Month: October 2017

In my line of work at IFP, I often have to build relationships with some unfamiliar faces. This means I’m constantly breaking out of my comfort zone, having some off-topic discussions, and turning those conversations into fruitful business arrangements. There’s no secret sauce or some mystical influence I have over other individuals – it’s just me and my decades of experience as a financial professional.

Whether you can offer the other person a new concept, strategy, or the keys to help unlock their hopes and dreams, a genuine relationship is the spark that ignites that fire.

Humanizing the Professional

If you initially communicate through email with an individual, don’t take their initial rigid speech to heart. Most people sound a bit mechanical when they type, which is simply a product of people meticulously picking apart their own writing before sending off a professional communication. We all do it – don’t overthink their overthinking.

Remember, you’re just trying to get a face-to-face conversation rolling as quickly as possible.

When you finally get that in-person opportunity, treat the person sitting behind the desk as a human being. They have their own dreams, aspirations, and business goals. Before throwing them some hard sell technique you learned in business school, slow down, gauge their personality, and get a feel for their beliefs. This helps later when you need to find common ground that will act as a catalyst to kick start your relationship.

Be Personable

Just as you can acknowledge them as a living, breathing person, you need to be one as well. While you should respect their position as a professional, a close relationship can only make your life easier. This closeness will allow you to openly communicate with them as issues or opportunities arise, potentially enabling you to more easily reach a reasonable and productive conclusion.

Sharing Common Goals

Without a common business goal, there’s no point to a professional relationship. Now, before you call up that contact you didn’t click with and burn the bridge, know that each connection established is a possible opportunity. Even if it doesn’t work out with that person, someone in their network might be looking for a financial advisor. Add that old connection on LinkedIn, ask them how their kids are doing from time to time and stay engaged.

As long as you find professionals that share your values and/or business goals, it’s worth staying connected.

Schedule Some Time

Should you start working together, it’s important to spend time with them on a regular basis. Whether they accept your offers or not, the gesture does not go unnoticed.

Be Helpful…But Not Too Helpful

If you’re like me, I naturally enjoy helping people. While this can help build a stronger bond with stakeholders in your new environment, people can take advantage of your good will. Financial advising is also about getting paid for your advice, so next time they want you to look over their entire financial situation, you might consider telling them to make an appointment.

Dealing with Difficult People

I know I’ve focused mostly on the scenario in which you’re universally accepted into the new workplace with open arms so far, so let’s look into the opposite scenario. Sometimes professionals don’t want friends. Sometimes it’s only about the money and passion for their job is a distant second.

In these scenario, it’s still possible to build a genuine relationship, but it’s one based purely on gaining a competitive advantage or generating more revenue. Our ultimate goal is to generate more business, so it’s nothing to be upset about. In fact, certain personalities might find this sort of arrangement far more appealing and no one can fault you for that.

Closing Thoughts

Every business relationship requires attention in one way or another, but as we adapt to changes in the financial services industry, it’s more important than ever to network. While it might be uncomfortable at first, being charismatic can help you achieve greater success than you have ever known. Also, as my old boss used to say, “The worst they can say is no.”

If you have been in the industry long enough, you’ve heard horror stories about advisors changing firms or breaking away, only to lose a majority of their clients. This story is the same across numerous channels, including wirehouse, independent, and insurance-based or bank broker-dealer-affiliated advisors. These stories are sometimes fabricated by branch managers to scare everyone straight (I am thinking of my former wirehouse!) and sometimes they are true.

Exploring the Truths

Let’s start by exploring the cases that are true. It’s typically obvious why this happens. An advisor is not happy with their practice’s growth and often is pressured by their firm to produce more. They may react by moving to a new firm that has a polished recruiting strategy that seems far more attractive. However, the advisor has never been proactive and plateaued early on in their career.

They got here by not building or adopting a system to more efficiently manage their clients and practice. Clients were never segmented and called or asked to meet on a monthly, quarterly, or annual basis. These clients typically were the ones initiating the conversation, which often put the advisor on their back foot. Without an established relationship, the inevitable death spiral will occur when switching firms.

Why does this happen?

Clients choose to work with the advisor, not with the firm that he or she is affiliated with. Wirehouse advisors: you know it’s true. Every individual is compelled to look out for number one and, should they receive poor service, they will make a change. So, when advisors make the change for a ‘new beginning’ or ‘upgraded platform’, clients exit stage left.

A Cautionary Tale

When consulting with advisors during a transition we always ask, “What does your client service model look like?” We tell them that they don’t need to answer the question to anyone but themselves, but the answer will affect client retention. There are other factors that impact client retention during a transition, but there is no other single factor that has a more profound negative or positive effect than how an advisor services their clients. Period.

We recently counseled an advisor who was moving and one week prior to the transition date, he asked me if it would be okay for him to speak with his compliance officer. According to the advisor, this individual was trusted and held in very high regard. He thought the compliance officer could make his outgoing departure smooth. For the record, we strongly advised him not to share this information and in the end against his better judgment, he told his secret. Luckily for him, this particular incident only resulted in one lost pay period of fees and commissions, but it’s still not an easy pill to swallow. However, it could have been much worse. Outside of your spouse/partner and attorney (and new firm!) never tell anyone about your move, as it could result in immediate termination.

Retention Rates Remain High

The majority of advisors do subscribe to tremendously effective service models and we often see client or asset retention as high as 85% or higher. This retention begins years before an advisor is even thinking of changing firms, as the advisor’s business practices help cater to clients for life. They become a trusted financial consultant and occasional poor investment performance results don’t cast a shadow on the relationship. Having taken my own book of business through a firm change, and then helping dozens of advisors and teams make a move, we consistently see client retention between 70% and 90% or higher. More often than not, the lower retention rate is by design as they shed clients they don’t want.

A Tale of Success

One of my favorite stories, told so much more eloquently than I can, comes from an advisor in Ohio. He left a wirehouse to affiliate with an independent broker/dealer. Let’s call him John. So, John segmented his book A through D, as so many advisors do. Upon resigning, his ‘A’ clients received nothing short of white glove service to ensure retention. The ‘B’ group received very close to the same level of attention, as they were also very important to his business. John mailed one letter to his ‘C’ clients and if they did not respond to the letter, he let them go. His ‘D’ clients (the ones he definitely didn’t want) were never notified of his move! The day after he moved firms, John said he was more profitable than ever and, more importantly, he was now running a highly efficient practice.

Final Thoughts

At the end of the day, Advisors should focus on a better experience for their clients and the retention will follow. As long as you are maintaining a close relationship with them, clients will be loyal to you, rather than the firm you are affiliated with. Whether you stay with your current firm or not, client happiness is the core metric that dictates an advisor’s success or failure. Never forget that.