Evolve Into A New Type Of Financial Advisor

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Many financial professionals are caught in a vicious downward spiral that robs them of potential income, personal satisfaction and self-confidence. This is a result of the way that many professionals were taught how to run their business. In order to break free from this downward spiral, you must first consider the problems you face everyday:

Free Consulting. Most financial professionals are giving away their time and wisdom in the hope of attracting new clients. Some even prepare estate plans, perform business analysis, conduct review meetings and provide ongoing counsel for free, expecting to sell a product and get paid on the back-end.

Commission Trap. When you dont get paid for time spent advising existing clients or delivering information to potential clients, then you need to find more clients to whom you can sell more products in order to make a living.

Each Jan. 1, you have to start all over because you have no retained value. You need to get at least as many new clients as you got the year before just to earn the same amount of money.

This problem is only further intensified by your financial success. The better salesperson you are–the more you earn in commissions each year–the deeper the hole you dig. Typically, the money that you are making is spent on upgraded lifestyle. If you take on particular lifestyle expenses during a good year, you relinquish yourself to making at least the same amount to cover those costs in the future. When you have to keep increasing your production you are simply multiplying the stress.

Overhead. Not only do you have to get new clients while also providing service to the existing ones, but you also have to pay for the ever-increasing costs of growing a business. Overhead doesnt just mean paying rent; it means paying for people power, professional services, and technology. Finding and paying good employees is expensive, plus you have to factor in employee turnover.

Performance Losses. When clients lose money in an investment you sold them, they get upset and frequently panic, wanting out of their investments, which can include variable annuities and variable life. Furthermore, they stop telling their friends about you. If part of your income is derived from asset-based fees, this revenue can plummet–from the combined loss of customers and loss of market value.

Commoditization. To the average investor, it appears that most financial professionals today provide the same basic menu of services. To intensify it, commercials and talk shows make it sound as if any person of normal intelligence should be able to manage their own portfolio as well as–if not better than–a professional.

Not only do many of the products you sell seem to be mere commodities, even the financial planning services you offer are viewed as a dime a dozen. Charles Schwab constantly is advertising the use of its free advisors, if youll just do your trading with Schwab. When you are forced to compete based on price alone, then you know you are not being viewed as anything but another in a long string of potential products. You are a commodity.

Overload. Financial professionals have an unbelievable amount of information to manage. You must stay informed regarding taxes and estate planning, while simultaneously monitoring the performance of literally every investment vehicle you have ever sold. In addition, you must attend conferences, research new products and keep abreast of industry trends. That doesnt leave much time for free consulting, marketing or servicing your existing clients.

Put all of these problems together and it becomes a vicious spiral downward into a never-ending trap–always feeling compelled to provide more free services, to more people, in the hope of selling more products to earn more commissions, to pay for your higher overhead. The worst part is where it finally leads. There is no pot of gold at the end of this rainbow. There is only stress, burnout and an overriding dread at the end of the day where youre left wondering, “Is this it?”

If you simply cant take it anymore, then something has to change in the way you are doing business.

To escape this spiral, you must evolve into a new kind of financial advisor.

Shift your role. Shifting your role helps you to shatter the problems of performance losses and commoditization. Change your role from being just another investment advisor or salesperson to being a financial coach. You will be someone who saves investors from being their own worst enemy when it comes to long-term investing. As a coach, it is your job to offer investors a process that lends peace of mind with the investing experience. To understand this evolutionary trend, lets examine the three roles that the financial professional traditionally has fulfilled:

(1) Implementor–”any person or thing serving as a means to an end.”

This part of the role involves offering a wide range of investment products, research and recommendations. The financial professional is the means by which the client achieves the end of owning investments. An implementor is product-based.

(2) Advisor–”someone who is given the power to give advice or an opinion.”

The advisor role includes preparation of analysis, written plans, estate tax, retirement, education and managing risk. An advisor is planning-based.

(3) Coach– “a person who instructs, trains and expands others capacity to take effective action.”

A coach is client-focused.

As a coach, you will manage client emotions and behavior, and provide a system of discipline for reaching lifelong financial and even personal goals. Having shifted from product-driven to planning-driven, you are now becoming relationship-driven.

Traditionally, these roles have occurred in the order listed above. Both the financial professional and the client are used to thinking of the financial professional as a salesperson (or implementor) first and as a trusted coach last. Shifting your role means moving the role of coach to the beginning of the process.

A coach works to establish a lifelong relationship from the start. A coach listens carefully for investor needs before offering products or solutions. (See chart.)

Only after the coaching role has been established does the relationship move into data analysis, financial planning and sale of products. In the past some of you become client coaches after doing all the planning and selling.

You should first assume the role of being your clients financial coach. With the emphasis on the use of money to achieve lifelong goals, investors fascination with performance losses decreases.

Coaching is a process, not a quick fix. The coaching process builds connection and trust, so clients feel secure moving forward. They trust that the financial professional has their best interest at heart, and clients now understand that the method is designed to help them achieve lifelong dreams, not merely earn a certain rate of return.

Therefore, the process of gathering money and signing paperwork is merely a necessary step in the process. Having reduced the level of this activity, it is easier to delegate it to your staff. Coaching creates an environment that is based on the relationship and the experience, rather than based on returns and ego.

As much as we might like to think it, it is not a simple matter to create a process that helps to build meaningful relationships with investors. It certainly isnt part of the academic or certification requirements for becoming a financial professional. You dont learn about coaching taking CLU, ChFC, or CFP classes.

Attract the Affluent. The reason most financial professionals dont have high-net-worth prospects lining up outside their door is because the planning and services they offer are merely average. Financial planning itself has become a commodity. When you feel pressured to compete based on price, it means you arent really unique–you are just another one of many.

So, how do you differentiate yourself? If you take a brutal look, you probably will be forced to admit that what you do is very similar to what every other financial professional in your town (and indeed, across the country) does. Most financial professionals mistakenly think theyre not getting high-net-worth clients simply because they dont have the right marketing system.

Instead of thinking of it as a “marketing problem,” consider that you might have an “experience problem.” Investors expect financial professionals to crunch numbers, plot data and sell based on logic because that is all they have ever known financial professionals to do. But that doesnt mean that is all we can do, nor does it mean that that is what an investor really wants.

Financial professionals have a unique opportunity to impact the quality of peoples lives on a very deep, meaningful level. When it comes to investing, today your clients want an experience that ultimately leads to “peace of mind.” To differentiate yourself, what you need to do is offer a meaningful, life altering experience that absolutely wows your clients.

You must create an awesome, engaging investing experience like nothing the investor has ever experienced before. When you do this, then your satisfied, existing clients will be compelled to introduce you to friends and family. Create a system that makes it easy for your clients to do exactly that.

This may be a total departure from anything you have even considered before. How do you go about it? The secret is to give investors what they really want, peace of mind about money.

All the pie charts, graphs and data in the world will never help them achieve that. But you “coaching” them to discover their true purpose for money and define their future goals can begin to do so.

To accomplish this, you need a clear, defined coaching experience. It is an entirely different approach, but the ultimate result is clients who are so happy with the investing process that they cannot help but tell their friends about you and what you do.

Your Game Plan. To take on the mantle of being a coach to your clients, not just be a salesman, planner or advisor, there are several steps for you to take:

1. Learn more about coaching. For example, you could join one of the coaching associations and read their literature. There are a number of books on coaching, some good, others just promotion for the authors.

2. Start being coached. There are many coaching programs available, and you probably are familiar with some. You might also hire a personal coach who would be working just with you. You may want to consider working with one that specializes in the financial services industry.

3. Modify your marketing materials. This includes your brochure, Web site and stationery. You might even adopt a coaching mission statement, like “Coaching Retirees to Economic Abundance.”

4. Decide how to charge. You will need to decide what to charge, when to charge (up front, of course) and how to receive these fees. For example, does this constitute investment advice and must it be processed through your broker-dealers RIA?

5. Develop a timetable. You must have specific dates for how you are going to implement this evolution in your practice. These must be real dates that you enforce on yourself.

6. Work your plan. You have to follow through. One of the best ways is to involve your most important staff person, or your spouse, to help hold you accountable.

When you create a truly awesome, engaging lifelong investing experience for investors, you transcend market volatility or short-term fears. By helping your clients experience peace of mind about money, you remove yourself from the vicious spiral forever.

is CEO & president of Abundance Technologies Inc., Cincinnati, Ohio. He can be reached at markm@maa.com. This is an abridged version of a presentation he gave at the MDRT meeting in Las Vegas.


Reproduced from National Underwriter Life & Health/Financial Services Edition, June 30, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.