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Ten Questions Prospective Clients Should Ask

A coaching client recently told me about a great new business opportunity. A few years ago, he had been introduced to a man with whom he shared an interest in running; both became involved in a local running club. They were more than acquaintances, but not close friends.

In recent months the running buddy (we’ll call him “Joe”) sold one of his businesses – for an eight-digit figure! It wasn’t long before word got out, and Joe found himself inundated by calls, letters and emails from financial people across the country, all wanting to help him manage his money. No surprise there!

Naturally, my client had similar interest, but wasn’t sure how he could best approach Joe. Certainly, he thought, being local ought to be an advantage, as should their shared interest in running. As we discussed various strategies to highlight what made this advisor different, I suggested that he consider positioning himself as an advisor to Joe in his process for choosing a financial advisor. In doing so, he would establish: 1) his expertise as to what makes a great financial advisor; and 2) his ability to guide Joe through a difficult decision process.

I suggested he provide Joe with a list of questions to pose to various candidates – including questions that on his own, Joe might never think about, and, of course, questions that would position this advisor in the very best possible way.

Here is the list of ten questions we put together to help Joe choose among financial advisors.

1. What do I need to know about you – your background, philosophy, experience and expertise?
2. Who are your typical clients? What issues and risks do they have that they themselves might not be aware of? How do you help them?
3. Describe how you advise clients, and how would you make sure you cover everything I would need? What makes your process different from other advisors?
4. If I were to become your client, how often would we meet? What would be covered in those meetings? How much additional communication would I have with you?
5. What do you believe about how people should invest and why? How would that impact how you would put together a portfolio for me?
6. How do you help people minimize risk?
7. Other than investing, what other areas of my financial life would you help me with and how would that work?
8. How would you work with my CPA, attorney and other advisors? How would I benefit from that?
9. What can you do for me that I can’t do for myself?
10. How do you charge for your services?

The questions are specific enough to help a prospective client gain a good understanding of the financial advisor and what type of experience he or she could expect to receive, as well as get past the clutter of marketing and financial jargon.

HERE ARE A FEW QUESTIONS FOR YOU: How effective would you be in answering these questions? How well would you be able to use these questions to showcase how you are different from other advisors? What questions do you think should have been on this list that we missed?

Willing to share your thoughts? Leave a comment.

Client Advisory Boards – 4 Keys to Success

Last week one of my clients asked about client advisory boards. Do I recommend them? How should they be put together? How should we plan for the meetings?

The answer to the first question is – “yes!” The answer to the second and third is – just like everything else – “carefully, thoughtfully and with a specific purpose in mind.”

A Client Advisory Board can be a tremendous way to enhance your decision-making process while  recognizing your best clients. Your clients can give you insight and perspective to help you assess what you are currently doing as well as provide input on new strategies or services you may be considering. Their involvement can deepen their connection to you and your practice, giving them a sense of ownership in the growth and success of your business.

4 KEYS TO SUCCESS:

1. Knowing your purpose – Selecting one or two specific topics will provide focus for a thoughtful discussion. Your goal is to get feedback that you can use in making decisions.  Simply gathering clients together for some general discussion about your practice will limit the value to you and to your clients.
2. Selecting the right clients – Think about clients who have a good understanding and appreciation of your value, are supportive of you and your business, and are both discerning and congenial. A good mix of clients will provide you with different perspectives.  For example, a new client will view your practice differently from someone who has been with you for many years.
3. Setting the stage during the invitation process – Set expectations in advance with your clients.  Make sure they know your purpose in establishing the board, what you hope to accomplish, why you believe they would be a good fit, and what the time commitment would be.
4. Following through – It can be very frustrating to clients to invest time and thought in something and not see the outcome.  Therefore it is crucial to follow through after every meeting.  First, remember to thank each client for their participation with a written note. Then start each subsequent meeting with a summary of what was implemented following the last meeting.

If you would like to receive a copy of our new Client Advisory Board checklist which includes a list of potential discussion topics and how to position them, click here to send me an email.

If you would like a sneak peak of our new PathfinderAdvisor.com website, click here to send Adam an email.

Thoughts –> Words –> Actions

“Watch your thoughts, for they become words. Watch your words, for they become actions….”

Lately I’ve been thinking about how this relationship between thoughts, words and actions applies to advisors and their clients. Thoughts and words do matter, and they influence our actions as well as the actions of others.

Here are some examples where thoughts and words can have an impact:

If advisors refer to their initial meetings with clients (in-depth/discovery interview, planning, etc.) as their “sales process” (and some do), how does that impact how they conduct those meetings? Is the focus on learning as much as possible about the client and then developing the best plan and recommendations? Or is the focus on “closing the sale”?

Some advisors consider ongoing progress review meetings as a core component of their advice process while others refer to them as “client service.” I’ve heard advisors say that sometimes they have a difficult time getting clients to engage when trying to schedule these meetings. Could it be that the message their clients heard was that these were simply service calls and therefore regard them as optional? Is it any wonder why clients don’t understand why they are being charged an ongoing advisory fee? Are they paying for service or advice?

If you talk about “wow-ing” your clients with gifts and parties, or your seminar invitations use a larger font to describe the dinner than the seminar topic, what are you communicating about what you do and its intrinsic value? How do these words impact your clients’ perception?

What examples have you seen that demonstrate how thoughts lead to words and words lead to actions…sometimes good, sometimes not so much?

I believe that everything you say and do, and everything you don’t say and do, communicates a message to your clients and to yourself. Make certain it is the message you intend.

Advice…a Commodity? Really?

In a recent article on Financial-planning.com, an advisor was quoted as saying, “Most people look at advice as a commodity, so the best way to differentiate yourself is through your communications and service.” The purpose of the article was to emphasize the importance of effective client communications, something I wholeheartedly agree with. But this quote jumped out at me for a couple reasons.

First and foremost, a commodity is generally defined as something widely available and consistent regardless of source.  I doubt that any advisor would consider his or her advice to be readily interchangeable with that of another advisor.  If the same advice were given by everyone, it really wouldn’t even be advice!

The more important question is whether or not clients recognize the value of your advice or do they view it as standard, off-the-shelf stuff – the equivalent of a commodity?

• Consider the depth to which you explore your clients’ situation, their needs and concerns, their vision for their future? Do you spend considerable time in conversation with them? Or do you jot down a few things on your legal pad or ask them to fill out a questionnaire?
• What about how well you assess your clients’ risk exposure? Risks you can help them plan for as well as preparing for the unexpected. Or do you ask them to check a few boxes on a standard risk questionnaire – or worse, guess what you think their answers would be.
• And what about your investment recommendations? Are they backed by your investment philosophy, an investment policy statement and appropriate allocation strategy? Or do your clients’ investments look like a collection of “ideas” accumulated over time.

The other reason the quote jumped out at me is the concept (which is not unique to the advisor quoted in the article) that differentiation comes through good communications and service.

While I agree that good service is vital to a healthy practice, it never makes up for mediocre advice.  Your advice is your product; the service is the wrapper.  Your dry cleaner may have wonderful service (friendly staff, drive-thru, etc.) but does that matter if they don’t get the spots out?

Your advice and your advice process are the heart of what you do.  Don’t let anyone dismiss them as a commodity.

Tell-Tell-Tell

Paul White was the first news director at CBS, beginning in 1930. Of course, it was CBS Radio back then. He is credited with what has become known as the White formula for writing radio news: “Tell ‘em what you’re going to tell ‘em. Tell ‘em. Tell ‘em what you told ‘em.”

Just about everyone who has taken any public speaking courses has probably heard the formula and understands the importance of reinforcing the message by repetition.

I expect that many advisors have never thought about how using the “tell-tell-tell” formula can help in their client meetings.

Imagine three advisors who cover virtually the same content at their progress review meetings with clients.

Advisor A sits down with his clients, works through his list of topics, answers their questions and sets their next appointment.

Advisor B sends her clients an agenda prior to the meeting. When they come in, she works through the list of topics, answers their questions and sets their next appointment.

Advisor C sends his clients an agenda prior to the meeting. When they come in, he explains the agenda and the purpose for each item on it. He works through the list of topics and answers their questions. Then he goes back over the agenda and confirms that everything has been addressed to their satisfaction before setting their next appointment.

While Advisors B and C both recognize the importance of using an agenda to guide client meetings, only Advisor C employs the White formula of “tell-tell-tell.”

When you tell your clients what you plan to discuss at the meeting (on the agenda and at the start of the meeting), discuss each topic and then review what you talked about, here’s what you will accomplish:

1. You will reinforce in their minds exactly what happens at your progress review meetings.
2. Your clients will gain a better understanding of the value of working with you because you have clearly explained…at least three times…what you are doing and why.
3. They will also know how to respond to the next person who asks, “Tell me about your advisor. What does he or she do?” You will have told them exactly what to say!

And it’s all because you told them what you were going to talk about, you talked about it, and then you told them what you talked about. Tell-tell-tell – a simple formula that works!

If you would like a copy of my checklist to help create your Progress Review Agenda, send me an email!

The End of the Dust-Covered Business Plan – Six Steps to More Productive Business Planning

It’s that time of year again. (No, I don’t mean “fall back” – that was last weekend.) It’s time to take out the 2010 business plan, dust it off, and see how things have gone. Now where is that plan? In the back of the desk drawer? Under the stack of papers on the credenza?

Isn’t that the problem with business planning?

The new year will soon be upon us. We’re excited about capitalizing on the opportunities that lie ahead. We envision all the things we can do to better serve our clients and grow our business. We set goals and think of a bunch of great ideas to achieve them, but then we get caught up in the day-to-day, and the plan is set aside or put away…and the next thing we know, it’s November.

I have been involved in business planning for many years – as an advisor, as a branch manager and as a practice management consultant. Every year I lead business planning workshops as well as work with individual advisors and teams to develop and implement their plans.

Over time, I have learned that six steps are essential for successful business planning:

1.        Define your vision. Knowing where you want to go is the important first step for all successful planning. Your vision for your ideal practice should include what you want it to look like in quantitative terms as well as descriptions of your clients and their experience and your own work and personal life.

2.       Assess your current practice. Review each of the five major areas of Purpose, Client Experience, Support, Planning and Growth. If you’d like a copy of my Business Assessment checklist, send me an email.

3.       Establish your quantitative goals. There are many areas where specific quantitative goals can be set; choose the ones that make the most sense for your practice. For some areas, you may want to consider two goals – a minimum goal and a reach goal. If you have defined a vision for your ideal practice, set five-year goals to achieve that vision and then fill in intermediate goals to serve as milestones along the way.

4.      Determine your strategic initiatives. These are the specific strategies, what you want to do to implement improvements and achieve your goals. Most advisors focus on three areas – improve your client experience, improve your support structure and grow your business.

At this point many advisors think their planning is complete and simply stop – marking the beginning of the dust-covered business plan. But the next two steps will help ensure that doesn’t happen!

5.       Implement your initiatives. The implementation process begins with prioritizing your list and giving each one a completion or implementation date. Then develop an action plan for each one, outlining everything that will be done to make it happen.

6.      Create accountability. Just as you meet with your clients to review progress toward their goals, schedule time to review your own progress – both in terms of your list of initiatives as well as your quantitative goals. Progress on strategic initiatives should be reviewed weekly or semi-monthly, while quantitative goals can be measured on a quarterly basis.

Are you ready to implement your own dust-free business planning process? If you would like to discuss getting some help, send me an email and let’s schedule a time to talk!

Abundance or Scarcity?

A guest post by Adam Kornegay

I once had a co-worker who lived in one of those neighborhoods where everyone went all-out for holidays.  One year, she invited me over to help pass out Halloween candy.  When I got there, I learned that she had bought 25 bags of candy!

When the first kids arrived, I grabbed a handful to give to each of them.  Immediately I was chastised, “One piece per kid, Adam!”  I couldn’t believe it.  We had over 450 pieces of candy. Just one?  While I was concerned that there was too much candy, she was worried that there wasn’t enough.

How do you look at life? Do you believe that riches are all around us? Do you believe that new opportunities lie on every corner and in every conversation?  If so, then you have an abundance mentality.

Or do you have a mentality of scarcity where ideal clients are few and far between and are only found through extensive marketing and hours of hard work?

In either case, your beliefs can have a profound effect on your behavior.

Just like you, clients can also have an abundance mentality or a scarcity mentality.

A client who has an abundance mentality:
- takes losses in stride, believing that success will come again
- is comfortable with the idea that with risk comes reward
- may have unrealistic return expectations based on previous boom markets
- may lack discipline in spending habits and take excessive withdrawals in retirement

When working with a client who has an abundance mentality, it is important to match their optimism for the future but you can balance it with a “just in case…” approach.  Here’s an example: “I agree with you that emerging markets will provide the biggest growth opportunities over the next 10 years, but just in case it takes longer to get there than we think, let’s make sure we keep your allocation in line with our financial plan’s recommendations.”

A client who has a scarcity mentality:
- may have a difficult time with losses
- may have been influenced by habits developed during the Great Depression
- may be very price and value conscious

Clients who have a scarcity mentality need reassurance and careful redirection: “Yes, stocks can be volatile in the short-term but your portfolio needs to include stocks so your retirement money will grow even in periods of inflation.”

Are you a believer in abundance or scarcity?  More importantly, what do your clients believe?

By the way, we ran out of candy!

Ride for Your Brand

Recently I met with an advisory practice from the middle of Kansas. The principal advisor is a native Kansan who lives on a ranch outside his town. He and his sons compete every year in rodeo calf-roping.

His vision for his advisory business is to plant offices across the state. As we began to discuss his branding, how he wants to position his firm with clients both now and in the future, he told me about something called the Code of the West, which was first written about in Zane Grey’s novel of that name in 1934.

The Code of the West never existed as a formalized, single set of rules, but the pioneers who settled the West knew that it was all about fairness, loyalty, hospitality and respect. While a cowboy might pay no attention at all to laws imposed by the government, the unwritten Code of the West was an entirely different matter.

The Kansas advisor decided that he wanted his practice to be known as a firm that believed in and upheld the standards of the Code of the West. If a client was referred to the firm, he wanted them to know that they would be treated fairly and honestly, that promises would be kept. He would hire only advisors who would “ride for the brand.” They would talk less and say more. They would take pride in what they did and know where to draw the line, all part of the culture of the Code of the West.

John Wayne is quoted as having said, “A man’s got to have a code, a creed to live by, no matter his job.” Particularly in times of volatility and uncertainty in the economic and political world, clients want to know that their advisor believes something, stands for something, and is willing to “ride for the brand.”

Wherever you may live and work with clients, do they know what you believe, what you stand for, what line you are unwilling to cross?

Google “Code of the West.” You will find plenty of lists describing various versions of the Code. No doubt you will smile at some of them. Others might give you ideas for concepts you want to incorporate as you develop your own belief system, your creed for running your business, what you want your brand to represent. Make it a brand worth riding for.

Helping Clients Prepare for the Unexpected

As I noted last week, there’s nothing like going back to your hometown to remind you about how things…and people…change, sometimes in unexpected ways.

There has been much emphasis in our industry in recent years on planning – investment planning, financial planning, life planning, legacy planning. All are valuable to clients as we are long past the days when life expectancies were short, defined benefit plans the norm, and simple wills took care of most estates.

In all the time spent on helping clients plan for what they want their future to look like, how much time do we really spend helping them prepare for the unforeseen?

Some of these unexpected events have broad, “black swan” impact – the events of 9/11, the technology and real estate booms and busts, and the “great recession” of the past several years. Some are more personal – layoffs, divorces, deaths and other individual and family crises.

This week marks the 12^th anniversary of my son’s death, the result of a brain injury from an auto accident. Who expects to outlive their child or that an evening out with friends would end in a tragic accident? In my conversations and correspondence with high school classmates, I heard similar stories of crisis and pain.

So, no matter how well we help our clients plan for their future, isn’t there more we can do to help them to think about and prepare for the unexpected, what could happen to derail their plans?

Then, the next time the markets collapse, or inflation spikes, or major illness strikes, or the family breadwinner dies suddenly, the advisor would be ready to respond, “Remember our conversation about this possibility? Remember the precautions we took? Remember how we prepared to be able to weather this storm?”

Don’t the best advisors make a list of potential “unexpected” risks, talk with their clients about what could happen and then help them prepare for that possibility?

Shouldn’t clients expect their advisors to help them prepare for the unexpected?

Note: If you would like a copy of my checklist “Preparing for the Unexpected,” send an email to susan@pathfinderadvisor.com.