Deliver Common Services in an Uncommon Manner

Wednesday, October 24th, 2012

by Anthony Lam, The Covenant Group
Although they may not real­ize it, the major­ity of com­pa­nies are actu­ally in the indus­try of client ser­vice — in com­par­i­son, their prod­uct offer­ings and sec­tors are minor details. The level of ser­vice that is offered in the forms of prod­uct qual­ity, pre­sen­ta­tion, avail­abil­ity and client sup­port is what usu­ally makes some­one choose to work with one orga­ni­za­tion over another. Essen­tially, the ser­vices and prod­ucts you offer mat­ter less than deliv­ery, which car­ries much more weight in a client’s deci­sion to begin or con­tinue doing busi­ness with you.This is a topic that gets a lot of atten­tion in the book Uncom­mon Ser­vice, co-authored by Anne Mor­riss, the Con­cire Lead­er­ship Insti­tute co-founder and chief knowl­edge offi­cer, and Frances Frei, a pro­fes­sor of ser­vice man­age­ment at Har­vard Busi­ness School. As they note, the way in which we serve each other plays a much big­ger role in push­ing the econ­omy for­ward than what we make.

I think this quote from Mor­riss and Frei sum­ma­rizes my point pretty well: “It’s easy to throw ser­vice into a mis­sion state­ment and peri­od­i­cally do what­ever it takes to make a cus­tomer happy … What’s hard is design­ing a ser­vice model that allows aver­age employ­ees — not just the excep­tional ones — to pro­duce ser­vice excel­lence as an every­day routine.”

Defy the sta­tus quo

How have you decided to make your ser­vices uncom­mon? Have you empha­sized the impor­tance of the client rela­tion­ship to every employee at every level of your orga­ni­za­tion? Sur­vey the ser­vice mod­els of your com­peti­tors, and seek out the gaps in their strate­gies that you can turn into your own strengths. Some com­pa­nies may be good at con­vert­ing prospects, but can­not retain clients because they fail to pro­vide sup­port after the ini­tial sale. Oth­ers deliver their ser­vices or prod­ucts in an imper­sonal man­ner, rely­ing on auto­mated mes­sages instead of deep­en­ing the con­nec­tion through per­son­al­ized emails, tele­phone calls and even in-person meetings.

Mor­riss and Frei warn against try­ing to be good at every­thing, since mas­ter­ing the art of ser­vice will mean you have to divert resources and ener­gies from other areas. (This is also a point that my col­league Matthew Asser made in a recent post, “Be More Effec­tive By Nar­row­ing Your Company’s Focus.”)

Think about the ways you can set your busi­ness apart from oth­ers and focus on a few areas where you can excel. Deter­mine the sta­tus quo for ser­vice deliv­ery in your indus­try, and then strive to break free from it.

Anthony Lam has spent more than 20 years hon­ing his cus­tomer rela­tion­ship man­age­ment skills. He has demon­strated his com­mit­ment to high-quality cus­tomer ser­vice in the retail, bank­ing and air­line indus­tries. Anthony is the Man­ager of Pro­gram Deliv­ery and Client Rela­tion­ships at The Covenant Group and coaches finan­cial advi­sors on client ser­vices through The Covenant Group’s finan­cial ser­vices train­ing.

Fol­low The Covenant Group

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Tags: Anthony Lam, Chief Knowledge Officer, Client Relationship, Co Founder, Common Services, Covenant Group, Everyday Routine, Harvard Business School, Leadership Institute, Minor Details, Morriss, Organization Survey, Product Offerings, Quality Presentation, Service Co, Service Excellence, Service Management, Service Model, Service Models, Uncommon Service
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Securing Valuable Introductions

Wednesday, June 6th, 2012

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Tags: Asser, Client Description, Client Relationship, Colleagues, Confidence, Covenant Group, Entrepreneurial Journey, Financial Services Industry, Five Steps, Groundwork, Introductions, Latter Situation, Momentum, Norm Trainor, Prospects, Quality Customer Service, Referral, Referrals, Salesperson, Sectors
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5 Questions to Answer in Developing your Strategy

Tuesday, May 22nd, 2012

by Norm Trainor, The Covenant Group

1. What is your Busi­ness Model?

Great com­pa­nies describe the essence of what makes them unique in a sim­ple and com­pelling man­ner. For Wal­mart, it is low­est price. Wal­mart rev­o­lu­tion­ized retail­ing by focus­ing upon oper­a­tional excel­lence. The firm does a bet­ter job of sup­ply chain man­age­ment than any com­pany in its space. As a con­se­quence, they are able to ruth­lessly drive down costs and offer lower prices. Four Sea­sons dif­fer­en­ti­ates itself through the qual­ity of ser­vice. Isadore Sharp explained how Four Sea­sons can charge twice the room rate of Hilton or Westin by say­ing: “It is because we do com­mon things uncom­monly well.”

The level of response of great lead­ers in defin­ing the Busi­ness Model is trans­for­ma­tional. The intent is not to com­pete with the exist­ing play­ers, but to make them irrelevant.

Your per­for­mance mea­sures in devel­op­ing your Busi­ness Model are busi­ness via­bil­ity, share­holder wealth and return on cap­i­tal. The time­frame is 10 years or more.

Tra­di­tion­ally, finan­cial advi­sory firms mea­sure suc­cess based upon com­mis­sion earned and assets under man­age­ment {AUM}. The real mea­sure is prof­itabil­ity or earn­ings before inter­est, taxes, depre­ci­a­tion and amor­ti­za­tion {EBITDA}.

Keep in mind that Strat­egy is the align­ment of the out­puts or objec­tives you want to achieve, the sys­tems and capa­bil­i­ties you have to real­ize your objec­tives and the oppor­tu­ni­ties and chal­lenges the envi­ron­ment pro­vides. Your chal­lenge as a leader is to fig­ure out the strat­egy required to max­i­mize share­holder value and return on your cap­i­tal and time invested.

2. What are your prod­ucts, ser­vices, mar­kets and ideas?

One of the ways in which you can pos­i­tively impact EBITDA is through prod­uct and ser­vice mix. As we have dis­cussed, there is sig­nif­i­cant poten­tial for increased prof­itabil­ity of the client rela­tion­ship through the sale of insur­ance prod­ucts, the offer­ing of fee based plan­ning in the areas of finan­cial, estate, tax and busi­ness suc­ces­sion plan­ning and a focus on the whole fam­ily wealth continuum.

This requires a bal­anc­ing of inte­gra­tion and return on cap­i­tal. Rather than mea­sure suc­cess based upon com­mis­sions or asset man­age­ment fees, the key is to mea­sure the over­all prof­itabil­ity of each client rela­tion­ship life­time. The oppor­tu­nity and chal­lenge is to build clients for life.

3. What are your sys­tems and processes?

Great busi­nesses are built upon replic­a­ble processes. A process is a pat­tern or method­ol­ogy that is repeat­able, dis­tin­guish­able and transferable.

A typ­i­cal Star­bucks loca­tion gen­er­ates ten times more rev­enue than an owner oper­ated cafe across the street. The dif­fer­ence in rev­enue is a bi-product of the effec­tive­ness and effi­ciency of the sys­tems and processes Star­bucks instills in each of its oper­a­tions. It is not about the peo­ple who work in Star­bucks ver­sus the employ­ees of the owner oper­ated busi­ness; it is about the sys­tems and processes.

One of your chal­lenges is to imple­ment sys­tems and processes that are repeat­able, dis­tin­guish­able and trans­fer­able. Finan­cial ser­vices train­ing can help you develop, expand and enhance the sys­tem capa­bil­i­ties of your firm.

4. How do you assure qual­ity and con­tin­u­ous improvement?

Great lead­ers instill in those around them the belief that every­one has a stake in the busi­ness get­ting bet­ter. Apple is a clas­sic exam­ple of the relent­less focus upon improv­ing every aspect of the prod­uct and the user expe­ri­ence. Effec­tive­ness is doing the right things. Effi­ciency is doing things right. Your sys­tems and processes ensure that peo­ple are doing the right things. Super­vi­sion and man­age­ment ensures that peo­ple do things right.

5. What is Ser­vice Excellence?

The para­dox of Ser­vice Excel­lence is that the answer begins with your answers to each of the first four ques­tions. Sat­is­fac­tion is the ratio of expe­ri­ence to expec­ta­tion. Doing com­mon things uncom­monly well requires a com­mit­ment to excel­lence on the part of every employee. It also involves the recog­ni­tion that what is value added today will be expected tomorrow.

Con­tin­u­ous improve­ment is a fun­da­men­tal under­pin­ning of excel­lence. The prin­ci­ple of cre­ative destruc­tion does apply. As a leader, you are con­stantly con­fronting the sense of enti­tle­ment that comes with suc­cess. Enti­tle­ment is an illu­sion. Yet, it is a nat­ural bi-product of success.

We believe that we have earned the right to client loy­alty and to high fees. Peo­ple are grate­ful, but only for a short time. Then, they want to know what we are going to do for them going forward.

Great lead­ers con­tin­u­ously chal­lenge peo­ple to be bet­ter at what they do, to con­tin­u­ously learn and grow. As a result, they bring out the best in peo­ple who are com­mit­ted to grow and make it uncom­fort­able for peo­ple who do not share the val­ues of excellence.

Great lead­ers also ele­vate the level of the con­ver­sa­tion. They edu­cate those around them with regard to the firm’s busi­ness model, prod­ucts, ser­vices, mar­kets and ideas, the sys­tems and processes that dif­fer­en­ti­ate the way in which they do busi­ness and the relent­less focus upon qual­ity and con­tin­u­ous improve­ment. These are the ele­ments that lead to Ser­vice Excel­lence. Lead­er­ship train­ing facil­i­tates a cul­ture of ongo­ing feed­back that informs every­one with regard to the stan­dards of ser­vice excel­lence and their contribution.

Sum­mary:

In answer­ing the above ques­tions, start by describ­ing your Busi­ness Model i.e. how you will assure the via­bil­ity of your busi­ness, the return on your time and cap­i­tal invested and the cre­ation of share­holder wealth. This will nat­u­rally lead to an explo­ration of the prod­ucts and ser­vices you offer, the mar­kets you serve and the ideas that dif­fer­en­ti­ate your busi­ness. It will require you to think about the sys­tems and processes required to serve your clients and attract new clients. Ulti­mately, you will evolve a pic­ture of Ser­vice Excel­lence and what is required to be effec­tive and effi­cient in deliv­er­ing this level of ser­vice to your clients. The Covenant Group is here to help in estab­lish­ing effec­tive sys­tems and processes.

Fol­low The Covenant Group

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Tags: Assets Under Management, Business Model, Business Viability, Client Relationship, Covenant Group, Depreciation, Financial Advisory Firms, Great Leaders, Insurance Products, Isadore Sharp, Measure Success, Norm Trainor, Operational Excellence, Performance Measures, Quality Of Service, Return On Capital, Shareholder Value, Shareholder Wealth, Supply Chain Management, Walmart
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Using Customer Service as a Marketing Tool

Wednesday, April 18th, 2012

by Anthony Lam, Covenant Group

Never under­es­ti­mate the power of a client rec­om­men­da­tion. When the peo­ple with whom you’ve built busi­ness agree­ments trust you enough to not only con­tinue the rela­tion­ship, but sug­gest that their friends and asso­ciates do the same, entirely new mar­kets and groups of prospects can become accessible.

How do you get to the point in the rela­tion­ship that your clients feel com­fort­able telling their friends and asso­ciates about your ser­vices? Do you have a sys­tem in place that guar­an­tees top-notch cus­tomer ser­vice while prim­ing your clients to make rec­om­men­da­tions or intro­duc­tions later on? Have you made the cus­tomer expe­ri­ence a pri­or­ity not only as a tac­tic for keep­ing the clients you have, but as a business-building strategy?

Deliv­er­ing high-quality client expe­ri­ences can serve as a mar­ket­ing tool, mak­ing prospects not only aware of your exis­tence, but also why they should con­sider a rela­tion­ship with you. One focus in finan­cial ser­vice train­ing is learn­ing how to inter­act with clients in a way that makes them feel val­ued and spe­cial, every time. It’s not enough to just be a great sales­per­son. Even before the deal is closed, you need to be nur­tur­ing and deep­en­ing the client rela­tion­ship by invest­ing time and/or money in pro­vid­ing the best cus­tomer expe­ri­ence possible.

For­rester Research released a study ear­lier this year that inves­ti­gated the mon­e­tary ben­e­fits of devot­ing addi­tional resources to improv­ing how the cus­tomer feels when inter­act­ing with a com­pany. The good news is: There’s a pay­off in pay­ing more atten­tion to your clients’ experiences.

“The Busi­ness Impact of Cus­tomer Expe­ri­ence, 2012″ found that when com­pa­nies offer a bet­ter cus­tomer expe­ri­ence, their clients tend to be more loyal, a devel­op­ment that can result in longer-lasting rela­tion­ships, greater rec­om­men­da­tions and increased rev­enues, ana­lyst Megan Burns writes for the research firm’s blog. For hotels and wire­less ser­vice providers that made the issue a pri­or­ity, rev­enues ben­e­fited from a $1.3 bil­lion boost.

The boon to prof­its is not short-lived. “When your cus­tomers like the expe­ri­ence you deliver, they’re more likely to con­sider you for another pur­chase and rec­om­mend you to oth­ers,” Burns writes. “They’re also less likely to switch their busi­ness away to a com­peti­tor. These improved loy­alty scores trans­late into more actual repeat pur­chases, more prospects influ­enced to buy through pos­i­tive word of mouth, and less rev­enue lost to churn.”

Anthony Lam has spent more than 20 years hon­ing his cus­tomer rela­tion­ship man­age­ment skills. He has demon­strated his com­mit­ment to high-quality cus­tomer ser­vice in the retail, bank­ing and air­line indus­tries. Anthony is the Man­ager of Pro­gram Deliv­ery and Client Rela­tion­ships at The Covenant Group and coaches finan­cial advi­sors on client ser­vices through The Covenant Group’s finan­cial ser­vices train­ing.

Fol­low The Covenant Group at:

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Tags: Additional Resources, Anthony Lam, Business Agreements, Business Building, Business Impact, Client Experiences, Client Relationship, Covenant Group, Customer Experience, Forrester Research, Introductions, Marketing Tool, Megan Burns, Monetary Benefits, Prospects, Quality Client, Salesperson, Tactic, Top Notch, Wireless Service Providers
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How a Two-Minute Phone Call Cost a Client

Wednesday, April 11th, 2012

Today’s arti­cle arises from a call from an advi­sor look­ing to sal­vage a client relationship.

In August I wrote that when it comes to hear­ing from clients, no news is def­i­nitely NOT good news. Just because you haven’t heard from clients doesn’t mean they’re not stew­ing about the impact of mar­ket events on their port­fo­lio and won­der­ing why they haven’t heard from you.

Recently, an advi­sor named Mike’s fail­ure to take two min­utes out of his day for a crit­i­cal task made this point painfully clear. He’d read my August arti­cle and decided that right after Labour Day he’d begin to sys­tem­at­i­cally touch base with clients, ask­ing if they’d like to meet. Before he could do that, events inter­vened and he paid a big price for wait­ing to make those calls.

The call every advi­sor dreads

Just before the Labour Day week­end, Mike got a call from a sub­stan­tial and long-standing client.

“I’m call­ing to let you know that Susan and I have decided to move our account” the call began. Not a great start, but it got worse.

“I’m dis­ap­pointed to hear that” was Mike’s response ” but I can under­stand how you’d be unhappy given what’s hap­pened to mar­kets over the last while.”

His client’s answer sur­prised him:

“Obvi­ously mar­kets have been tough but that’s not really why we’re mov­ing. In early August, Susan and I were talk­ing about the fact that we hadn’t heard from you for a while and were won­der­ing what was going on.

I was going to send you a note but got busy. Then I got a call at work from some­one who intro­duced him­self as a finan­cial plan­ner at my RBC bank branch. He said that he was call­ing in the event that that I hadn’t heard from my advi­sor recently and would like to sit down and talk about what’s hap­pen­ing in our portfolio.

We ended up meet­ing for a cof­fee and then Susan and I sat down with him. Ulti­mately, we just decided that we’re not a big enough client to get the kind of atten­tion we’re look­ing for and we’d be bet­ter off work­ing with some­one who’d be able to give us more priority.”

Mike apol­o­gized for not being in touch and said that in fact this client was on his list to call the fol­low­ing week. He asked for another chance, promis­ing to stick to a sched­ule of reg­u­lar meet­ings. His soon-to-be for­mer client thanked him but said that he had his wife had talked this over and really had made up their minds.

The price of procrastination

Chances are that the exact same amount of time that Mike spent try­ing to sal­vage the rela­tion­ship, with­out suc­cess would have pre­vented this prob­lem in the first place. A two minute call at the begin­ning of August to check in is all that it would have taken.

I’ve had advi­sors tell me that given how busy they are fight­ing fires and respond­ing to client calls, they don’t have time to make proac­tive calls. This misses two impor­tant points.

First, the impact of a call that you make is dra­mat­i­cally greater than one that your client ini­ti­ates. You’ll spend the exact same amount of time on the phone or in a meet­ing, but if the client took the first step, they’ll often con­clude that you would never have called on your own. In effect, you can’t be relied on to stay on top of things with­out prompt­ing; not a good feel­ing for clients.

Sec­ond and related to this, the time mak­ing proac­tive calls isn’t an extra expen­di­ture of time. Rather, it’s a real­lo­ca­tion of the time you’d be spend­ing respond­ing to clients except that you’re get­ting a much higher pay­off from that time.

I’ve writ­ten in the past about the impact of tak­ing 30 min­utes a day to make proac­tive calls to clients you haven’t spo­ken to recently. Advi­sors who’ve done this told me they were scep­ti­cal ini­tially, but once they tried it real­ized that they were get­ting a bet­ter impact from this 30 min­utes than to any other half hour their entire day.

Per­suad­ing clients to stay

A final note on my advice to Mike on sal­vaging this client

When a client tells you they’re leav­ing, beg­ging them to stay typ­i­cally won’t change their mind. I made two sug­ges­tions to Mike.

First, part with class. Tell depart­ing clients that while you’re dis­ap­pointed, you obvi­ously respect their deci­sion and offer to do what­ever you can to make the tran­si­tion a smooth one. That can include expe­dit­ing paper­work and fol­low­ing up with head office to ensure that things are being processed. The last thing you want is for depart­ing clients to feel that you’re drag­ging your heels.

Sec­ond, pro­vided of course that you’d like to work with them in future, tell clients who are leav­ing that you’d like to stay in touch. I sug­gested that Mike keep the depart­ing client on his mail­ing list, and after six months days, check in to see how things are going. If Mike is lucky, the client may say that things with his advi­sor have not ended up being as rosy as promised and be open to com­ing back.

Of course, all of this could have been avoided with a short phone call. This is one of those “pay me now or pay me later” propo­si­tions. You may decide that you don’t have the time to make those two minute proac­tive phone calls. Just rec­og­nize that by fail­ing to make them, you’re set­ting your­self up for aggra­va­tion down the road deal­ing with prob­lems that would oth­er­wise have been prevented.

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Tags: Client Relationship, Coffee, Critical Task, Early August, Failure, Financial Planner, Hadn, Labour Day, Labour Day Weekend, Phone Call, Rbc Bank, Salvage, Two Minutes
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The Advisor’s Success Measure – A Profitable Client Relationship

Wednesday, August 10th, 2011

I con­tinue to be sur­prised when finan­cial advi­sors mea­sure their suc­cess based upon the trans­ac­tion value of a sale or client assets under man­age­ment (AUM). Today, the mea­sure of an advisor’s suc­cess is the prof­itabil­ity of the client relationship.

Let me give you an exam­ple. Neil had been an advi­sor for 21 years, but had reached his peak rev­enue five years ago. He was tired of work­ing harder and harder for the same return. That was his moti­va­tion to get involved in our Prac­tice Devel­op­ment Program.

Most advi­sors don’t under­stand the rela­tion­ship between profit and their clien­tele and how best to har­ness the value of each client rela­tion­ship to gen­er­ate a profit. I asked Neil how many clients he had.

“Roughly 300 fam­ily units,” he answered. A typ­i­cal advi­sor works at a deep level with 40 or 50 clients.

“Neil,” I said, “I don’t think you can tell me with con­vic­tion that you have rela­tion­ships of any depth with clients out­side your top tier. Do you know each client’s finan­cial and life goals, the issues and prob­lems they face, their deep­est needs, wants and val­ues?  Do you know if you are their pri­mary advi­sor?  Who their other advi­sors are? What their total net worth is?  How many prod­ucts or ser­vices they have with you com­pared to their other advi­sors? How much wallet-share you have?”

Neil admit­ted he couldn’t answer many of these ques­tions for the bulk of his clien­tele. I then went on to explain to Neil that If a typ­i­cal advi­sor were to graph his or her profit against their clien­tele, they would most likely find that 150% or more of their profit comes from their top 40 clients. The rest of their clients take them back to 100%. So, the profit they make on their key rela­tion­ships is lost on the mass of their other lower-level relationships.

But this doesn’t need to be the case. With the right strate­gies in place, an advi­sor can extend the profit poten­tial well beyond the 40-client mark.  Fur­ther­more, the remain­der of their clien­tele can add to their profit rather than detract from it, albeit at a decreased rate.

Neil asked if I was sug­gest­ing he seg­ment his client base.

“Yes,” I said, “but I want you to have a clear under­stand­ing of the effect of seg­men­ta­tion on profit, and how exactly to seg­ment your client base. I don’t believe a lot of advi­sors go about it the right way. You need to have sound cri­te­ria for seg­ment­ing your clien­tele and the dis­ci­pline to apply the appro­pri­ate ser­vice lev­els for each seg­ment. Too many advi­sors aren’t rig­or­ous enough. They tend to pro­vide either too much or too lit­tle ser­vice to dif­fer­ent seg­ments and this drags down their profit.”

Neil asked what cri­te­ria he should use to seg­ment his client base.

“We use three cri­te­ria: 1. Value; 2. Propen­sity to buy; and 3. Will­ing­ness to intro­duce, rec­om­mend and refer you to peo­ple who fit your Ideal Client Pro­file. You need to exam­ine the poten­tial of each client based upon these three fac­tors. Value is based on things such as the client’s net worth, the assets you man­age and the pre­mi­ums they pay. Propen­sity to buy con­sid­ers the num­ber of prod­ucts and ser­vices they could buy from you in the future. The third mea­sure is their abil­ity and will­ing­ness to lead you to other high-value prospects.

“Some clients might have high value, but a low propen­sity to buy.  You can graph the value poten­tial of your clients against their propen­sity to buy. Ide­ally, you want to find as many clients with high value who also have a high propen­sity to buy. Those, of course, are going to be A clients. But if a client is not likely to do addi­tional busi­ness with you, you’re prob­a­bly bet­ter off cat­e­go­riz­ing them as B or C clients.

Your next chal­lenge is to come up with a strat­egy for real­iz­ing the poten­tial profit each client rep­re­sents. For finan­cial advi­sors there are essen­tially four key strate­gies to focus on: 1) grow your client’s assets under man­age­ment; 2) cross-sell, 3) con­sol­i­date; and 4) make your­self refer­able. If you apply these strate­gies to your high-value clients who have a high propen­sity to buy, and a will­ing­ness to help, you will increase the prof­itabil­ity of your business.”

“But I won’t have time to ser­vice all of my clients,” Neil said.

“For each seg­ment of your clien­tele, you require a Ser­vice Level Agree­ment (SLA). It is impor­tant that the ser­vice you pro­vide fits your profit for­mula. That’s what becom­ing prof­itable in each client seg­ment is about. The imple­men­ta­tion of your SLAs involves var­i­ous options. You can del­e­gate ser­vice func­tions to staff, share the ser­vic­ing with another advi­sor or mar­ket­ing ser­vice, or hire a junior advisor.”

Neil agreed. He had reser­va­tions about tak­ing time away from his busi­ness to seg­ment his clien­tele and develop a mar­ket­ing, sales and ser­vice strat­egy, but he forced him­self.  He booked three days out of the office and worked on his busi­ness plan.  He was sur­prised at the results.

His meth­ods for mar­ket­ing, sell­ing and ser­vic­ing his clien­tele were more messed up than he thought. There were lots of high-value clients with a propen­sity to buy whom he treated like C or D clients and too many C and D clients with whom he spent way too much time and energy for them to be prof­itable. It was no won­der he hadn’t been able to grow his busi­ness over the past few years.

Within a few months, Neil imple­mented his SLAs for each client seg­ment. He focused more of his time on those clients who were of high value, have a propen­sity to buy and were will­ing to refer. In addi­tion, he brought in a junior asso­ciate to whom he del­e­gated the C & D clients. Before long, he was already see­ing great results. His rev­enue increased over 50% in the next year and his profit by over 70%.

Norm Trainor is the founder of The Covenant Group, a com­pany spe­cial­iz­ing in prac­tice devel­op­ment for advi­sors. For fur­ther infor­ma­tion, visit his Web site at www​.covenant​group​.com.

Fol­low The Covenant Group at:

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Tags: Assets Management, Assets Under Management, Client Assets, Client Management, Client Relationship, Clientele, Conviction, Financial Advisors, Financial Success, Graph, Life Goals, Lost, Motivation, Net Worth, Norm Trainor, Profitability, Relationships, Sale Management, Success Measure, Transaction Value, Wallet Share
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You Missed a Great Conference!

Wednesday, May 25th, 2011

The CIFPs 8^th National Con­fer­ence Review

By Marc Lam­on­tagne, CFP, R.F.P, FMA

This is my sec­ond con­sec­u­tive year attend­ing this con­fer­ence and once again the agenda was PACKED. Each day began about 7:30 am and typ­i­cally went to 6:00 pm, with din­ner start­ing pronto at 6:30. You clearly earn your CE cred­its and receive your money’s worth at this conference.

The agenda was a smor­gas­bord; enough to quench the thirst for nov­elty of 500 to 600 atten­dees. The high­light was undoubt­edly Her­mann F. Leinin­gen with RBC Global Asset Man­age­ment. Leinin­gen was very funny, and he man­aged to walk the audi­ence through sev­eral com­plex eco­nomic sce­nar­ios and sus­tain their interest!

Take away: Expect U.S. inter­est rates to stay low for at least the next nine months or until there is a jobs recov­ery, stocks are still trad­ing at the lower end of the band due to con­tin­ued global eco­nomic uncer­tainty, and the demand for oil from China and India has barely scratched the surface.

Like any con­fer­ence there were a few mutual fund com­pany “talk­ing heads,” although the more inter­est­ing mate­r­ial came from indus­try par­tic­i­pants such as Cary List, Pres­i­dent and CEO of the Finan­cial Plan­ners Stan­dards Coun­cil. List pre­sented some of the find­ings of their recent con­sumer sur­vey on the ben­e­fits of finan­cial plan­ning. This is news that all CFP pro­fes­sion­als will want to share with their clients and prospects. Shawn Bray­man, Pres­i­dent of Plan­Plus, offered us an overview of the top aca­d­e­mic and indus­try research in the field of finan­cial plan­ning. How­ever, he had so many fas­ci­nat­ing papers to dis­cuss, it was unfor­tu­nate he had only an hour to cover his mate­r­ial.  And yours truly gave a short pre­sen­ta­tion on the recent 2010 Advi­sor Sur­vey Report, con­clud­ing that the deliv­ery of finan­cial advice is not that dif­fer­ent between fee and com­mis­sion models.

Susan Wol­burg Jenah, Pres­i­dent & CEO of IIROC, pro­vided an update on the Client Rela­tion­ship Model (CRM) pro­pos­als that will impose greater dis­clo­sure on the indus­try in order to increase investor pro­tec­tion. How­ever, the CRM has dragged on for so long and mor­phed so many times, it is hard to believe it will ever mate­ri­al­ize. Asked by an attendee how the devel­op­ments on com­pen­sa­tion in the U.K. and Aus­tralia might affect us here, Wol­burg Jenah said that IIROC was keep­ing a close eye on devel­op­ments that could poten­tially influ­ence com­pen­sa­tion mod­els in Canada, although it is prefer­able that indus­try par­tic­i­pants “vol­un­tar­ily” assess how to bet­ter align the inter­ests of clients and advisors.

The final day ended at noon, but the morn­ing still had sev­eral excel­lent speak­ers such as Dr. Dale Orr, Jamie Golombek, and Kevin O’Brien, who filled the morn­ing with great nuggets of wisdom.

Take away: Dr. Orr from Eco­nomic Insight pro­vided his short-term pre­dic­tions for Canada’s econ­omy: neg­li­gi­ble infla­tion, the dol­lar will trade close to par or maybe even higher if the price of oil increases, short-term rates will be higher in Canada than the U.S. (again putting upward pres­sure on our dol­lar), expect the Bank of Canada pol­icy rate to increase by 25 basis-points at every fixed announce­ment date for the next three years until it reaches the tar­get of 4% to 4.5%, and finally, don’t expect to see a bal­anced fed­eral bud­get until 2014–2015.

Jamie Golombek from CIBC Pri­vate Wealth Man­age­ment, who always stages a grand show, regaled the audi­ence with sto­ries of cre­ative bro­kers who sup­pos­edly found loop­holes in the TFSA con­tri­bu­tion rules. He also offered sev­eral use­ful tax strate­gies, updates, and sug­ges­tions on advis­ing your clients based on recent tax court decisions.

Take away: Advi­sors should be rec­om­mend­ing to almost every client that they top up their TFSA con­tri­bu­tion room prior to mak­ing RRSP contributions.

And finally, cer­ti­fied finan­cial plan­ner Kevin O’Brien from Kevin O’Brien & Asso­ciates told the audi­ence his some­times funny, some­times heart­felt story of man­ag­ing his parent’s messy estate before he became an advi­sor. It affected his cur­rent approach to estate plan­ning so much that he pub­lished his story for other advi­sors to read in Where There’s a Will….There’s a Way.

Over­all, it was an excel­lent con­fer­ence, and I would highly rec­om­mend attend­ing CIFP 2011 to be held in Ottawa from June 5 to 8. Media arti­cles from some of the pre­sen­ta­tions are avail­able on the CIFP website.

Fall Con­fer­ence Alert!

There are two first-rate con­fer­ences com­ing up in the fall that I will attend and rec­om­mend as well worth the investment.

The first is the IAFP Annual Sym­po­sium in Banff from Sep­tem­ber 23 to 25, 2010. This one is par­tic­u­larly enjoy­able; it is more sym­po­sium than con­fer­ence because it is anchored by a sin­gle finan­cial plan­ning case study. All speak­ers are required to ref­er­ence this case study in their pre­sen­ta­tions and are encour­aged to pub­lish papers from their spe­cialty per­spec­tive. This cer­tainly elim­i­nates the dis­ori­en­ta­tion one can some­times feel lis­ten­ing to mul­ti­ple talk­ing heads on sev­eral diverse sub­jects at other con­fer­ences. This year the case study is about a retir­ing busi­ness owner who also hap­pens to be a finan­cial plan­ner (is this a coin­ci­dence?). The sym­po­sium cul­mi­nates with a half-day dis­cus­sion on the case study by the 125+ attendees.

The sec­ond is the Knowl­edge Bureau’s (KB) Dis­tin­guished Advi­sor Con­fer­ence in Orlando from Novem­ber 14 to 17, 2010. Knowl­edge Bureau fac­ulty speak­ers such as Richard Croft and Doug Nel­son are top notch and KB Pres­i­dent Eve­lyn Jacks obvi­ously used her time wisely recruit­ing the likes of Don Stew­art, CEO Sun Life Finan­cial, while she was a fel­low mem­ber of the Fed­eral Task Force on Finan­cial Lit­er­acy. The other com­pelling rea­son to attend is this: each day ends at the utterly civ­i­lized time of 1:30 pm, giv­ing atten­dees ample time to enjoy the sun and nearby ameni­ties with col­leagues and family.

Marc Lam­on­tagne, CFP, R.F.P., FMA is a fee-based finan­cial plan­ner with Ryan Lam­on­tagne Inc., fee-model prac­tice man­age­ment trainer, and author of To Fee or Not to Fee II — How to design a fee finan­cial advi­sory prac­tice.  www​.tofee​ornot​tofee​.com

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How Referrals Happen

Wednesday, May 18th, 2011

How Refer­rals Hap­pen
When friends ask clients, not when the advi­sor asks

by Stephen Wer­sh­ing, The Client Dri­ven Prac­tice

It is not true what you been told – you don’t get more refer­rals because you ask for more. In my work, I know that peo­ple refer not because they are asked to, but because they want to. John Jantsch, in his book The Refer­ral Engine, goes a lit­tle fur­ther – peo­ple refer because they need to. We refer, he says, as a form of sur­vival, to con­nect with other peo­ple, to build social currency.

A study by Julie Lit­tlechild of Advi­sor Impact now reveals sta­tis­tics to sup­port this under­stand­ing. Lit­tlechild found that 57% of clients who referred did so because a friend described a finan­cial chal­lenge, and 48% did so because a friend asked for one. How many pro­vided their most recent refer­ral because their advi­sor asked for one? 2%. The prob­lem with ask­ing Ask­ing for refer­rals is about the worst way to try get­ting them. Too fre­quently, it sets up a sce­nario that actu­ally com­pro­mises the client rela­tion­ship. What’s worse, unlike cold call­ing, which may be the crud­est and least imag­i­na­tive way to try to get new clients, it doesn’t work.

At least cold call­ing, done con­sis­tently and fre­quently enough, will bring in clients, and some­times good ones. Refer­rals pro­vided in response to your request for them will not gen­er­ally give you the best ones. There is sim­ply no clear straight-line between ask­ing clients for refer­rals the way we have been tra­di­tion­ally trained to do it and the best refer­rals you actu­ally receive.

Here are some of the prob­lems cre­ated by con­stantly ask­ing your clients for referrals:

• It places demands on clients. Your rela­tion­ships with clients are not like your rela­tion­ships with friends. In a friend­ship, you do each other favors because you like each other and are impor­tant to each other. While most advi­sors count friends among their clients, the fun­da­men­tal rela­tion­ship is for you to pro­vide ser­vice to clients and for them to com­pen­sate you for it. (We will get to the whole com­pen­sa­tion thing in just a minute.) Ask­ing your clients to serve you gets the rela­tion­ship backwards.

• It vio­lates client expec­ta­tions. When a client retains an advi­sor, they are look­ing to receive ser­vices, and in return they are will­ing to pay. Every­one under­stands that rela­tion­ship. When you begin ask­ing for more than sim­ply pay, you run a sig­nif­i­cant risk of sur­pris­ing your client with an expec­ta­tion from the rela­tion­ship they had not counted on. Sur­prises like that are gen­er­ally not pos­i­tive expe­ri­ences for the client.

• It con­verts refer­rals into trans­ac­tions. Many train­ing pro­grams rec­om­mend fram­ing the refer­ral request as an exchange. “If we do this, we would like you to do that.” That estab­lishes a weak basis for a refer­ral. Ide­ally, clients refer to us because they are thrilled with the expe­ri­ence and want to share that with peo­ple they care about. Reduc­ing it to an eco­nomic trans­ac­tion cheap­ens it. Giv­ing us a refer­ral can be a very pos­i­tive expe­ri­ence for our clients. But, like any other activ­ity we enjoy doing, doing it as a busi­ness trans­ac­tion takes most of the fun out of it.

• It dis­torts the mes­sage you want to com­mu­ni­cate. Many pro­grams rec­om­mend intro­duc­ing the idea of refer­rals with phrases like “it is part of how I get paid” or “if you help me find new clients, I can spend less time mar­ket­ing and more time pro­vid­ing ser­vice to you.” Most of these approaches can con­fuse the client. I’m not pay­ing you enough? So you’re spend­ing all your time mar­ket­ing and not tak­ing care of me? There is tremen­dous oppor­tu­nity to con­fuse the client about how you run your business.

• The biggest prob­lem of all – it puts the focus on you. In your rela­tion­ship, the focus should be on the client. In a well-designed refer­ral sys­tem, the focus remains on the client. The client pro­vides refer­rals because they derive ben­e­fits from intro­duc­ing their friends and acquain­tances, not because it is an oblig­a­tion. Once the activ­ity changes to pro­vid­ing you ben­e­fits, you have just short-circuited much of the moti­va­tion for pro­vid­ing them to you. Too many of the ways we have been taught to attract refer­rals send the wrong mes­sages. Too many cre­ate stress for the client. Too many cre­ate the sce­nario that makes the client uncom­fort­able with refer­ring peo­ple to us. Most refer­ral pro­grams reflect a hunter men­tal­ity. We must go out and stalk and cap­ture the refer­ral. How do you sup­pose the prey feels in this relationship?

The new research indi­cates that you can attract refer­rals, and you don’t have to demand them. You have prob­a­bly seen exam­ples of this in your own expe­ri­ence. Do you know any­one who gets refer­rals and never asks? Some advi­sory prac­tices actu­ally have a pol­icy of not ask­ing. Under the hunter men­tal­ity, this would be impos­si­ble. I pre­fer to think of refer­rals more like a farmer rather than a hunter. Under the farmer
model, you pre­pare the soil, plant the seeds, and nur­ture the field. A crop will grow. I keep hear­ing in refer­ral train­ing pro­grams how impor­tant it is not to release the process to clients. If you want depend­able, con­sis­tent refer­rals, you need to be in con­trol. The farmer does not approach it this way. Could you imag­ine a farmer being obsessed with the progress of every seed? He knows that if he plants enough seats in fer­tile soil and care­fully tends to the field he will get a good crop. Not every seed will ger­mi­nate. Not every plant will thrive. But he will get ample yield.

Littlechild’s study sep­a­rates clients into dif­fer­ent cat­e­gories based on how strong a client’s feel­ings are toward their advi­sor. The top cat­e­gory is “engaged.” Clients become engaged when they have a wide and deep rela­tion­ship with their advi­sor, have their expec­ta­tions for the rela­tion­ship met or exceeded, and feel they have a mean­ing­ful influ­ence on how the advi­sor pro­vides ser­vice. How to engage clients is an impor­tant
ques­tion because vir­tu­ally all refer­rals received by an advi­sor come from this group. There­fore, the most pro­duc­tive route to refer­rals is to make sure your clients are engaged and that you have cre­ated in the client the envi­ron­ment in which a refer­ral has a high prob­a­bil­ity of occur­ring. Then, when they are asked for a refer­ral, there is the high­est like­li­hood that it will materialize.

Am I actu­ally advo­cat­ing never ask­ing for refer­rals? Not really, although many busi­nesses get con­sis­tent refer­rals with­out directly ask­ing. If you ask, do it the right way. Dan Richards and John Jantsch have both writ­ten about cre­at­ing refer­ral sys­tems focused on the ask­ing for refer­rals in a way that ben­e­fits the clients. The right way means start­ing by ask­ing the clients for their opin­ions instead of refer­rals. Ask how you can get bet­ter. Ask what they want most from you and your inter­ac­tions with them, and update your processes to con­sis­tently deliver it. Ask what your clients believe is your great­est value to them, and what par­tic­u­lar skills or value they rec­og­nize you for.

Put the spot­light on the clients, get them involved in improv­ing your prac­tice. Only then can you cred­i­bly ask if they know other peo­ple who need what you pro­vide. And at that point, your clients will refer their friends and acquain­tances because it is a ben­e­fit to them, not a ser­vice to you. The best, most pow­er­ful way of putting the spot­light on clients and get­ting them involved in your prac­tice is the client advi­sory board. Before we get to the details of uti­liz­ing advi­sory boards, how­ever, let’s describe the envi­ron­ment in which it will operate.

Next Week: Set­ting the Stage for Referrals

Copy­right © Stephen Wershing

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Tags: Asking For Referrals, Client Relationship, Cold Calling, Currency, Driven Practice, Financial Challenge, Friends, Friendship, Fundamental Relationship, Julie Littlechild, Referral, Relationships, Statistics, Straight Line, Survival
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How Often Should You Bring Up Referrals?

Wednesday, February 2nd, 2011

In a recent  round­table lunch that I hosted with advi­sors, the ques­tion came up as to the right fre­quency with which to raise refer­rals with clients.

Some advi­sors were hes­i­tant on intro­duc­ing the topic of refer­rals at all.  On the other hand, one advi­sor talked about a direct con­nec­tion between how fre­quently he talked to clients about refer­rals and the chances that refer­rals would fol­low as a result.

While true to a point, there are some obvi­ous cases of going too far.

For exam­ple, sup­pose you raise the sub­ject of refer­rals on the phone to a client in the morning.

If you believe that advi­sors should “Always ask for refer­rals”  then if you hap­pen to speak to that same client the next day, you should say “Since we spoke last, have you run into any­one I should be talk­ing to?”

Few advi­sors would take the idea of always ask­ing for refer­rals to this extreme – but the ques­tion still per­sists about the right fre­quency with which to raise referrals.

Qual­ity over quantity

While the “more the mer­rier” approach does apply to some aspects of the advi­sor client rela­tion­ship – that’s not true of refer­rals. Yes, you want to let clients know you’re open for busi­ness, but bring­ing this up too often can backfire.

The rea­son is quite sim­ple. Remem­ber, clients pro­vide refer­rals to help their friends, not their advi­sors. And if refer­ral con­ver­sa­tions become a recur­ring part of every con­ver­sa­tion, you risk being seen as a pest rather than some­one com­mit­ted to help­ing clients achieve their goals and as oper­at­ing from your agenda, not clients’.

As a result, the focus of refer­ral con­ver­sa­tions needs to be qual­ity, not quan­tity. For exam­ple, throw away reminders that you’re open for busi­ness gen­er­ally seem to have mar­ginal ben­e­fit. As a gen­eral rule,  a three minute con­ver­sa­tion about the spe­cific attrib­utes of the clients that you work with best and can help the most that actu­ally engages clients (and is in fact a con­ver­sa­tion) is far more effec­tive than any num­ber of casual reminders that “refer­rals are welcomed.”

Estab­lish­ing  a rule of thumb

Even with a focus on qual­ity first, you still need some guide­lines on how often to raise this sub­ject in talk­ing to clients.

Part of the dif­fi­culty here is that there is no uni­ver­sal answer to this ques­tion – it will vary with each indi­vid­ual advi­sor and client.

There are three sce­nar­ios in which it’s eas­ier to bring up referrals:

1. If clients have pro­vided refer­rals in the past. While respect­ing client con­fi­den­tial­ity, if the per­son they referred is still a prospect, there’s an oppor­tu­nity to update clients on the progress of the con­ver­sa­tion. And if the per­son they signed up has become a client, you can briefly men­tion that things are going well and thank them again.
2. If they joined you as a refer­ral themselves.

One advi­sor will intro­duce this topic by say­ing: “You’ll recall that the only rea­son we’re work­ing together is that you were referred by NAME OF CLIENT”

1. If a client is com­ing to an event you’re run­ning, you have an oppor­tu­nity to call him or her a cou­ple of weeks before­hand and say:

“Dan, I look for­ward to see­ing you at the tax plan­ning lunch that my branch is host­ing on Feb­ru­ary 4, with our panel of three accoun­tants. The rea­son I’m call­ing is that while the bulk of my guests will be clients like you, I do have one spot avail­able at my table. I won­der whether your part­ner Joanne might be inter­ested in join­ing you and com­ing along.”

So the fre­quency will vary – but you still need a rule of thumb.

Here’s one way to think about the fre­quency with which to bring up refer­rals in client meetings.

Unless clients raise the topic, you should bring up refer­rals no more than once every three meet­ings or every two years, whichever comes first. That means that if you meet with clients annu­ally, you would raise refer­rals on every sec­ond meet­ing … or every two years. If you meet with clients twice a year, that means you’re bring­ing up refer­rals every eigh­teen months.

This assumes, of course, that you haven’t received a refer­ral in the mean­time – if you do get a refer­ral, this cre­ates an oppor­tu­nity to keep this top of mind by updat­ing clients on the progress of your con­ver­sa­tion with their friends.

Guide­lines for refer­ral conversations

There are at least three impli­ca­tions to adopt­ing a more selec­tive approach to rais­ing refer­rals with clients:

1. First, a “less is more” approach only works if the con­ver­sa­tions that you do have are higher qual­ity and engage clients.
2. As a result, you need to plan the con­ver­sa­tion. One approach I’ve writ­ten about in the past is incor­po­rat­ing a refer­ral con­ver­sa­tion into the agenda for client meetings.

So when you’re set­ting the meet­ing up, after first find­ing out what clients want to talk about, you could then go on to say:

“One other topic I’d like to briefly dis­cuss when we meet. You may recall that a cou­ple of years ago we talked about the qual­i­ties of clients that I found I could help the most. I’ve recently updated that list – when we meet, I won­der if we could take three min­utes to talk about this, should you be talk­ing to some­one look­ing to make a change in advisors.”

1. Finally, you need to rigourously record every time you talk to clients about refer­rals. Chances are your clients will remem­ber when you talked about refer­rals – but unless you record this in the client file, you won’t.

All of this is much more effort than every time you meet with a client say­ing “Who do you know who I should be talk­ing to?”

But it’s results that are the stan­dard of suc­cess, not the ease of implementation.

And if results are your pri­or­ity, then con­sider whether a “qual­ity over quan­tity” approach to refer­ral con­ver­sa­tions might be right for you.

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Tags: Asking For Referrals, Attributes, Client Relationship, Conversations, Lunch, Marginal Benefit, Minute Conversation, Referral, Reminders, Risk
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