From the June 2009 issue of Wealth Manager Web • Subscribe!

June 1, 2009

Communicating with Clients

Regardless of the client profile they seek to serve, asset allocation strategies, aggregate AUM, or the organizational culture in which they operate, several common themes emerged from discussions I had with wealth managers from a variety of different firms, operating within a wide array of wealth management practice models. Advisors are drained by the daily exchanges with clients who are anxious and agitated. As one advisor put it, this market has brought "a trip to the boulevard of broken dreams for clients and advisors alike." Advisors are facing the challenge of maintaining credibility and a sense of self-worth in a profession that has been badly damaged. Add to all this the loss of personal net worth and income-generating opportunities advisors are facing (and in this they share the "boulevard" with their clients), and it is easy to understand the fear-based, negative mind set that has permeated the individual and collective psyche at many wealth management firms.

To persevere in these turbulent times and ultimately succeed by maintaining client relationships and even enhancing them is a real challenge for most advisors. To maintain a positive emotional state in the face of these challenges requires both the individual advisor and their firms to cultivate resilience.

What is 'resilience?'

In her article "How Resilience Works," published in the May 2002 Harvard Business Review, author Diane L. Coutu considers the question "What exactly is that quality of resilience that carries people through life?" Coutu goes on to assert: "Resilience is one of the great puzzles of human nature like creativity or religious instinct. But in sifting through the many research studies, I observed that resilient people possess three characteristics: A staunch acceptance of reality; a deep belief, often buttressed by strongly held values, that life is meaningful; and an uncanny ability to improvise. You can bounce back from hardship with one or two of these, but you will only be truly resilient with all three."

Executive coach Marilyn Puder-York, PhD, author of The Office Survival Guide (McGraw Hill, 2006), provides additional insight into "resilience" from her extensive work coaching and facilitating workshops for executives and advisors during turbulent times in their professional lives. "Resiliency encompasses the mindsets and behaviors required to successfully handle all levels of stress that get triggered by change, instability and trauma," she says. "Many attributes evident in resilient people come from their DNA, but a number of these qualities can also be developed, learned and practiced. The resilient individual is able to adapt and weather most of the turbulent circumstances that impact their lives."

Puder-York believes that "feeling fearful during abnormal times is a normal reaction. However, it is the ability to transform fear into a more positive form of anxiety that fuels one's motivation to survive and thrive that is the cornerstone of resiliency. Along with the ability to turn fear into a motivator is another important attribute: The ability to maintain an optimistic outlook." It's the mindset that says, when life gives you lemons--make lemonade! A resilient individual, while trying to survive the present, will also think creatively about the future--or, explains Puder-York, "they try to see the whole picture in a longer term and with peripheral vision. Those who possess resiliency can see beyond what is right in front of them. They are aware and can react to both opportunities and dangers across the periphery and seek to be positive as appropriate."

In the current environment, resilient professionals do not think or act from fear or denial, but instead approach problem solving with the benefit of this "peripheral" vision. In doing so they help themselves, their clients and even colleagues adapt and thrive in getting through turbulent times.

Training: An important tool

The concept of being resilient comes from the school of Positive Psychology developed by Martin Seligman, PhD, at the University of Pennsylvania. In his book Learned Optimism (Paperback, 1998), Seligman says Positive Psychology is a discipline that examines which behaviors make people perform at their best and how to be happy, balanced and most productive in the process. Studying these behaviors has helped management development specialists to design training that applies the tenets of Positive Psychology to the business practice of effectively building relationships--both with clients and with team members.

Scott Asalone and Jan Sparrow founded A&S Global Management Consulting (ASGMC) in Trenton, N.J. in 1999 after many years of working as senior executives at Merrill Lynch where they designed and delivered training and assessment programs for financial advisors. The two estimate that they have trained upward of 10,000 advisors over the course of their consulting careers working with clients such as Merrill Lynch, Smith Barney, UBS, Raymond James and AXA. The workshops they offer blend concepts derived from psychology--how to build resilience and project optimism--communication techniques and business strategies.

According to Asalone, co-author of Pathways to Greatness (Great Insights Press, Nov. 2008), "when financial advisors adapt a Positive Explanatory Style in communicating with clients, it allows clients to think more broadly and consider more possibilities. Clients become less reactive and more proactive." Getting clients out of a reactive, negative mindset is essential for helping them move forward and focus on what makes most sense given the present and future. The research and theory defining a "Positive Explanatory Style" is another concept to come out of Seligman's work. In The Journal of Abnormal Psychology (1978) vol. 87, Seligman says Explanatory Style refers to "the habitual way that an individual explains setbacks, failures, and successes."

Survival tools for turbulent times

A number of innovative training efforts are taking place throughout the industry. These programs share the common goal of helping the advisors at a given firm stay positive and focused as they deal with the heightened day-to-day demands of their job.

ASGMC offers another program that meets the needs of advisors navigating the current market environment in a workshop titled "Resilience: Learning the Psychological Skills of Success." According to the program description, "this highly interactive session will help advisors change their perspective about and reaction to current financial challenges by learning more about and honing their own resilience skills using a simple psychological process. This process, when practiced, allows advisors to confront difficult challenges, identify unique opportunities, and help their clients make decisions amidst difficulties."

At JPMorgan Chase, Pamela Lipps-Hendricks, PhD, head of training and development for the Global Wealth Management Division, is well aware of her firm's challenge in helping advisors deal with their clients to navigate these difficult markets. Lipps-Hendricks acknowledges that "many of our clients are very anxious--they want stability, not constant volatility. My team works with business management to educate our client-facing population on a variety of topical issues relating to markets, and best practices around relationship management." At JPMorgan Chase, advisors are able to access product specialists via daily regional conference calls who are able to discuss market events as they happen in real time in terms appropriate to share with clients. Michael Cembalest, chief investment officer, holds frequent "open calls" during which advisors offer up anecdotal scenarios from their daily client interactions. He then suggests thoughts and advice on how to best handle client issues. Finally, the company maintains what it terms "a culture of apprenticeship." In this model, junior and senior advisors are put into "partnering pairs" where the junior person will have ample opportunity to learn how to handle difficult conversations with clients from a more seasoned wealth manager. The approach is admittedly more holistic, but works well in a firm that places value on team-based learning.

The management development professionals who conduct this training and senior management at firms offering these programs agree that the opportunity to participate in these sessions is very helpful to financial professionals on the front lines. The chance to gain new insights into how best to handle working with their clients, and real-time guidance on how to put those insights into practice helps to motivate advisors. In a time that is unprecedented and very disheartening for many investors, a road map in the form of training and coaching for wealth managers who want to get themselves and their clients moving in a positive direction is the first turn off that "boulevard of broken dreams."

Robin J. Scheman is a management consultant to financial services firms on human resource issues.

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