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Why Helping Your Clients Know Their Number is an Old School Approach

Have you ever had a client tell you their number? You know, the net worth number that will make them happy. Or that number they ask you to calculate so theyll know theyll be okay?

Focusing on this number is outdated, a mistake and I contend will actually hurt someones chances of reaching their long term goals. Heres why:

You are encouraging your client to focus on the wrong thing. When someone focuses on a future number they arent focusing on what they need to do to get there. Unless they are planning for a short term liquidity event, such as selling a business or winning the lottery, having a big number in their head doesnt do anything to move them toward the goal.

Helping Clients Know Their Number is an Old School ApproachClients may very well use this number to gauge their progress. One of the positive impacts of goals is that they give us a target to move towards. One of the negatives is that when we dont hit them we feel as if weve failed. When we put our attention on missing a goal, our energy is on the failing as opposed to the achieving of the goal.? For example, if your goal is to drive to Denver and you hit a detour and find yourself in Birmingham it doesnt get you to Denver any more quickly by feeling badly youre in Alabama. Instead, if you get a map or use your GPS to guide you to your preferred destination youll have a much easier time actually getting there.

In his Psychology Today blog Ray Williams surveys various research articles looking at how goal setting doesnt work. He quotes L.A. King and C.M. Burton in an article entitled, The Hazards of Goal Pursuit, for the American Psychological Association. They argue that goals should be used only in the narrowest of circumstances: “The optimally striving individual ought to endeavor to achieve and approach goals that only slightly implicate the self; that are only moderately important, fairly easy, and moderately abstract; that do not conflict with each other, and that concern the accomplishment of something other than financial gain.”

Williams continues:? There is an addiction in our culture to getting more, the going for the goals hype is disconnected from peoples’ authentic selves, and their values.there are psychological manifestations of not achieving goals that may be more damaging that not having any goals at all. The process sets up desires that are removed from everyday reality. Whenever we desire things that we don’t have, we set our brain’s nervous system to produce negative emotions. Second, highly aspirational goals require us to develop new competencies, some of which may be beyond current capabilities. As we develop these competencies, we are likely to experience failures, which then become de-motivational. Thirdly, goal setting sets up an either-or polarity of success. The only true measure can either be 100% attainment or perfection, or 99% and less, which is failure. We can then excessively focus on the missing or incomplete part of our efforts, ignoring the successful parts. Fourthly, goal setting doesn’t take into account random forces of chance. You can’t control all the environmental variables to guarantee 100% success.

If youre not buying the danger of goal setting argument, then consider that making the number the goal is the wrong goal. People think that having a money goal will motivate them to achieve it. Actually, they are focusing on the wrong incentive. People may think they are motivated by money or advisors may think clients are, but really people are motivated by what they money will do for them. The money might help them leave a job they hate, pursue a hobby they enjoy, give to causes they believe in, etc.

Build better relationships with clients and do a better job supporting them in getting to where they want to go.The number is a meaningless moving target. I had a client who told me at our first meeting that his number was $5,000,000. When he got to $5 million he said, Oh, I guess that number doesnt really make me feel like Im there. I think its really $10 million that would have me feeling okay. Guess what, $100 million might not make him feel okay. The feeling of security or knowing that well be okay isnt typically related to the number, but rather our beliefs about what okay is.

As advisors, many of us create financial plans for our clients, run projections, make assumptions etc. We help our clients create a road map for their financial futures. Anyone who has been in business over the past ten years knows that our projections are just that, projections. The world often changes in ways we cant anticipate. What we are really doing for our clients by creating a financial plan is to provide them with a plan that satisfies their logical minds and really serves to ease their concerns about the future. When we can calm our clients worries we help them to make much better decisions with their money.

There are real benefits from the financial planning process. As advisors we need to expand our views about all the benefits a plan provides. When we move past the left brain logical benefits and expand our focus to the more right brain behavioral benefits well build better relationships with our clients and do a better job supporting them in getting to where they want to go.

As a 21st century advisor make sure you understand your clients well enough to know:

  • What they want their retirement to look and feel like.
  • The most important people in your clients lives and how they want to be involved with them in the future.
  • The causes important to your clients and what impact, if any, they would like to have on these causes.
  • How strong their internal barometer is for making adjustments in their financial lives based upon whats happening in the world.
  • What they really need from you to make solid financial decisions.

Helping clients to tap into their motivation behind their number will allow us to be much more effective in helping them get to where they want to go. People are motivated by avoiding pain and moving toward their passions. To succeed as an advisor in the coming years it will be crucial to expand the conversation from just the numbers to instead, focusing on intentions and passions. This is what it will take to truly move people closer to their desired outcomes.

Ellen Rogin, CPA, CFP
is the co-author of Great with Money: 6 Steps to Lifetime Success and Prosperity. She speaks and consults to the financial services industry on business building strategies and working successfully in the women’s market. To learn more and to sign up for Prosperity Tips visit www.ellenrogin.com.

White Paper: Blind Spots in the Financial Advice Process

Every financial advisory firm has a client planning process which it considers to be sound. However, it is likely that the process will have one or more key areas that are missing or are not being adequately executed with the appropriate systems.

In raising these blind spots we fully recognize that there is an inherent tension between enhancing client engagement, which boosts revenues, and compliance, which protects the business. Our recently released Blind Spots in the Financial Advice Process white paper serves to highlight these blind spots that your firm should be aware of, and then recommended actions to consider.behavioral finance, financial planning, blind spots, home office goals, client behavior, financial personality

Where are the blind-spots in your firms current advisory process causing this gap?

Read the Executive Summary to the White Paper

Download the Blind Spots in the Financial Advice Process White Paper

Discovering the Silent Killer

Indifference. Websters dictionary defines this word as lack of interest, concern or sympathy.

J.D. Powers and Associates just released the results of a survey that found 31% of financial advisors were indifferent about their work and have no strong attachment to their firms.? Without a connection to their firm, these advisors are likely to be open to discussions with competitors.

There is a silent killer lurking in the midst of our organizations. Could a third of your clients be classified as indifferent?

http://dnabehavior.com/Company%20Values%20Resize.jpgOne of the biggest challenges with identifying indifference is that we usually judge our clients through our own viewing lens.? That is not always objective. Or we point to our annual client surveys.? But there is a risk that you can have lots of data and not see what it is saying.

Indifference can translate into business risks.? The first is that the client will not stick to their financial plan and that will present problems for you in the form of difficult conversations and unrealized goals.? In addition, the client will not add money to their account or provide any referrals.? Finally, the client is open to conversations with other advisors and the ultimate risk is losing the entire relationship.

What can you do to combat the silent killer?? Start by asking a lot of questions to get beneath the surface of a client. Human differences are really the hidden obstacles in any relationship.? It takes time but you will uncover the behavior and emotions that lead to authentic engagement.? Next, be sure to adapt your communication style to that of your client. You might be excited about sharing all the market data when in reality your client is happy with the concrete, bottom line results. Finally, customize your products and services to your client.? A lengthy newsletter is not necessary to clients who prefer picture, graphs and bullet points.

All of these recommendations may seem small. But small changes produce big results.?? Keep in mind that it is in understanding behavior that leads to customer engagement.? When your clients are connecting with your firm at a deeper level, there is no room for indifference.

Learn how you can objectively uncover and navigate the different financial personalities of your clients by visiting the Financial DNA website.

Keys to Developing a Client-Centric Approach

If you don’t decide strongly for yourself the favorable outcome you want out of a client/advisor relationship, your success as an advisor will likely come from others’ definition of success.

In most cases those who ask for financial advice already know the answer. Often this is based on their instinct and seeking professional advice delivers not only a confirmation but probably a measure of confidence in terms of trusting their instincts.

The measure of a strong advisor client relationship lies not in the confirmation of things already known but whether or not the advisor has the skills to take the relationship to the next level.

Financial Planning, Financial Personality, Quality Life Planning, Perpetual Income

A primary responsibility of an advisor is to gain an understanding of where the client is going before deciding how to get them there. This level of connection begins the process of taking the relationship to the next level.

Investing time into understanding the journey clients are on can only be achieved if the advisor firstly understands how to communicate effectively with them. Communication is the key that unlocks closed relationships and makes a pathway for questions to be asked in a way that causes no offence and yet elicits answers that go to the heart of how a client wants to use their money.

  • what their drivers are
  • the plans they have for their lives and those of their family
  • their tolerance to risk

Perhaps more importantly such an approach opens the door to insights that inevitably allow the advisor opportunities to upsell in a non-threatening way.

Todays economic landscape is constantly evolving and as a result people are far more cautious about the advice they listen to. Clients are likely to seek advice from many sources but are far more likely to return to those whose advice is based on understanding their journey and knowing how to communicate effectively with them. This is the relationship that not only delivers success for the advisor but peace of mind for the client. A win win.

Visit the Financial DNA website to learn more about how you can develop a client-centric approach.

Skydiving

You dont need a parachute to skydive; you only need a parachute if you plan to skydive twice. Likewise, you dont need a good financial plan, you only need a good one if you plan to keep your wealth.Saving for wealth

Wall Street can create statistical white noise that makes everything so complicated, when in reality, wealth management is very simple ? its so simple as to be almost boring. Let me be clear, it isnt easy, but its simple.

My job can resemble a broken record because good advice doesnt change. Dont pay fixed bills with variable money, establish your perpetual cash flow stream, and create a healthy break glass in emergency stash that can greatly reduce the stress of unexpected financial hiccups. Once this is done, you can enjoy the ride because you have the tools to survive and skydive another day.

Read more from Rusty Holcombe on the Holcombe Financial Blog.

Superior Client Satisfaction

Superior Client Satisfaction – Delivered by Engagement through Collaboration

The success of every professional services firm is driven by the need to deliver consistently superior client experiences that result in high levels of client satisfaction.

High levels of client satisfaction lead to more dynamic growth rates, greater revenue, profitability, and business valuation, higher employee retention rates and performance and a much more positive business environment.

Professional services firms have undergone a series of major transformations over the past twenty years. In the 1980s, these firms were sales organizations and employees were hired to maximize sales volume and values. For those of us who were involved in business in the 1980s, you will recall some of the approaches we were taught ? overcoming objections, closing the sale, getting the next appointment, accelerating the sales cycle, and how to sell anything to anybody. Most approaches were based on the sales person being pitted against the client and the goal was to close the sale.

The past two decades saw a shift from selling to Collaborative Selling. Changing demographics and consumer attitudes has driven the change from focusing on the sale to focusing on the client’s wants, needs and preferences. Collaborative Selling is a new approach through which a professional utilizes a fact-finding approach to identify problems is followed by a presentation of solutions. Financial advisors present the best investment or wealth management solutions, insurance professionals present the best insurance or risk management solutions, accountants present the best taz planning solutions and estate attorneys present the best estate planning solutions.

The transition from selling to problem solving was really the first step in shifting the focus of the service professional from an adversarial approach to a client-centered approach. Today, some service professionals try to spend time understanding a clients wants, needs and preferences and then attempting to match problems with appropriate solutions. Some professionals are taking this to the next level ? true Collaboration.

Merriam-Websters Dictionary defines collaboration as to work jointly with others or together especially in an intellectual endeavor. True collaboration is established to lead to success for all parties involved. The three R’s of Collaboration – Transparency of Roles, Responsibilities and Rewards must be established and maintained in a collaborative team. Collaborators must completely understand the how to communicate with each other, the hard-wired tendencies, blind spots and learned behavior of fellow collaborators. Frequently professionals collaborate with multiple partners – business partners or spouses and the task becomes more complex. Each collaborator must understand how to best interact with each member of the collaborating team. Next, they must understand the goals, objectives, roles and responsibilities of each participating member.

A main driver of the shift to collaboration is changing demographics. Baby Boomers, who hold many of North Americas major jobs and a high percentage of wealth today, range in age from mid-forties to mid 60s in 2010. During the previous stages (Selling and Problem Solving), wealth was controlled by people born during the depression or during World War II. Baby Boomers are far more educated and knowledgeable than previous generations and have much different learned behavior. Research shows that significant financial events during a person’s childhood, up to the age of 15 years, will have significant lasting impacts on their financial attitudes regardless of the natural behavior. It is natural to assume that the first fifteen years was quite different for people born during a depression or war than those post war children. As a result of their early year experiences, earlier generations tend to abdicate responsibility to “knowledgeable” professionals whereas Baby Boomers tend to delegate and maintain control.

Collaboration is the Baby Boomers preferred style of interacting with professionals and enables both the client and the professional to be fully engaged together in the process. It is important for them to maintain control, work on their terms and to be completely understood by professionals they choose to work with. They are increasingly demanding that professionals collaborate with them to help them make good decisions.

This multi-step process enables professionals to achieve a deep understanding of their clients, wants, needs and preferences and to stage a client experience that will lead to mutual agreement on strategies and solutions. In this emerging model, The business goal isnt merely to delight customers; its to turn them into promoters ? customers who buy more and who actively refer friends and colleagues. (Fred Reichheld, The Ultimate Question ? Driving True Profits and True Growth)

I have been been assisting professional services firms to design winning client experiences and improve client satisfaction rates since 1998 and has teamed with leading international consulting firms to help professional services firms to make the transition to a more modern and effective Client Engagement Business Model delivered by Collaboration.

The Six Stage Client Satisfaction Process is called ENGAGE:

1. E – stablish the professional services team members communication preferences, natural behaviors and success strengths to improve personal and team performance.

2. N – ext open the lines of client communication. Identify client communication preferences to enable client/advisor collaboration and engagement.

3. G – ain agreement and buy-in of clients by discovery of goals, wants, needs and preference. Collaborate to establish a framework for a successful relationship.

4. A – ssess core life motivations and perspectives to establish a risk profile, goal-setting, results and interaction needs to determine how the client and professional can collaborate to make success and financial decisions.

5. G – enerate plans with the client to achieve the outcomes the client requires.

6. E – volve the program with clients as plans are implemented.

The result is the modern client is very satisfied, feels listened to and involved and in turn the professional service firms achieves their objectives of increased revenues and profitability and do so by a fully engaged collaboration process.