Advisors today are all ginned up about risk. Trouble is—they shouldn’t be.
“We assume if we are excited about risk, our clients are. But when you talk to a client about risk, you may as well insert the word radioactivity. As an industry we’re a couple of years behind the investor mindset,” notes Scott West, managing director and co-founder of Invesco Van Kampen Consulting. “Advisors are making a huge mistake when they talk about risk. It’s like they’re all wearing bell bottoms. They’re from a bygone era.”
What do clients want to hear about instead? As West frames it: “Growth, baby.”
This fall, West’s consulting group will release a new research report on the language of risk. Early findings, according to West, suggest it will be a blockbuster. The takeaway: lose “risk” as your go-to conversation opener. Why? Clients want to be talked to in much more balanced terms.
“They want to know how I can maximize my earnings while minimizing my downside potential. That’s the magic formula, in that order,” says West, 52. “Stop leading with risk. Fear-based language can be paralyzing when used with investors. These folks just lost a decade of earnings. They want to know what you can do to help me get my monthly paycheck back.”
West, a self-described “broker of ideas,” has long recognized the power of words. Since he co-founded the Invesco Van Kampen Consulting Group in 1998, West and his colleagues have presented over 25 communications skills programs to more than 240,000 financial professionals worldwide. Even so, there is nothing about the enthusiastic West that appears at all tired.
Industry consultant Mitch Anthony calls West “a Spielberg” of the industry. “Scott will pick up on a germ of an idea that he knows is going to resonate with the masses of advisors. By the time he’s done with it, it’s like it went through a Hollywood studio,” says Anthony, who has collaborated with West on several books. “He’s got great instincts about what will play and what won’t, just like a producer. He has that something in his gut. He’s a big idea guy.”
One of West’s big ideas at the moment: the often overlooked boardroom presentation.
Advisors tend to spend a lot of time building their case to win new business, but when they enter the boardroom, West says, it is as if “they’ve taken the field with no equipment on.”
To find out precisely what prospects wish to hear in a boardroom presentation, Invesco Van Kampen Consulting surveyed 180 middle-size plan sponsors about how they want advisors to open the conversation, how they want the content communicated and how they want the conversation closed. The results are telling.
For starters, how you position yourself physically is critical. Most people today mix it up when they sit down for a presentation but the reality, according to West, is that it is an “us versus them” dynamic. So sit “intentionally,” he says, so that both parties can present in the most clear and organized fashion. “Sitting in a mishmash clouds who is who in terms of power positions and, from a practical standpoint, it kills sight lines,” he adds. West himself favors the Japanese construct with the most powerful person sitting in the center, fanning out to either side in decreasing levels of importance.
After testing a series of conversation openers, West’s consulting group settled on the “transitional opener” as the most effective. In that scenario, the team leader announces he or she will cover three specific points but first invites the prospects to identify what they are looking for from the presentation. In a “consultative close,” the lead advisor reviews the high points, then asks the prospects: “What do you believe are the next steps?”
“I’m finding more business is won or lost by your skill in the boardroom,” says West. “Long before you are in the room, you have to go through roles and make sure your relays are seamless. There’s also respect. When you are in a board meeting, you are evaluated as a team. The weakest link can kill an entire presentation.”
West admittedly has an unconventional perspective on just what it is that advisors do, starting with the maxim he lives by: “If you stick to the facts, the facts don’t stick.” The advisory business isn’t about conveying facts, according to West, it’s about persuasion.
“Successful persuasion is the transfer of confidence. If you can transfer confidence you have about a subject to somebody else, you’ll have a great run in this business,” says West. “This is also a business that is inextricably linked with emotion. It will never not be emotional. As an advisor, you have to tug at those emotions and acknowledge that people have an emotional attachment to money. Then you judicially, authentically and responsibly link your client’s emotions to the facts.”
Including emotion in the equation has had a positive impact on the advisors West counsels.
“As soon as you get in front of advisors, and tell them this, you can see the relief come across their faces. It’s like they have been liberated to allow themselves to think about emotion,” he adds.
“At the end of the day, advisors are in the transportation business. They’re in the business of transporting people from lives of insecurity and fear to lives of freedom and peace of mind. It’s not just about moving people mathematically from A to B, it’s helping them emotionally to enjoy the ride. It’s creating the experience of transportation. We really have to grasp this—or we’re missing the experience.”