It used to be that you had to go to meetings to share ideas. With today’s Blogs you can pick up great ideas right off the web. Our job is to find these ideas for you. Here is a blog that reinforces our Acquisition model where we commit to spending as much as 50% of our time building the practice. That puts you in rare company in the industry. According to Kevin Nichols in this article, you are among only 12% of the FA’s in the country. Read on… By Kevin Nichols
As we ended our coaching session, David made a rare boast, “I’m really starting to get outside of my comfort zone; it’s an invigorating feeling. I’m going after more business than ever and people are actually taking me up on it. I figure, the chances of them asking me to manage their portfolio are pretty slim. So I’m taking the guess work out of it, I’m asking.”For David, this was a revelation on two fronts. First, David realized that in order to become a Rainmaker he must commit himself to specific high-impact marketing activities. Secondly, in order to fully execute those activities it was going to require venturing outside of his comfort zone.
Before this transformation, David was like many advisors not fully capitalizing on the current confusing financial waters. He was doing his best to keep his own head above water, concerned about getting his personal portfolio in line and trying to appease any disgruntled clients. But now, after a small renaissance, he is singing a different tune. He is not only welcoming financial conversations and needling questions from affluent prospects, the types of conversations that make most advisors cringe; he is out in traffic actively soliciting them.
But this didn’t happen overnight, it took some coercion, commitment to action, and convincing David of two important statistics from our 2009 research. These statistics heighten the importance of getting out of your comfort zone and prospecting like there is no tomorrow. The first is the fact that a dismal 15% of advisors are spending more than half of their time on offense. The majority of advisors are not actively prospecting; this leaves more opportunity for the rest of us. Secondly, our research indicates that most advisors have not put together a recovery strategy for their clients and even less are communicating it. Combining these two telling statistics, we have a competitive landscape that is ideal for prospecting and an underserved target market.
Here are the tough times statistics:
Percentage of Time Spent on Offense (Prospecting)
No time spent on offense 6.7%
25% or less 49.0%
25-50% 30.0%
50-75% 12.3%
75-100% 1.9%
Client Portfolio Recovery Strategy
No recovery strategy 17.5%
Not comfortable w/ recovery strategy 30.0%
Clear recovery strategy, but don’t talk about it 14.3%
Clear recovery strategy and communicate w/ confidence 38.2%
David took heed once he heard these statistics and it was the boost he needed to convince himself that an unprecedented opportunity abounds, especially for the advisor who lives and breathes outside of his comfort zone.
David went on an “out of comfort zone” warpath. He started asking for introductions, planting himself in the right affluent circles, approaching social contacts with whom he had never before spoken business, and holding regular recovery plan events. He committed himself to action and removed any insecure hurdles in his mind because the need was evident; the affluent aren’t being serviced properly and advisors are at a standstill.
The biggest problem that advisors face when marketing is threefold: (1) they aren’t doing enough activity (2) when they are active, they aren’t doing the right activities and (3) even when they execute the right activities, they don’t execute with the necessary affluent sales skills.
Take an advisor who is targeting the affluent, like David, who is willing to jump outside of his comfort zone, get him doing the right activities, add a dash of seamless affluent sales skills, and you have a recipe for new assets.
Are you taking full advantage of this opportunity?
If you are ready to get on the affluent playing field and start doing the high impact activities required to bring in affluent prospects, here is a glimpse at the action plan that helped get David started…
1. Identify the Opportunity: Take a chance to talk business with that social prospect, ask for an introduction through one of your best clients, or take that CPA to lunch. Revitalize those opportunities you let slip away.
2. Commit Yourself to Action: Determine your plan of attack and get the wheels in motion. Be prepared to step out of your comfort zone and sharpen those sales skills. Revel in the comfort of being uncomfortable.
3. Be Consistent: Set a weekly goal for getting out of your comfort zone and hold yourself to it. Eventually, your comfort zone will expand. The initial activities that really make your hair stand up will become second nature.
As David and I concluded our session I asked him if activities like offering affluent prospects a “second opinion” took him outside of his comfort zone. He boldly responded, “Of course, but I’m ok with that.” He rhetorically continued, “Am I doing activities that take me outside of my comfort zone? Absolutely. Am I bringing in more business than ever before? Absolutely.”
The transformation Kevin just shared with you is available for virtually every financial advisor willing to grow. Today’s environment is ideal for affluent client acquisition. However, the psychology of achievement requires each of us to venture outside of our respective comfort zones if we expect to grow. So, let’s capitalize on the environment; get outside your comfort zones and bring in those new affluent clients.
Your Centers of Influence will help to deliver many of your best prospects and clients to you because they like you, trust you, respect your professionalism and want to help you. Your job is to reinforce that positive image of you each month by educating, helping and reminding them that you are accepting qualified referrals.
Centers of Influence by definition are willing to refer business to you on a regular basis. If they don’t, they may be fans, but they aren’t Centers of Influence. Here is a list of potential Centers of Interest:
1) Mayor, Senator, Congressman
2) Independent CPA
3) Estate Planning Attorney
4) Commercial Realtor
5) Residential Realtor
6) Head of Camber of Commerce
7) Head of Hospital
Influential Attorney
9) President of Local University
10) CEO of largest employer in area
Your Centers of Influence will look very different from this initially, but over time if you are intentional, you will at least have these influencers on your side. Helping them must be a priority and valuable use of your time. All of these influencers can use your help in raising money, building new relationships and marketing themselves. They all have large networks of important contacts in your community that you should know. Remember, you get more of what you want, when you help others get more of what they want.
Using the Supernova Acquisition Model you will treat these COI’s as if they are clients. You will meet with them monthly (minimum 12/4/2) to share ideas, business opportunities and introductions. I suggest breakfast or just coffee in order to control your time. I found that your insights on tax changes, legislation, economic updates are always of interest.
My experience is that these friends will dramatically help to bring your practice to a whole new level of success.
We had a very inconsistent experience with service from the 401k Department at ML. Being a Managing Director in the field; I had very little control over the operation of departments in NY. At the time we were being serviced by a phone bank of 401k staff, some good, and some bad. I asked if our office could be serviced by one qualified person. We selected the person and after some negotiation, it was agreed.
Everything changed. Service was great; everybody had the name of our service representative. When she was promoted she recommended the next person for our office.
Although this seems obvious, this was a huge breakthrough for us. The personal accountability that was brought to the problem dramatically changed the level of service.
The entire 401k department soon switched to this personal accountability model and the quality of service improved immediately.
When you are facing quality of service issues, check to be sure that a staff member owns both the client and the problem. There should never be figure pointing (not my job). If your company is organized with phone banks, consider changing to this model and watch service improve.
On behalf of the Board of Directors and all the members of the Pfeiffer Family, I would like to welcome you, the Class of 2013, to Pfeiffer University for what will be one of the most meaningful experiences of your life. I would like to thank Dr Ambrose and Dr Espy for giving me this opportunity to share with you some of my experiences and ideas so that your four years at Pfeiffer might be just a little bit better. I would also like to thank the faculty and staffs for attending and for all their energy and dedication to helping these students have the brightest possible future.
Before I get started I want to tell you a little story:
I was in church last Sunday and the minister put four jars on a table. He filled the first with smoke, the second with chocolate, the third with alcohol and the fourth with earth. He put a worm in each jar. At the end of the sermon he checked in each jar. The worms in the smoke, chocolate and alcohol were all dead. The worm in the earth was thriving. He asked, “Does anyone know what this means?” A woman in the back enthusiastically raised her hand.She said, “If you smoke, drink, and eat chocolate you won’t have worms…. My friend Larry Wilson, noted author, says, “The natural result of communications is misunderstanding.” We in the communications business have a tough job.
I was 17 years old standing on the floor of the Massachusetts State Senate arguing the merits of a bill to overhaul state government. I was the Student Senator for the day and was having a ball. I was spending the full day with my State Senator Bill Weeks, who later became my mentor for much of my life. Previously I had lost the election for Student Council President. My teacher Mrs. Butterworth and the civics department had chosen me to represent the school at the States Student Government Day. I asked “Why was I chosen?” She answered, “Because you are the best candidate, and although you lost, you ran a great campaign for Student Council President.” I was shocked, excited and honored. Like all great teachers, coaches and mentors, she saw more in me than I saw in myself and took that opportunity to turn that defeat into a victory. The door she opened would alter my life forever.
Knapp and Knapp vs. Knapp and? The Charlotte Observer was likening a tennis match between Pfeiffer and Wake Forest to that of the civil war: brother vs. brother. They reported that they had no records in college sports of three brothers pitted against each other in the same venue. My older brother Warren and my younger brother Rick of Pfeiffer were facing off against me and Ed Parker of Wake Forest. It was great fun. None of us would have had that opportunity, had it not been for our coaches, Jim Leighton of Wake and Wallace Martin of Pfeiffer. They were our Dad’s away from home. They went out of their way to schedule those matches. Seeing more in us than we did in ourselves, they monitored our studies, got us jobs and took us into their homes. My parents ended up settling in NC because of their relationship with Pfeiffer and all three of my brothers and my son attended Pfeiffer.
Teachers and coaches have a profound impact on us that we don’t often recognize until years later. Malcolm Gladwell in his new book, “Outliers, the Story of Success”, shares common success traits from the Beatles to Bill Gates. Why them and not others? Is it just talent or is there more. There are several factors according to Gladwell. One is the appearance or intervention of mentors at critical points in our lives.
I received my draft notice not long after graduating from Wake Forest in 1968. I took my physical and was heading to the Army, which meant the jungles of Viet Nam. At the time I was working for the same State Senator Bill Weeks who had mentored me in high school. I had put in my application and passed all the tests to become a Naval Aviator, but hadn’t heard anything. Time was running out. I asked him for help. Thanks to the Senator, I achieved a dream and spent 4 great years serving my country as an officer and aviator. By stepping up and asking for help, I did what Gladwell calls advocating. This is another characteristic of the outliers. They advocate for themselves when they reach a hurdle. Bill Gates was able to convince a company desperate for programmers to hire him and several friends while they were still in high school. This gave them access to the world’s most sophisticated computers, programmers, and thousands hours of experience.
Once I completed my military service, I stopped by the Boston Merrill Lynch office and asked for a job as a Financial Advisor. The Sales manager that interviewed me had worked with my mentor, State Senator Bill Weeks and remembered me from the campaigns. I got the job. I called my Dad and said, “This is my opportunity and I am going to be a success at Merrill Lynch.” I committed.
The doors had opened for me due to a combination of luck, timing, mentoring and self advocating. It was now up to me.
This third element of the Outliers, Gladwell calls the 10,000 Hour Rule. A study was done of violinists, at Berlin’s elite Academy of Music to determine if it was talent or practice that made the difference between stars, good players and average players. Their teachers asked them how many hours had they practiced since the age of 5. Those that were considered stars by the teachers consistently had practiced at least 10,000 hours. Those that were considered good had practiced 8,000 hours and the others 4,000 hours. They ran this hypothesis against their pianists and other high achievers and found an amazing consistency. Once they reached a high level of proficiency, it was practice more than talent that determined greatness.
In the early days, the Beatles were a good local Liverpool band. While they were still in high school, a club owner asked them to come to Hamburg, Germany and play for eight hours a day, seven days a week for 109 days straight. After two years, they went back to Liverpool as the world class Beatles. By the time they came to the USA, they had performed1200 times. They had the talent, but without that extraordinary practice, they may never have reached their potential.
Everyone here has their unique role to play in freeing up the human potential of this University. Our roll as teachers, coaches and administrators is to see more in our students and players than they see in themselves, mentor them, identify their true talent, teach them to advocate for themselves and lead them on the path towards those 10,000 hours of practice to stardom. By playing your role, we will create world class servant leaders who will make this The World Class University.
I met Lou Holtz in 1985 and it was a pivotal event. As one of the greatest college coaches of all time, I asked Lou how he was able to consistently build such world class teams. He explained it this way. “As coaches, teachers, parents, bosses, we all have to be able to answer yes to three questions every day. Can they trust me, am I committed to excellence and do I care about them as people. “Trust, Excellence and Caring. I put up those three words up in my office and looked at them every day. Every decision I made had to pass this test. Trust is built by consistently doing what you say you will do. Do what you promise and you build your bank of trust? Show favoritism, show up late, change the rules in mid-stream, you make withdrawals from the bank of trust. Unfortunately withdrawals are much more powerful than deposits. One major trust buster can bankrupt a relationship and ruin a team. Shortly after I was given responsibility for Minnesota, a senior Financial Advisor decided to retire. We have a policy that accounts are distributed fairly among the sales force when an Advisor retires. The office was in an uproar because the Manager had decided to ignore that policy and give the entire practice to one of his favorite Advisors. The sales-force could no longer answer positively, can we trust him. Because of that lapse of judgment he lost the confidence of his team and he was forced to resign. He bankrupted the bank of trust.
Am I committed to excellence? This is the really tough one. Every time I was tempted to compromise my standards I would look at this and know everyone was watching. If I accepted mediocrity once, that became the new standard. My staff and I had interviewed three candidates for the job of Administrative Manager for the Region. I informed my staff that I had made the decision to hire the best of the three candidates. My service manager came to see me and said, “If we are truly committed to excellence, you can’t hire this guy. He is not up to our standards. You are hiring the best of what is available, not the best.” I stopped in my tracks, thanked her and told her how grateful and proud I was of her. It took a lot of guts to confront me. I was never so proud of the team because they were comfortable enough to call me on this and never wavered from the commitment to excellence. We started a new search and found the right guy.
Does he care about me as a person? This is where the great coaches and teachers demonstrate their skill. Each player and student is unique with different strengths and weaknesses. The great coaches leverage his player’s strengths and minimize their weaknesses. I had a tough time learning to read so school was always a challenge. My freshman year of college, Coach Leighton suggested that I get a tutor for biology and that I tutor other students in history, a subject that I loved. By learning history and then teaching it, I really knew the subject. By reaching out for help in biology, I passed. This process of learning, doing and teaching became my way of excelling in both the Navy and Merrill Lynch. This is where Pfeiffer excels. The teachers, coaches and administrators truly care about the welfare of each student here, know their students and leverage their strengths and manage their weaknesses.
There must be more to achieving greatness as a coach than just trust, excellence and caring. Yes, there is talent, experience and hard work. But without the first three it is an uphill battle.
In order to ritualized this process of customized learning I encourage the coaches, and professors to take the bold step and identify fifteen students each; mentor them by helping them put together a plan to develop their talent, monitor their progress with monthly meetings, stay on a timeline and open doors to their future. Both you and your fifteen students should hold yourselves accountable for their success. Treat your students as though they are your best friend’s children. By accepting this challenge each student would have a mentor and an equal opportunity to achieve. I encourage the students to meet with your mentor advisor, put together a plan to develop your talent, stick to your timeline, practice your skills and become an advocate for yourself. I encourage the administration to demonstrate strong leadership by organizing this program, establishing monthly meetings with each professor and coach and reviewing the progress of each student and hold them accountable. By monitoring that progress, the administration demonstrates to all their commitment to excellence towards both the professors and the students. If you don’t monitor it, you can’t manage it.
What would be the result? All of us would speak of Pfeiffer with even more conviction. Today, we say that Pfeiffer is different because you get special attention. Classes are small and professors teach. You can play a sport and still have a life. If you choose, you will become a true servant leader. With this mentor/advisor model, you could demonstrate servant leadership at work by adding that you will be assigned to a mentor/advisor who will coach you through your entire four years at Pfeiffer. Your mentor will help you develop a life plan to develop your unique talent, meet with you monthly, hold you to your timeline and rapidly respond to your problems. Everyone involved would be putting others before self, right from the start, in a most meaningful way.
How many schools can say that? None. The results would be: reduced stress, higher standards and higher achievement. The resulting world class organization would attract even better students looking for a world class environment. I shared this servant leadership mentor/advisor idea with my life coach who just sent her daughter off to college. She said, “What a wonderful idea. I sure wish that were available for my daughter. That would make me feel so much better if I knew someone was looking out for her.
What an advantage Pfeiffer would have.
We did this at Merrill Lynch. We called it Supernova, a star that is reduced down to its core and then burns ten times brighter. At Merrill Lynch we had a problem. Here at Pfeiffer, it would be as if all of a sudden instead of 800 students, you had 5000. You couldn’t possibly serve them. Business had been good at Merrill Lynch and our average Financial Advisor had 600 clients but could only properly serve 100. Chaos ensued, with high client turnover, poor customer satisfaction and low morale. We created Supernova to focus the Advisor’s energy on only 100 clients. Now, the Advisor had time to meet with clients monthly, fully implement their multi-generational plans and rapidly respond to their problems. They were putting clients before themselves. Client satisfaction improved to the point that turnover was no longer an issue. Portfolio performance improved as did employee productivity and satisfaction. A recent study showed that in 2008, those Advisors that spent 60% of their time or more with clients had less than 1% client turnover. Those that didn’t had 21% turnover. The productivity of the first group was eight times greater than the second group.
At Pfeiffer, student centered mentoring with the entire faculty involved, has the potential to dramatically improve performance, reduce stress and turnover. As a financial guy anytime there is the potential for increased revenues and reduced cost, you have my attention. In a servant focused environment, morale improves because the work is more satisfying and the University thrives. Everyone likes playing on a winning team. The outliers become the norm as better and better students are attracted to this environment. This brings the focus of the University squarely to where it belongs; the Student.
Alumni and friends love Pfeiffer because of relationships forged over four years of growth and development. Students come because of the idea of Pfeiffer; they stay because of the people, not a climbing wall or a new building.
My brother Rick and I attended summer school at Wake Forest because we both had been such good students. We drove our Model A Ford roadster from Winston Salem to Pfeiffer on many weekends to meet Rick’s friends. On the drive back on Sunday nights we would often both fall asleep and awaken when the car would drift off onto the gravel on the side of the road. As the passenger, I would wake up and slap Rick, saying, “Rick, wake up”. We got pretty good at this with practice. Years later I was asleep in the passenger’s seat with my wife Marcia driving. She inadvertently, drove onto the gravel at the side of the road and I awoke slapping her and saying, “Rick, wake up!!” Those skills and friendships you develop in college will stay with you for a lifetime.
It is gratifying when others reinforce your work. Maya Ivanova, in an article in Investment Advisor Magazine, explains that the best RIA/FA Firms(Teams) have several things in common. In a study of all RIAs, her firm Rydex AdvisorBenchmarking concluded that the top 26 were rather unique verses the others in the difficult year 2008:
They grew their practices by 6% on AUM(Assets Under Management) vs the average where assets slid by 12%
They were proactive in contacting their clients spending between 40 and 50 hours/wk with clients vs 11-15hrs for the average. The results were dramatic. The best lost only 1% of their clients vs 21% for the average.
The top firms had much larger clients and fewer of them. The top firms served on average 126 clients with $1.3 million in AUM vs 140 clients and $485,000 AUM. The results were not only higher customer retention nd satisfaction, but higher profitability for the firm.
The Supernova systematicly provides the plan, process and rituals to perpetuate this type of success.
The authors conclusions were simple:
1. Spend as much time as you can with your clients. Firms that spend 60% of their time with clients are eight times more profitable than the averages
2. Focus on fewer clients with higher net worths
3. Every single top firm focuses it’s client aquisition efforts on specific market niches
4. Measure your activity. The top firms know where their teams time is being spent. Determine your critical critera and measure it vs the best and you will improve.
After last year’s market slump, clients need more attention than ever, but not all clients are worth it. Today, many advisors are reevaluating their books of business and letting go of “C” clients for the first time.
These days, financial advisors are facing a huge time crunch. Both their best and worst clients are beating down the door for extra attention, as they seek to repair the damage done to portfolios and retirement plans last year. In a post-Madoff world, prospects have become more skeptical of a financial advisor’s bona fides and take a lot longer to woo. And, in a volatile and uncertain market, selecting investments and managers has gotten more complex and time-consuming. This means FAs face some tough choices about where to spend their energy — and on whom.
“In challenging times, where advisors may need to communicate more than normal, they only have time to communicate frequently with their A and B clients,” says Bill Bachrach, president of Barach and Associates. Their “C” clients are often more numerous, but generate far less revenue. And in this environment, A and B clients can’t be ignored: A recent survey by Prince & Associates, a firm that provides research on the high-net-worth, found that 15 percent of the wealthy left their financial advisors in 2008 and 70 percent moved at least some assets out of an advisor’s hands. Wealth management consultants have long recommended that advisors fire their least lucrative clients as their practices grow, but few advisors have actually taken that advice — until now.
Take Jason Wenk, who launched his fee-only RIA, Retirement Wealth Advisors in Jenison, Mich. five years ago, but only really began to purge his book of “C” clients for the first time last year. Wenk, who works with four other financial advisors, an operations manager and administrative assistant, focuses on money management and does some financial planning. With assets under management at $100 million today, up from roughly $9 million five years ago, Wenk says a third of his 145 clients accounted for just 10 percent of his assets, but took up just as much of his time. Wenk allocates four hours to talk with each client per year (three hours in person, one hour on the phone), which meant he was spending more than half the week just talking with clients. He didn’t have enough time to build his business.
So last year, Wenk slashed the number of clients he works with to 96, handing the rest off to one of the other advisors who work at his firm. He held onto a few long-time clients who didn’t meet his new criteria just because they were low maintenance and a pleasure to work with. But the rest he broke out strictly on the revenue they generated per hour worked.
Dumping a third of his accounts gave him the time to pull in new ones: In the first quarter, he attracted four new clients with a minimum of $2 million in assets. So, he decided to reassign another 40, bringing his total down to 60. The benefit has been two-fold: “I spend more time with my best clients, who are really the ones paying the bills anyway. Now they are getting the value they deserve. More importantly, I start functioning a little more as a business person and less like a slave to my clients. Unfortunately, that is what happens when you have a lot of clients — especially in the middle of a nasty market.” The moves seem to be paying off, despite the down market. Revenues were up 20 percent in the first quarter this year versus last year.
Richard Capalbo, a former Merrill Lynch manager who co-founded The Quantum Group and the Quantum Leap Institute, a consulting firm specializing in the financial services industry, says it is more important to let go of lower tier clients now than it ever was. “This market is going to be directionless,” he says, and clients are going to continue to demand more time and attention over the next several years. Advisors may be afraid to give up any source of revenue because income is down — especially if they’re getting paid on a fee basis, he says. But that’s just not a good way to do business. “In an environment where most people are saying, ‘Hey, I am going to change FAs if I don’t hear from my FA on a regular basis,’” clearing the deck to make sure you have enough time for your best clients is critical.
C’s a Crowd
Many consultants believe, in fact, that the vast majority of advisors have too many clients. “They’re leaving them parked in there just in case. Advisors say, ‘they don’t generate a lot of money, but they don’t take up a lot of time, and I might need that money some time,’” says Bachrach. Generally, industry consultants suggest that a single financial advisor should not directly manage more than 150 clients. Of course, this figure will vary somewhat according to an advisor’s business model. Some advisors in high end fee-only wealth management can serve as few as 25 to 40 clients, whereas advisors with more of a transaction-based or team-based approach could make serving over 100 clients work. Sure, some advisors — with the support of a client service associate or junior advisor — might even be able to manage 600 smaller client relationships if they’re providing investment management as opposed to complex wealth planning, but most consultants still advise against it.
“It is subjective and depends on what type of client base the advisor wants, but rarely can an advisor effectively serve and profitably build a client base with hundreds of clients — they have to be practice management machines for that kind of volume to work,” says Nancy Imholte, founder of Forte Coaching. “If you’re getting beyond 150 clients, I wouldn’t call those clients, I would call them customers,” agrees Dan Inveen of FA Insight. “If the best 20 percent of your clients are providing 80 percent of your revenue, why are you wasting your time with that other 80 percent? You just can’t afford to anymore.”
Most consultants believe that it’s okay to make exceptions — the “old lady” who has been with the advisor from the beginning and has been like a second grandmother, the client who happens to socialize with a lot of high-net-worth people and has provided a wealth of referrals, the soon-to-inherit daughter of the advisor’s largest client. But for the rest, if they are not providing revenue, and the advisor is already pressed for time, chances are the client would probably be better served by another advisor anyway.
But telling clients you can’t work with them anymore isn’t an easy job. For some advisors, old habits die hard. Capalbo says there is a basic belief system flaw in financial advisors: “Most of them, when they got into the business, were told to open accounts, and that is what they did. They did it well and they continue to do it well. Unfortunately, even when they get rid of a bunch of accounts, they tend to open a bunch more just like the old ones.”
Randy Carver, founder of independent firm Carver Financial Services, affiliated with b/d Raymond James, says that like many FAs, he fell into that trap at the beginning of his career: trying to grow the client base without regard to the profitability of each relationship. “You could have a huge client who generates very little revenue and takes up a lot of time,” he says.
Ted Feight, President of fee-only RIA Creative Financial Design, says letting go of long time clients is one of his biggest challenges, but something he will have to do this year. Feight, who has been in the business for 36 years, manages $25 million in assets and provides asset management and wealth management services to 73 clients. He knows that, realistically, 43 of those clients should go.
Feight’s A and B clients account for almost 40 percent of his book and 67 percent of his income, individually contributing around $2,000 to $3,000 in income a year. His C through E clients make up the other 60 percent of his book, and just 23 percent of his income, individually contributing $1,200 or less a year. Feight says his C and D clients are more needy, too. He plans on providing many of these client referrals to other advisors, but worries it will be an adjustment for some. He is a fee-based advisor and suspects that few other fee-based advisors will take them on.
The How To
Mark Little is at the opposite extreme. In 2000, he decided he needed to gut his book of 1,242 client accounts. Just 18 months later, he was left with 17 clients, each of whom had between $1.2 million and $1.8 million in assets. Over the following 18 months, he built his business back up to 91 clients with referrals from that original 17. He was so successful with this process that he created a website for other advisors (TrustedAdvisorToolkit.com) to document how he did it. He started by creating a spreadsheet containing assets and estimated recurring annual revenue for every single client and then sorted the list for the latter. He says there were eight pages of clients in his spreadsheet with zero recurring revenue.
Little let clients go in incremental steps, only dropping his least profitable clients when he could replace the revenue they generated with fees from a new “ideal” client. So if he signed on a new client who provides $10,000 in recurring annual fees, he would go back to the spreadsheet and identify the clients at the bottom of his list that he could let go without losing revenue. Before deciding how to handle the dismissal, he would identify what kind of relationship he had with the client, and what that client’s needs were, and act accordingly. Some got letters, others phone calls and still others meetings. He would inform them of the change to his business model and offer to help them find another advisor. Little did make exceptions for around four clients who were moving towards a significant planning event, and another 10 clients who did not fit his new minimums, but whom he wanted to keep anyway.
His process certainly paid off. He was generating $388,000 in gross dealer concessions in the beginning of 2000, and by October of 2002 he was reeling in $1.6 million in recurring fees. Originally an independent b/d called Wall Street Services, Little renamed the firm Summit Wealth Management after he merged with another advisor in 2005. He now has a a silent partner role, while the other advisor handles the majority of the clients at the firm.
“The advisors I find who do well in this marketplace have a very defined process: They know what their ideal clients look like, how to convey value, they know what clients are looking for,” says Dennis Gallant, principal and founder of Gallant Distribution Consulting. “They’ve gone through business planning and know where they want to go, and they are also winning business,” he says. “Advisors can come out of the recession clean and mean. They need to figure out a way to make things work efficiently and effectively or they’re not going to be able to make it in the business.”
During the market decline of 1997, only 20% of the Investment Advisors surveyed called their top 100 clients. The reason they gave (75%) was putting out fires. Why did that happen? Lack of discipline? Focus? I don’t think so.
From my book cover and other blogs you have learned that I am a Naval Aviator. I had a chance to share a round of golf with a famous Naval Aviator that explained it best to me.
He had just finished a bombing run on an island called Chi Chi Jima in the South Pacific, when he got hit by enemy fire. His cockpit filled with smoke and his wing was on fire. I asked, “What were you thinking about at the time?” He said, “Rob, I didn’t have time to think.I just followed my procedures. I notified my skipper that I was going down, headed the plane out to sea and away from the island, put it in a slight climb which slowed it down, notified my crew to bail out and got out.” He was later rescued by the submarine USS Finback, received the Navy Cross for valor, and went on the fly 54 more missions. This 19 year old grew up to be our 41st President whose name is George Herbert Walker Bush.
George told us that the Japanese on that particular island were known to kill and eat captured American pilots
George later joked with Barbara that if he had been picked up by the Japanese, instead of getting a husband, the Japanese Commanding Officer might have had pâté.
So what save George Bush? Luck? Yes, but he contends it was his training. The check lists and procedures that every Naval Aviator learns. These become sacred rituals of flight. As a Supernova Advisor you will learn how to create the same passion for your new rituals and how they will work to help you put out your cockpit fires.
Our mission at Supernova Consulting Group is to “boldly go where no person has gone before” and joyfully “share the map.” Sound familiar? We borrowed this opening line from the famous TV series “Star Trek” because it encompasses our desire to explore new frontiers in the financial services industry and share those discoveries with everyone. To”share the map,” a phrase borrowed from change-agent Larry Wilson, is used to both illustrate the map of how we log our discoveries, as well as the map of how our minds change as we begin thinking differently about new ideas. It takes great courage to be an explorer in today’s intimidating and challenging financial services industry, as it did for the crew of the “Starship Enterprise”. It is very easy to stay “stuck” and continue to do what you have always done and expect different results. Our mission is to get out of that “stuck” condition and challenge ourselves and the industry to raise the bar in client service and team productivity.We then share our discoveries with everyone who will listen and change the world. Sound like fun. Join us!!
Our vision is to “Revolutionize the Client Experience”, not just in financial services, but in all professional services. Considering the state of service in the in the world today, this is a huge task. Since my primary knowledge is financial services, our focus is there for now.
What is the state of the financial services industry today? About the same as the state of our Congress. Congress’s approval rating hovers about 30%, yet we like our local Congressmen and women. We are, however, disappointed in their results over the last several decades. It seems all politicians promised fiscal responsibility along with new social contracts yet, we get something else. We have had a failure to communicate and a misalignment of actions vs values. The same can be said for the financial services industry. When questioned, investors rate their financial services firms very low, while they personally like their advisors. They are however disappointed with the level of service and performance to the point of considering a change. Why is there such disappointment? I contend that a great deal of the problem results from confusion over expectations and communications. What does the Supernova Revolution do to solve this conundrum?
First and most importantly, Supernova clearly lays out the expectations for the client and guarantees accountability. The expectations are a multi-generational plan, twelve contacts per year and rapid response to the clients problems. If this isn’t done, clients are asked to hold the Advisor accountable. A Supernova Advisor confidently uses this guarantee because they only have one hundred clients. They also give the same level of service to all clients, while reassigning clients that need a different level of service.
Second, Supernova FA’s fully implement the clients plan through our 12/4/2 contact model. By fully implementing the plan, they fully assure that the client is on the right path to reach all their goals.
Third, Supernova FA’s monitor(12/4/2) the client’s plan to be sure, as the environment changes, that all of the plans are tracking their goals. They plan for the best while preparing for the worst.
So where is the revolution? It is in the consistency of client experience. It is in the guarantee and the accountability. With Supernova, every client receives the same excellent service, no exceptions. Can you say that you give this kind of exceptional experience to everyone. What would that mean to your Brand if you could guarantee this level of service.
Supernova suggests that this level of consistent client service is so unique that you become referable. That is the big payoff. By showing a personal interest in each client through your monthly calls and consistently doing what you say you will do, you develop a mutual trust and respect. Take the leap of faith, cross the Invisible Bridge and adopt the Supernova model. You’ll love it.
In the Spring of 1973 I was heading out of Whiting Field, Florida with my training squadron to do carrier qualifications on the USS Lexington. I was flying a T-28 Trojan in a five man echelon formation. We were leaving land heading out into the Gulf of Mexico to find our carrier. My section leader, flying diagonally to my left and several feet above, began to fly erratically and drift away from the echelon leader. It became clear he was having some problems. It turned out later that he lost his radio. Two other planes were flying on my wing and instructed to stay there until we reached the carrier. We had been practicing this for months. As we drifted further off course I said to myself,”do I leave my section leader and get myself and my wing-men back in formation or do I stay with him because he is in trouble?” The weather was getting worse and we needed the Echelon Leader to get us to the carrier and back to the base. We weren’t instrument trained at the time. Although we all could get to the carrier, we had to worry about midair collisions if we got separated and the weather deteriorated further. The pilot with radio problems finally realized the situation(putting us all at risk) and got back into formation. We all went on to successfully complete our carrier qualifications that day, but not without teaching me a good lesson. Keep your eye on the mission. Although my section leader was in trouble, it was no reason to lose his head and risk his fellow pilots by leaving the formation with us on his wing. Stay with your rituals and training procedures. Stay cool under crisis and execute as you have been trained. Deal with your emergency but keep your eye on the bigger picture. He should have stayed in formation while he managed his emergency, not put the rest of us at risk.
So how did you do during this crisis of 08 and 09. Have you followed your plan, process and rituals. Was your training designed for an emergency or just fair weather. Were you prepared to have your partner panic and take the team in a wrong direction. Did you leave your leader and put your wing-men(clients) in jeopardy or did you deal with the smaller emergencies while you kept your eye on your mission.
Supernova prepares you for all kinds of weather, not just clear skies. Your multi-generational planning, 12/4/2 and rapid response team will keep your communications sharp as you monitor the weather for storms and get your wing-men safely to their destination.
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