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Practice Management > Building Your Business

Stand By Me

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2008 ISN’T AS far away as it seems–especially if, like many advisors, you’re beginning to think about your business plan for next year. How many new clients will you bring in? How much will you pay your support staff? Then there’s an often-overlooked question that could have an even larger impact on your bottom line: how will you keep current clients and staffers from leaving?

I’ve read that the cost of replacing customers can be five to 10 times as much as it would cost to retain them, and that you can easily spend one-third of a skilled employee’s annual salary trying to find a replacement. With that in mind, consider how these ideas for strengthening relationships might help you sustain the loyalty of your clients and fellow workers.

Q: I’ve just gone through my third new hire in three years. All these junior planners have had great credentials, and made a good impression in quarterly client meetings. But when they resigned, they all complained about too much busy work and not enough face time with our most important clients. What’s going on here?

A: The feedback you’ve been getting indicates that your new employees needed and wanted to feel more valued, more intellectually and emotionally stimulated, and more in the loop. Although you may not have been ready or willing for them to take on any of your most valuable clients, there are probably ways you can more fully engage other new hires in the future.

For example, you may need to take more time to learn about the hopes and expectations they bring to their work. Maybe you should be mentoring them more actively. Do you have group meetings where their input is appreciated, or individual meetings to track how things are going? Should you be trusting them with more challenging tasks, so they feel their skills are growing and developing under your tutelage? Are you giving them enough praise when they do great work?

Be sure to ask departing staffers for suggestions about what you could be doing differently. By requesting their comments in a thoughtful and non-defensive way, you may end up with a slew of new ideas about how to establish better connections with new employees (and old-timers as well, I wager).

Openness to change may seem like a risk, but I hope you’ll consider taking these steps. They could help close the distance between your expectations and those of your new hires.

Q: I’ve recently lost a couple of good clients to a competitor whose experience, products, and pricing are similar to mine. As far as I can see, the only difference is that he’s a good schmoozer who often invites his clients to lunch or a game of golf. Don’t people value an advisor who tries to keep the relationship on a professional level, as I do?

A: An extroverted people person (or, as you say, a good schmoozer) can attract a certain kind of client–as your frustrating and ego-bruising experience shows. However, for every client who wants to be engaged on a personal level with their financial advisor, I believe there are others who prefer more distance in their relationship.

To find out which kind of connection a new client wants, discuss this issue in your first meeting. What do they expect of you and your interactions with them? Do they want to keep the relationship strictly business, or would they value such extras as golf outings or appreciation dinners?

The other question is how much you’re willing to stretch your habitual mode of serving clients. Explore your own nature, your desires, fears, and resistances to decide which “schmoozy” activities would still meet your definition of professionalism and which would make you too uncomfortable. I believe that many successful financial professionals have learned how to strike a good balance between professionalism and more personal involvement.

If you just can’t see yourself inviting clients to lunch or competing with them in a round of golf, you may need to accept that you’ll seek a clientele who want a strictly business relationship with no frills or perks. Not that there’s anything wrong with that! You’ll just need to become more at peace with the notion that there are others who prefer a closer, more sociable connection.

Q: Even though I’ve always thought of myself as a good boss, I’m at the end of my rope with our newest employees. They want to immediately make as much money as I do, and show little respect for our firm’s culture of hard work. I’m ready to can them all and hire some grayhairs with a decent work ethic! How can I get them to accept my guidance instead of constantly challenging me?

A: If you’ve concluded that all young people are slackers, I suspect you’ll end up having a pleasant, comfortable company of older employees–who will all retire when you do, leaving your company unstaffed.

Let’s not throw out the baby with the bathwater. I recommend that you take more time to interview prospective hires. Ask these young folks about their past experience with teachers and coaches. Do they value working with older mentors? Do they have experience in working hard to make gradual progress toward a goal?

What they say, and how they say it, can help you choose new employees you enjoy mentoring and working with. In fact, these younger folks may even be able to teach you a few new tricks.

Q: A couple of years ago I hired an experienced planner and gave him a lot of freedom to set his own course. Several months later he quit, saying he didn’t feel he was being given enough direction to do a good job. When I hired his replacement, I gave her much closer supervision. Now she wants to leave, saying she feels micromanaged! These are both good people, and I feel like a failure as a manager. What should I be doing differently?

A: This frustrating experience is a lesson that different folks need different strokes when it comes to being supervised.

One way of finding out what best motivates a person is to ask whether he or she ever worked for an outstanding boss. If so, what was it about this manager that made the relationship so satisfying and successful? The answer may provide clues you can use to shape your own managerial style with this employee.

If you have a strong preference for a particular style, be sure to communicate it to new hires. Your honesty may encourage an openness between the two of you, which will help in evolving the mix of independence and supervisory involvement that works best for you both.

Remember, “hands-off” and “hands-on” are just two of the many ways to manage others. You can try a variety of management approaches with new employees, asking them for frequent feedback about whether they’re getting too much supervision or not enough. The key is for both parties to communicate their expectations upfront, and to evaluate the ongoing relationship in frequent follow-up sessions.

Q: When I started out in this business, my mentor, a well-respected financial advisor, told me that if I expected the best of people, they would strive to meet my expectations. But the other day, when I asked a junior planner to stay and finish revising a plan to be presented in the morning, she asked me to move the client presentation because she had a date that evening. I ended up working late myself to correct her mistakes. I’d hate to lose her, but this attitude really bothers me. How can I speak to her about it?

A: Do last-minute changes happen often in your office, or are they rare? If they’re a common occurrence, consider taking steps to ease what may be a pressure-cooker, crisis-driven atmosphere. Specifically, you may need to allow more time to review plans prepared by junior staffers, or set better boundaries with your clients so the work is not rushed.

If this truly was a rare exception, you and your junior planner need to talk about what to do if it happens again. In order for you both to move forward in a positive way, I think you should discuss it in a private meeting with her at a time when you’re not feeling stressed out.

It’s fair to tell her that you stayed late to revise her work, and what it cost you in terms of your own plans for the evening. If she truly didn’t understand how important the morning deadline was, apologize for not making it clearer and reiterate your expectations for client service.

Talking this out can lead to a mutually agreeable plan of action that lets you and your planner continue working well together. I hope you’ll discover that your mentor’s pearl of wisdom shines in this setting, after all.

Q: Whenever I have an opportunity to talk to clients of commission-based financial professionals, I stress the fiduciary responsibility and objectivity of fee-based planners like myself. Although these clients nod and agree that our model better represents their interests, they still keep working with their brokers. Is it inertia or misplaced loyalty? What’s your take on this?

A: Though you may have an excellent rational argument for your point of view, you are not taking into account these clients’ attachment to the advisors they’re currently using. Their resistance may be due in part to inertia, or it may be that they can’t just reject people they feel connected to. In any event, something about the collaboration must be working well for them.

So before you try to sell them on the benefits of your business model, ask about their relationship with their current advisor. Once they share with you the pros and cons of their situation, it may be easier to help them see the advantages of fee-based planning. While you may be tempted to strengthen your argument with scare stories, you’ll probably find that these have no effect on clients who feel attached to the professional they’ve been working with.

When clients or employees depart, ask yourself (and them) what you could have done differently or can do differently from now on. To build loyalty, use your empathetic communication skills to tune into their expectations and desires, while being aware of your own preferences, strengths, and limitations.

Remember, good relationships are based on more than money. When clients and co-workers feel that you truly value their strengths and are willing to help them develop their potential, you have an opportunity to build a bond that will resist stresses now and in the months to come.

Olivia Mellan, a speaker, coach, and business consultant, is the author with Sherry Christie of The Advisor’s Guide to Money Psychology, available through the Investment Advisor Bookstore at She also offers money psychology teleclasses. E-mail Olivia at [email protected].


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