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Careful Language Wins Clients; Wall Street Feels Political Heat: January Research—Slideshow

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The January issue of Research magazine offers cutting-edge advice on communicating with clients and prospects, and assesses the tough election-year political climate facing the financial services industry.

“The Power of Words,” the cover story by Jane Wollman Rusoff, draws on the thinking of communication experts Raphael Lapin, Michael Maslansky and Frank Luntz, among others, to aid financial advisors in navigating conversations with current and prospective clients. “Advisors,” warns Lapin, “may be the experts in technical financial jargon, but they still aren’t the experts in working with and managing clients on a human level.”

Choose your words carefully, the experts advise. For instance, in Luntz’s view, “imagine” is a powerful word that helps people consider not only their goals but how an advisor can help achieve them. No less important than knowing what to say is knowing how to listen. “Pick up on something the client says or their body language,” Luntz suggests.

Political Monitor, a column analyzing national trends and issues of particular relevance to financial advisors, debuts with “Target: Wall Street,” an analysis of the implications of public disgruntlement with the financial sector, including the Occupy Wall Street movement. Other topics covered in the issue range from helping clients deal with health care costs to how a medieval mathematician helped shape modern retirement planning.

Click through the following slides to preview the January issue of Research.

The Power of Words

In this cover story, Contributing Editor Jane Wollman Rusoff taps the knowledge of leading consultants on communications to explore the crucial role of language and conversation in getting and retaining clients.

“The specific words you use, as well as your look, body language and tone of voice combine to create a perception as someone clients can or cannot trust,” writes Rusoff.

The experts she talks with include Frank Luntz, the noted political analyst; Michael Maslansky, Luntz’s former partner, who consults for financial institutions and other clients; and Raphael Lapin, Harvard-trained communications expert and contributor to Research magazine.

Careful communication is notably important in dealing with an irate client. “You need to do some very good active listening and acknowledge what they’re upset about — but without agreeing with them,” says Lapin. “Understand and empathize: stand over to their side and walk along with them so there are limits to how much they can continue pushing. Don’t speak condescendingly. Ask clarifying questions. Eventually, the negative energy will dissipate, and you can bring the discussion back to problem-solving.”

Target: Wall Street

Political Monitor, a new column, debuts with an assessment by Senior Editor Kenneth Silber of the political ramifications of current popular discontent with the financial services industry.

“The question,” writes Silber, “is not whether the financial industry will encounter a volatile and difficult political climate this election year. The question is just how tough that climate will be.”

The Occupy Wall Street movement has raised the visibility of public disgruntlement with the financial sector. However, by late autumn, polls showed eroding support for the movement. Looking at an agenda sketched out by Kalle Lasn and Micah White, editors of the magazine Adbusters and key figures in getting the Occupy movement started, Silber questions whether measures such as a financial transactions tax are likely to win broad support.

Still, disgruntlement toward Wall Street stretches across the politcal spectrum. One idea that might gain backers on left and right, Silber contends, was sketched out by GOP presidential hopeful Jon Huntsman: to downsize the largest financial institutions to remove their Too Big To Fail status. For financial advisors, such a policy would mean the shakeout in the industry becomes even more intense, with layoffs at the biggest firms and a scramble for assets elsewhere.

 Health Care Is the New Wealth Care

Contributing Editor Ellen Uzelac reports on a trend among innovative advisors to develop expertise, either in-house or outsourced, to help clients grapple with Medicare and health costs in general.

This subject has become increasingly pressing as the oldest baby boomers have moved into retirement age. “Health care expenses in retirement can run hundreds of thousands of dollars — not exactly pocket change,” writes Uzelac.

As Adam Koos, president of Libertas Wealth Management Group in Dublin, Ohio, observes: “Five years ago, I’d be the one bringing it up in conversation as we talk about expenses. Now, I find clients are bringing it up before we even get to that line item. There’s a sense of urgency around this that didn’t exist before.”

Accordingly, advisors have become increasingly involved in matters such as helping clients vet retirement communities and pick insurance plans. That can mean collecting health information about clients so as to help them make decisions. For example, if a client has a family history of cancer, an advisor who knows that can steer that person away from an insurance policy that has a high deductible for chemotherapy.

The Market Really Is More Volatile Today

Writer Gerald Burstyn pulls together evidence supporting what many intuitively believe: that markets have become more volatile.

Moreover, he takes a wide-ranging look at strategies for dealing with such choppy markets. These include managed futures funds arbitrage, commodity trend indexes and stakes in currencies and real estate.

For example, Less Antman, founder of Simply Rich, a financial planning and asset management firm in California, suggests using commodity trend indexes as a hedge against volatility and weakness in the equity market.

Bob Southward, investment industry veteran and principal at Greenrock Research, advises clients to focus their equity holdings on dividend-paying stocks, reduce bond allocations and consider alternative investments such as a managed futures fund.

“The water is turbulent,” writes Burstyn. “Swim at your own risk.”

The Debt Retirees Owe to Fibonacci

Adapted from Moshe Milevsky’s new book The 7 Most Important Equations for Your Retirement, the January Annuity Analytics column focuses on the extraordinary achievement of the medieval mathematician Leonardo Fibonacci in developing techniques that are still relevant centuries later to solving complicated questions involving interest rates.

For example, Fibonacci presented the puzzle of a business traveler who doubles his money in a couple of towns before returning home while also spending a set amount in each place. “With a little bit of imagination,” writes Milevsky, “you can translate Fibonacci’s 800 year-old traveler into a modern day retiree who starts retirement with an unknown sum of money.”

As Milevsky explains, “Fibonacci’s genius was that he broke-down complicated compound interest calculations — taking place across different periods of time — by bringing the cash flows all back to one focal point in time and manipulating those values on the same date. He eliminated the messy time dimension.”

 The Very Best

Sales Seminar columnist Bill Good extracts key lessons from his annual Best Practices survey. His number crunching highlights the practices of “Winners” who have more than $200 million in assets under management, and those of “Not Winners” who have been advisors for a decade-plus yet have less than $50 million in AUM.

One lesson Good propounds is that the type of firm matters, as an advisor is more likely to reach a goal of $200 million AUM at a large national firm. Another is that having a solid support team matters, as advisors who fail to build up staff at an early stage are unlikely to generate a lot of assets later.

Another lesson is one that runs against much current thinking. “Hardly the day goes by that I don’t hear that advisors should limit the size of their books. The usual number is 100 families,” writes Good. His numbers suggest that having a large clientele is an important method for building up AUM. Over half of his Winners have 300 clients or more. Exhorts Good: “Never stop prospecting!”

Alone With Your Thoughts

Closing Bell columnist Bill Miller lets his mind wander through the lonely side of life as a financial advisor. When a wholesaler buddy of his announces a move to become a rep, Miller wonders if his friend knows the full implications.

“Here’s a guy who, as a wholesaler, was never in an office for more than an hour at a time, and now he’s going to sit in an office all day long? Who’s buying him lunch every day?” the contemplative columnist wonders.

Miller remembers his own time as an advisor in a small Ohio town: “I finally understood why I went to lunch with any wholesaler who would drive down Route 67. I am secure enough in my manhood to admit, 20 plus years later, I had no idea what any of them were talking about. It just beat sitting around the office all day by myself.”

View the complete table of contents for the January issue of Research.


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