A fellow with whom I am acquainted, a married man in his 40s, has just retired after a few years as a broker. Regrettably, the reason for his retirement is not the fabulous riches he accumulated at a young age, but the rather more common problem in this difficult industry: He just didn’t make it. He couldn’t generate enough business. He’s now training to be a therapist.
Even advisors who have managed to build a sustainable business can sympathize with this unlucky fellow’s plight. We know how tough business is these days; we’ve all stared down the abyss. Most of us have our own fiscal cliffs to contend with, if for no other reason than that our clients from whom our revenue comes are facing theirs.
Indeed, the business environment in 2013 is likely to be challenging. Even if we manage to dodge a new recession, we are entering a period of sustained slower growth. But don’t let grim statistics deter you. While the economy and the industry can support fewer financial advisors, you can be one of the myriad successful ones. It’s a new year, filled with new opportunities. And if you are finding business slow, perhaps all you need is to make some business resolutions and stick to them to turn things around.
The start of any new year, of course, is famous above all for new year’s resolutions–an annual ritual of setting goals whose ultimate failure rate is an abysmal 88%, according to one comprehensive study of 3,000 people.
Whether the goal is to lose weight, get out of debt or learn a foreign language, the trouble people run into is not an inability to frame a worthy goal, it’s the ease of getting out of it.
We all make executive decisions multiple times every day. But, executive that you are, you can just as easily reverse that decision. Your goal may be to lose weight, but when staring at the Krispy Kreme donuts your colleague brought to the office, you may exercise your sovereign authority to suspend your rules, whatever they were.
Once you make an exception, it is far easier to make similar ones and soon we find we’re back in the same old rut.
The key to achieving a worthy goal is to make a commitment, not a decision. A commitment is a resolution that involves others, which is why it is painful to break.
If your not showing up at the gym each morning means your work-out buddy won’t have you to spot him when he’s on the bench press, that means you let him down. So you’ll be there.
Soldiers whose instincts might prompt them to flee often display the greatest bravery when they’re protecting their comrade in arms.
If you and your spouse each committed to a single dessert a day, you’re far likelier to hold off on that donut at the office.
Advisors can apply the commitment principle in a number of different areas. If you’re having trouble bringing in new clients and find that you’re usually quick to give up calling on prospects, make a commitment to more effective prospecting in the new year.
Tell your business partner, if you have one, that you will mutually commit to making an agreed number of contacts each day. One of the key reasons advisory teams tend to outperform is because of the feeling of mutual accountability.
If you’re a sole proprietor, frame your commitment such that a failure to keep up prospecting will be letting your spouse down: “Business is insufficient to meet our family’s needs. We need 10 sizable new clients this year. I will therefore reach out to five new prospects each day so our kids can attend the schools we think best for them.”
While bringing in new business is a key to growth, keeping your current clients happy is often even more essential. How to do it? Make a commitment to them. Make your first meeting of the year with each of them a time to set not new year’s resolutions but new year’s commitments.
Behavioral finance experts have often stated that the advisor’s greatest role is keeping their clients from making disastrous mistakes such as panic selling and euphoric buying. As Professor Meir Statman said in an interview last year with Research magazine:
“Clients are their own worst enemies. They come to advisors to tell them when to buy and when to sell, and what to buy and what to sell. But that’s not what advisors can do–period. Advisors cannot beat the market. But they can prevent clients from doing really stupid things. If advisors have that kind of conversation with clients, both would benefit.”
Precisely. Advisors can therefore most help their clients by committing to them. Clients are far likelier to pare down debt, limit unnecessary expenditures and increase savings with the active planning and support of a professional financial advisor to whom they can feel some sense of accountability.
Saying you want to lose 10 pounds cannot be compared with following your doctor’s weight-loss plan through frequent check-ups meant to see the patient lose the weight and keep it off.
The commitment principle can be applied to any and all aspects of the business. Want to increase your competitive edge and knowledge base through advanced training? Sign up to get a certified financial planner or retirement management analyst designation–then meet weekly with a study partner to review what you’ve learned and prepare for exams.
Many advisors seize on the exigencies of work and family life as an excuse to drop out of continuing education programs. But just as clients are likelier to meet their goals through regular meetings with you, so too are you likelier to realize your certification goals by having a learning partner you want to help (and to whom you don’t want to appear inadequate).
With committed prospecting, client service and continuing learning, your practice should prosper, despite the tough economy, in the year ahead, perhaps even affording you the choice of retiring early–on a voluntary basis, unlike the hapless broker who was unable to succeed. But chances are you just won’t want to even if you could. That’s what commitment really means.