January 18th, 2012 by Norm Trainor, The Covenant Group

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Spe­cial thanks to our client, Eric J. Miller, for pro­vid­ing the inspir­ing story included in this case study.

When we first met Stan Sum­mers he had just blown two sig­nif­i­cant busi­ness cases and was con­cerned about mak­ing the same mis­take with his other high-net worth prospects.

Stan had been an advi­sor for three years. Prior to that he had been a con­sul­tant at a large firm. Though suc­cess­ful as a con­sul­tant, he was attracted to the idea of being his own boss and set­ting his own income ceil­ing. Fur­ther­more, he knew he could bring an envi­able asset to his advi­sory busi­ness — a large net­work of busi­ness con­tacts. After two years, with ded­i­cated study and hard work, he had man­aged to grow a size­able clien­tele. But he knew that he’d only scratched the sur­face of his poten­tial. He had always known that through his net­work he could access some extremely afflu­ent indi­vid­u­als, but had decided not to approach them until he felt he was ready. A year ago, he felt the time had come.

He arranged an appoint­ment with the owner of a large import com­pany, a prospect worth over $30 mil­lion. He pro­gressed through a series of appoint­ments and even­tu­ally put together an insur­ance pack­age for $5 mil­lion, but then the case started to unravel. The client raised objec­tions Stan couldn’t respond to and the deal fiz­zled out. He found the loss dev­as­tat­ing, but soon opened another large case, only to find that fall through as well.

When we sat down, I asked Stan why he thought he’d lost the big cases. He admit­ted he’d felt a lit­tle out of his depth, didn’t know how to respond to the objec­tions, and lacked exper­tise.
“What’s your strat­egy for get­ting that exper­tise?” I asked.

“That’s why I called you.”

“Okay, with our help then, when do you think you could expect to develop the exper­tise you’ll need to close big cases?”

“Months, maybe years,” he answered.

“Can you afford to go years with­out approach­ing big clients?”

“No, but I can’t afford to go on blow­ing my chances. You only get one chance with these prospects.”

“You spent your first cou­ple of years ignor­ing large prospects because you weren’t ready,” I said. “In that time, some of those prospects were picked up as clients by other advi­sors. Prospects that are on your radar screen today might not be there tomor­row. You have a win­dow of oppor­tu­nity with some of these prospects, but you don’t know how large that win­dow is.”

“So it’s a catch-22,” Stan said, “What do you recommend?”

“I rec­om­mend you get the exper­tise to go on those big cases.”

“But when would I be ready?”

“Today, if you’re willing.”

“Will­ing to do what?”

“Play the Infi­nite Game.”

He looked perplexed.

“Most advi­sors play the Finite Game,” I said, “they work by them­selves, serv­ing their clients as soli­tary advisors.”

Stan said he didn’t like the idea of work­ing with other advi­sors and shar­ing com­mis­sions. Since he had the con­nec­tions, he felt the prospects were his alone.

“You’ve just expressed the mind­set of the Finite Game player. Peo­ple who play the Finite Game think that the oppor­tu­nity with cer­tain mar­kets or prospects is lim­ited, and that their best strat­egy is to ensure they get the ‘whole pie’. How­ever, the real­ity is far dif­fer­ent – the lim­its advi­sors per­ceive are often based on their own lim­i­ta­tions, not the lim­i­ta­tions of the mar­ket or the client. To get beyond your lim­i­ta­tions, you need to play the Infi­nite Game — you need to expand what you bring to your clients by work­ing with others.

“Let me give you the exam­ple from a client of mine, Eric J. Miller of the Miller Con­sult­ing Group. Eric is a large-case expert based out of New York. Another agent, Henry, had come to Eric for help on a case he was hav­ing trou­ble with. Henry had sold a $3-million insur­ance pol­icy with a $33,000 pre­mium to Vic­tor Win­ters, a wealthy entre­pre­neur. Henry had called Eric for help on the case when the sec­ond pre­mium was due, say­ing that Vic­tor was ‘chok­ing on the pre­mium.’ Henry had drafted a pro­posal to rewrite the insur­ance for a pre­mium of $18,000, almost half the orig­i­nal cost, think­ing that that would save the deal. When Eric and Henry went to see Vic­tor, Henry opened the meet­ing by refer­ring to Victor’s feel­ing the pain of the pre­mium costs. Vic­tor hotly denied that and clar­i­fied that he didn’t feel he was get­ting value for his money. Eric felt that Henry was about to bun­gle the whole deal and waded in. Eric began to talk about the value of the cov­er­age and said he had a pol­icy that rep­re­sented tremen­dous value with a pre­mium of $60,000. By now Henry had the where­withal to keep quiet and let Eric run the meet­ing. Victor’s estate was worth $15 mil­lion, and grow­ing. The poten­tial tax lia­bil­ity was in the $6-million range. Eric relayed the ben­e­fits of hav­ing the insur­ance com­pany pay the tax, rather than sell­ing assets to do so. Eric stated that the orig­i­nal pre­mium wasn’t too high — it was too low. Vic­tor agreed. By the time the appoint­ment was through Eric was propos­ing a solu­tion with a $100,000 premium.

“Prior to the appoint­ment, Henry had laid out his strat­egy to walk away with an $18,000 pre­mium. We can clearly see that Eric moved the case from $18,000 to $100,000, but more impor­tantly, Eric solved Victor’s tax lia­bil­ity prob­lem. Henry’s strat­egy to lower the pre­mium because of a per­ceived objec­tion was a dis­ser­vice to the client. Henry was out of his ele­ment here. Eric brought the nec­es­sary expe­ri­ence and exper­tise and was able to pro­vide the advice Vic­tor needed.

“It’s inter­est­ing to note that Henry’s per­cep­tion of the size of the pie stemmed not at all from the real­ity of the client’s need but from his own per­sonal feel­ing that a $33,000 pre­mium was too much. It’s very dif­fi­cult for inex­pe­ri­enced advi­sors to sep­a­rate their emo­tions from a large case. They’re not used to deal­ing with large, com­plex client needs and let their own per­sonal biases get in the way of serv­ing the client. An expe­ri­enced expert like Eric brings the nec­es­sary objec­tiv­ity and cool-headedness to the table. Eric knows to ask the ques­tions that an inex­pe­ri­enced advi­sor is too fright­ened to ask. In the end, the case with Vic­tor even­tu­ally grew well beyond the $100,000-premium mark, and Henry shared half the case. That’s the value of play­ing the Infi­nite Game.”

Stan was blown away by the story. I could see his mind shift from a Finite-Game to an Infinite-Game men­tal­ity. I sug­gested Stan put together a plan for how he would approach his busi­ness from this point for­ward. A week later we reviewed Stan’s plan in which he mapped out a strat­egy for approach­ing his big-case prospects, but this time jointly with a business-case expert from his firm. At the time of writ­ing, Stan and his part­ner have already closed one sig­nif­i­cant case, and are work­ing on others.

Lessons Learned

Stan learned that his best strat­egy for tack­ling his high-net worth prospects was to play the Infi­nite Game — to team up with other pro­fes­sion­als. He learned that in the big-case mar­ket it’s dif­fi­cult for one advi­sor to have all the nec­es­sary ingre­di­ents for serv­ing the client. While he had access to big prospects through his net­work, he lacked exper­tise. And it works the other way around. There are many advi­sors with exper­tise who lack access, so it’s essen­tial for them to team with advi­sors who have valu­able net­works. Even though pool­ing resources means shar­ing com­mis­sions, each advi­sor ben­e­fits, because it’s bet­ter to have a smaller piece of a larger pie than a larger piece of a smaller pie — or, as is more often the case, no piece at all. And it’s infi­nitely bet­ter for your client if you bring in the needed exper­tise, oth­er­wise you risk leav­ing your client exposed to the risks you were intend­ing to min­i­mize. Most advi­sors have heard the advice about shar­ing the pie, but few heed it. Per­haps the largest bar­rier to adopt­ing the prac­tice of play­ing the Infi­nite Game, as Stan learned, is the per­cep­tion of the size of the pie. For many advi­sors, their per­ceived lim­i­ta­tions of a case are based on their own feel­ings, and not on real­ity. As Eric’s story above has shown, the lim­its of the Vic­tor deal far exceeded what Henry had ever enter­tained. And as Stan learned, the best way to push through your own lim­its is to start play­ing the Infi­nite Game.

Fol­low The Covenant Group at:

Norm Trainor is the Founder and CEO of The Covenant Group, a company that specializes in educating and coaching financial advisors and entrepreneurs and providing them with business tools to enhance their performance. He can be reached at norm@covenantgroup.com or 1-877-903-3878 X333. Read more from the author/contributor here.

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Tags: 30 Million, 5 Million, Advisory Business, Affluent Individuals, Appointments, Boss, Business Cases, Business Contacts, Case Study, Clientele, Import Company, Infinite Game, Inspiring Story, Insurance Package, J Miller, Mistake, Objections, Prospects, Special Thanks, Stan
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