choices. Ted certainly understood this and did it in a very caring way.

I had a chance to spend some special time with Ted at his retirement party, at his home in Florida in December and at the hospital. Ted was always so optimist, full of energy and great stories. He was very proud of his family and career. We didn’t believe the cancer would take Ted, but we was wrong. We will miss him and always keep him in our hearts. It was said at the service Ted was probably too busy to hear any of us because he was on his 17th birdie.

Ted, save a spot in that foursome up in heaven for me when it is my time.

Throughout his life Ted chose love and trust over fear and doubt. In the end Ted put his trust in God and gave his spirit up to the Lord.

I walked into the crowded freshman dorm and introduced myself as Playboy’s representative on campus. I said,” I am taking orders for subscriptions to Playboy for 12, 24 or  36 months”. I signed up the entire dorm. As a freshman who needed money, I knew I had hit a gold mine, and I worked it very hard. Following my success at school, I decided that I would sell Readers Digest door to door to housewives. Well, I learned a good lesson that summer. Not all magazines are created equal. I sold one to my Mom. Not one after that.

In the early 80’s, when I was managing for ML in Chicago, we were offering money-market accounts paying 22%. They were selling like Playboys to freshman boys. The FA’s didn’t want to sell them because they didn’t get paid. Dan Tulley said, “Sell them to anyone who wants one”, so we did. Later, those assets became the fuel for the booming equities of the 90’s. Was it the best thing for them? No. They should have bought 14%, Zero-coupon, 30-year treasuries; but they wouldn’t, because they were convinced interest rates were rising. The Playboy and the money market fund were, at the time, the “product of least resistance”.

Then, as now, there is always a POLR( Product of Least Resistance). What is it today?  You tell me.  What should you do with the POLR? As a new FA, you must grow your practice. Knowing what the market wants and is willing to act on immediately will shorten your sales cycle. First rule, of course, as in medicine, is to do no harm. When looking at a high-yielding, preferred, or whatever the POLR is today, remember Rule #1. As you gain the trust and confidence of your client, steer them away from the POLR to the product that will meet their needs over the long term. As you educate, entertain and retain your clients, always remember that your clients are driven by emotion. Your job is to balance that emotion with logic and help them to make better choices.

As we turn the page to 2008, what comes to mind but New Year Resolutions. Many make them, but few keep them. Why? Psychologically there are several reasons. One is that they are not our own. They are what someone else thinks would be best for us. Second, they are too ambitious. Too hard to achieve, so we give up easily. Finally, they are usually stated in the negative. For example: “I will lose 20 lbs. in the next 3 months”. Instead, try stating it as something you own, something that is reasonable, achievable, in the positive, and in the present. For example: “I am very happy with all the energy I have since I now weigh 175 lbs. Because of my conditioning program, I will get to see my daughter’s children get married”. Now you have something that connects you to something that is really important to you. Not to someone else. It is stated in the present and is positive.

How does this idea of New Year Resolutions translate to the FA Supernova practice? As you put together your business plan for the new year, you may want to review your practice’s physical condition. Are you as lean and mean as you need to be in order to defend your practice against new competition and attract new business from old competitors? Has your practice gotten a bit bloated? No matter how disciplined you are by your Min/Max, unqualified people slip into the practice. What might a resolution look like that would get your practice back on tract? “I have a lean and profitable practice based on high-quality service and exceptional results for a qualified clientele of 100 that likes, respects, trusts, and pays me.” What does a typical Min/Max look like? We focus on what we want vs. what we don’t want. For me, I know that, based on the Supernova model, the most clients that a Supernova FA can have is 100. Your Max# may be different, but it must be something that you can reasonably service. Set too high a number, and you will be frustrated and quit your goal. Your minimum should be whatever it takes to reach your goals, deliver exceptional service and love your practice.

For example, I personally decided in 1973 in my practice that it was critical to make myself happy in order to keep my attitude positive. Therefore, all of my clients had to pay me my minimum, like me, trust me, and listen to me. I knew even then that my attitude was critical to not only the growth of my practice but also the retention of my clients. My clients sensed it when I was down. Everyone wants a leader, a coach that is always positive even in the face of real challenges. Cool under fire and always constructive. Great leaders and coaches surround themselves with highly qualified, positive and talented people. Why should your clientele be any different. That is your team and you are the coach. Their results are your results. Pick a bunch of negative losers, no matter what their wealth, and you have a losing team that will make your life miserable. On the other hand, pick a talented team of positive wealthy people, and you’ll have fabulous business always ending with a smile. Harder to build but worth it. Try it, you’ll like it.

Rob

Can high-quality service go hand in hand with retail sales holiday sales? The answer is yes. In the right stores, and you’ll pay for it. Just go shopping at Costco vs. Sears vs. Nordstrom. Now, compare that experience in retail to your experience in Financial Services. Full service vs. discount vs. no service. What is that service guarantee at your full-service firm? At your discount- and no-service firm? Does it exist?  The biggest problem with retail service is expectations. You go to Sears, you expect courteous informed salespeople. What do you get? Nothing. You can’t find anyone to help you. When you do find them, they are stressed out by having to handle too many clients. Cost-cutting at Sears has stressed the retail sales staff and is ruining their brand. When you go to Costco, you get what you expect. Low prices and warehouse service. Low expectations that are usually exceeded. What about Nordstrom? High expectations matched by high-quality experience. The results of both Costco and Nordstrom create both a happy sales force and happy clients.  Where do Financial Services fit into this mix? Clients are generally happy with Schwab due to low expectations that are exceeded. What about full-service firms? High expectations by the client without a clear service model = disappointment on both sides. A client came to a full-service firm with $1000 and was asked by his FA what his expectations were for service and contact. He responded, “I really only want to be called once..ah..ahh..week”. This is Sears’s problem. High expectations, low margins and low service. FA’s better establish a minimum profit margin and and a minimum level of service. Buy a copy of my book, The Supernova Advisor, and find a service model that will work for your business.

Supernova originated with The Eight Steps to Success. During the early 90’s, Merrill Lynch was in the midst of a major focus on asset gathering and it was working. I sat with Jon Spafford in Indianapolis, Indiana, talking about a creative strategy that was revolutionary at the time. He called it Automate, Elevate and Annuitize.

As he explained his plan, the firm’s strategy became clear and doable. He believed heartily in asset gathering, but he knew it had a downside risk. Too many accounts and a reduction in service. His strategy seemed to solve the problem. What was this strategy? Automate = use of technology to assist the Financial Advisors to automate their contact process. All customer contact for Jon became appointments, even the phone calls. He called the phone appointments AT&T’ers. He had regularly scheduled appointments with every client every quarter.

Ten years later, this is more relevant than ever. As your clients’ time and attention have become shorter, playing phone tag seems even crazier. Arrange all important calls as AT&T’ers. Respect your clients and their time and make your life simpler. Be like other professionals and do all important work by appointment.

Now that everyone has thrown Merrill Lynch’s former CEO Stan O’Neal down the stairs and under the bus for not better managing the risk at Merrill Lynch, lets give Caesar his due. Stan came along at a time of crisis for Merrill Lynch and put the company back on the road to success. Coming out of the roaring 90’s, Merrill was bloated and unprepared for the recession pre- and post- 9/11. Stan taught us to do more with less. He said, “Cut costs across the board. Do more with less.” We could not even replace employees when one left. We were forced to figure it out.

We really had to do everything possible to maintain and grow our best Financial Advisors and our most valuable clients. The 80/20 rule became critical to our future so everyone was paying attention. We put together a process to better serve the top 20%. We shed many of those that were not paying the bills to the Client Services Department, which Stan supported. We had breakthrough moments as FA’s realized that, with more time and attention, their clients were giving them more business and more referrals. The business model we called Supernova took shape in that crisis environment, honed by the heat of necessity.

A Supernova is a new star that shrinks down to its core and then, with a burst of energy, grows to ten times its original size and heat. A true Super Star. Our FA’s were shrinking their businesses down to their core and then subsequently exploding to 2 or 3 times their original size with no additional support. This was a true productivity breakthrough. Stan loved it.