The most successful advisors of the past will not be the most successful advisors of the future.
I truly believe that the successful advisors of the past will not be the successful advisors of the future.
I discovered that what got financial advisors to the top is going to change dramatically in the future, and I can see it clearly. It is not about technology or products and services. I will share secrets that even Albert Einstein revealed about the future, including how to implement key practice management strategies to engage ideal clients and prospects.
Let me explain. About three years ago, I made a discovery while teaching advisors. Here I was traveling across Canada as the National Director of Practice Management for Manulife; I did over 100 flights that year. You are probably like me — you want to find out the best processes to become an elite financial advisor, or the best of the best. You attend conferences, meet with top advisors, always try to find an edge to becoming and staying an elite advisor. You are a true student of the financial industry, passionate about CANI — Constant And Never-ending Improvement. But as Albert Einstein said, “The only source of knowledge is experience.” You can’t just learn it; you must experience it. I discovered that what got elite advisors to the top is going to change dramatically in the future, and I could see it clearly.
As it turns out, all elite advisors act in the exact same way — run similar processes and do the exact opposite of what all other advisors do. All I did was to put it in writing and create a presentation to explain it. Let me show you.
Einstein was known for his brilliance. He understood numbers and formulas, but he knew human behavior was a major factor in the future. With all the change in the world including robo-advisors, regulation, technology and product-pricing pressures, Einstein, years ago, understood the need to focus on the emotionally compelling aspects of human behavior.
So, how do you create an emotionally compelling process? Why would you create an emotionally compelling process in the first place?
According to 2018 research by CEG Worldwide, as it turns out that 84 percent of the wealthy engage emotionally first and logically second. Think about why other people, such as accountants, struggle in the financial services world. Do they engage emotionally first or logically first?
Products and performance: Is that logic or emotion?
Planning and advice to reach your goals: Is that logic or emotion?
So, how do you make emotionally compelling offers to prospects? Start by discovering what they are not getting.
Start by telling a story.
Ten years ago, markets tanked. I decided to do one thing — add more value to my ideal clients. After a ton of research and discussions, I decided to add beneficiary audits and fee audits as value add for my ideal clients and prospects. The firms that add more value do dramatically better than advisors and firms that don’t add value.
How can you explain how others achieve things that defy all of the assumptions in the financial business? How some advisors became successful in the past may not be the same successful advisors of the future. We know that one key fundamental difference is advice. And there are two key words: “emotionally compelling.”
They may not be the best planners or investment strategists, but they offer valuable advice in an emotionally compelling way.
But, in the future, the words will be different as the industry moves from products to advice. Communication skills will determine the elite advisors of the future, but I believe the language will change.
Einstein knew about the success of advisors. He knew that it goes beyond performance. Most people you talk to think, I’m good. I’m good.
How do you change their thinking? By changing yours. By changing your mindset.
Seventy percent of the wealthy want emotionally compelling discussions with their advisors, yet performance is not emotionally compelling, is it? So what are they not getting?
What three key things are your best prospects not currently getting from their advisors or institutions? How many have their complete financial life?
Our process includes:
- Putting three to six goals on paper
- Financial organization in six areas
- Total transparency of cost and value
- Quality financial plan updated annually to goals
- Team of three+ professionals coordinated and delegated to one person
Complete wealth
Clarity: Would it be valuable to get clarity around your values and goals for the future and put it on paper?
Complete: Would it be valuable to get your complete financial life in order and keep it there forever?
Transparent: Would it be helpful for you to understand the total cost of investing and advice — what you get and don’t get for the cost?
Quality: Would it be valuable to have a quality financial and investment plan? What is the probability of success in reaching all of your goals currently?
Team: Would it be valuable to have a coordinated team of professionals?
Key value questions for the wealthy
Clarity: Would it be valuable to get clarity around your philanthropic goals for the future and put it on paper?
Complete: Would it be valuable to get your complete family estate plan in writing and keep it updated?
Transparent: Would it be valuable to get clarity around your legacy for the future and put it on paper?
Quality: Would it be valuable to have a comprehensive financial, tax and investment plan? What is the probability of success in reaching all of your goals currently?
Team: Would it be valuable to have a coordinated team of professionals for succession and transition of your business and your wealth?
I have found when working with the wealthy that they are looking for more planning and advice as they have excess capital, income and cash flow for their lifetime. Help them solve these questions.
These are the serious conversations that people need to have with their advisors. It is emotionally compelling and helps people get the No. 1 concern in their lives on paper, directly in front of them.
The average advisors communicate from the clearest thing to the blurriest thing. The average advisors talk about product or performance because it is the clearest thing to talk about. The elite advisors focus on the blurriest thing because they understand that the No. 1 item people want is clarity for their future. They talk about the opposite of what all other advisors talk about.
How most advisors communicate is uninspiring. Most financial plans look like a manual for a stereo, or, worse, a spreadsheet. Numbers are not inspiring, yet they are easy to understand. Elite advisors have figured out that it is about advice and planning and inspiring clients. It is the complete opposite of what average advisors do. It is like what Simon Sinek said in his book, “Start with Why” — start with a purpose, cause or belief. Start with your client’s purpose. People don’t buy what you do; they buy why you do it. The goal is not to do business with everyone who needs your products; the goal is to do business with people who believe what you believe.
But if you don’t know why you do what you do, and people respond to why you do what you do, then how will you ever get people to trust you? The goal is not just to sell to people who need what you have; the goal is to sell to people who believe what you believe.
Successful advisors of the past had beliefs and could sell them on a cocktail napkin with a simple example. While this may work in the future, the language will have to change — from products to advice. You must believe in the value of advice and have the language to support it.
Now, have you ever had difficulty getting all of the documents from a prospect?
The second item that will change in the future is the power of delegation.
Advisors who spend a majority of their time with ideal clients and prospects will be able to invest in technology in their practice because the demands of clients are growing. I point to work done in the U.S. with Charles Schwab. The study by Schwab noted that nearly half (44 percent) of advisors have begun providing more services to clients without charging for them. And two-fifths (40 percent) have been spending more time with clients without charging an increase in fees.
Bernie Clark, head of Schwab Advisor Services, goes on to echo the mantra of financial life management that Joe Duran, CEO of United Capital, has been preaching for the past several years. Duran has championed the concept of financial life management, which is about the pursuit of their ideals, not money, and which is another term for “holistic” or “comprehensive approach.”
How do you transform your practice to be ready for the future?
This quote is often used to describe Charles Darwin’s work: “In the struggle for survival, the fittest win out at the expense of their rivals because they succeed in adapting themselves best to their environment.” In the current world of financial advisors, there is a storm of change. The three major changes Charles Darwin would observe are regulatory, technology and business models. Advisors will need to adapt their practices and show the future-ready way, which is about acquiring, servicing and managing capacity in their practice. No longer can advisors accumulate hundreds of clients and have successful relationships with hundreds of wealthy families.
Acquire, service and manage capacity are three keys to a successful practice of ideal clients and three key ways to adapt to change. This is the difference between average and elite advisors in the future. I truly believe that the successful advisors of the past will not be the successful advisors of the future.
So how do you prepare your practice to be future-ready?
Let’s start with your acquisition processes. Having a proven process to acquire more ideal clients is critical for the future of every advisor. Finding more ideal prospects and opportunities and acquiring them faster through key practice management processes while making deeper emotional connections is what advisors need to work on every week. Advisors are discovering that strategies of the past are not as effective, and they need a new way of thinking for the future.
Who could use a little help in acquiring more ideal clients? Seventy-five percent of advisors do not have a clear definition of ideal clients. But the ones who do grow their practice by 17 percent or more annually by clearly segmenting whom they are spending time with.
How many advisors segment their business on an annual basis and raise the minimum revenue for ideal clients while providing more value to their best clients?
Do you feel you are working past your true capacity? Is it time management that is the problem, or is it capacity?
And what is your clear definition of an ideal client? There is one critical measure: the revenue you get from an ideal client for the value you deliver. It may be upfront revenue in terms of insurance or ongoing revenue for wealth management and advice.
What is your number for the ideal revenue per year that you would like to generate in the future from an ideal client? Is it $10,000, $20,000, $30,000, $50,000 or more? What is that number? This will help you identify whom you are looking for as an ideal client. How many of those ideal clients could you manage in a calendar year? 50? 75? 100? This is the first critical step in finding your capacity because everyone in this room has a capacity number. Your job is to find it, manage it and develop it. If you don’t know your capacity number, how will you ever know how to manage your time?
Managing capacity is the No. 1 challenge for financial professionals. Why do some advisors thrive in uncertainty while others struggle with over-capacity issues year after year? In the future-ready way, you need to know your capacity number so you can block time and, more importantly, free up time while focusing on your ideal clients and prospects, to generate your ideal revenue.
Who needs strategies in enhancing their ideal client experience?
According to Business Health Pty Ltd, 73 percent of advisors have no written service processes. The advisors who have clearly written ideal client service processes earn 146 percent more than advisors who don’t.
How do you build an emotionally compelling process for ideal prospects and clients that is a future-ready experience? It’s a proven fact that 43 percent of advisors do not have a value promise. Even worse, 75 percent do not have an ideal client definition, while 85 percent do not ask for client feedback. How can you build a value promise for your best clients without asking them for feedback?
Here are four simple but effective questions to write down and ask your best clients and advocates:
- As an ideal client, what are the three things you value the most from our services? (Ask both spouses because the answers are different as men’s and women’s values may vary. Let them know they are ideal clients.)
- How important are those three things to your financial future?
- What is it worth to you?
- How can we enhance our client experience for our ideal clients such as you?
Then build your value promise around feedback words.
If I were to ask anyone in this room, “Why should I do business with you,” the answer should be “Great question. Our ideal clients chose us because of these three reasons.” Then give your clients’ answers and their words. Words such as “trust,” “communication” and “accountability” are usually emotionally compelling words, not “tax,” “estate,” “risk” and “insurance.”
Are you ready for the future? How can you be an advisor of the future and get ahead of the curve? Ask Charles Darwin about the strongest advisors in our business today. If they do not adapt to change, we know where they will end up.
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Grant W. Hicks, CIM, is a practice management expert and president of Advisor Practice Management, a financial coaching and consulting firm. His “Guerrilla Marketing For Financial Advisors” books have made him an expert resource on practice management for financial advisors, and he has spoken for several major financial institutions. With more than 29 years of experience in the financial industry, Hicks helps financial advisors grow their practice and get ahead of the curve of industry changes.
