Posts Tagged ‘Standout’
Wednesday, February 22nd, 2012
Standout success is rare in every industry, including ours. Part of that is just the reality that by definition most companies and most financial advisors are average performers.
But the problem runs deeper than that relating to human nature. Most businesses and most financial advisors start with huge drive and the willingness to take risks. As success comes and businesses and financial advisors become comfortable, however they often lose that drive; as well as the appetite to take even modest and carefully defined risks in their business.
A recent poll of business school professors pointed to Peter Drucker and Harvard’s Michael Porter as the most influential thinkers on corporate strategy. Both Drucker and Porter have written about the tendency for successful businesses to become complacent and resistant to change. I see this mirrored in the reluctance by many advisors to move from the comfortable status quo and to make choices about more narrowly targeting resources and focusing their day.
The importance of making choices
Most advisors start as generalists with an “all things to all people” approach. That strategy can create a base of clients and a level of success that will allow people to stay in the business; but at some point, most advisors using that approach hit a wall.
It’s at this point that I often hear from advisors, looking to sit down to talk about their situation. Even when I suggest they consider evolving their client focus towards a tighter direction that has the potential of dramatically accelerating revenue and profitability, most advisors resist this change. Quite simply, they prefer the security and comfort of their current “all things to all people” approach to the uncertainty of changing direction for a more targeted business model.
The Harvard Business School’s Michael Porter ranked today’s top authority on strategy has this to say: “Strategy is about making choices and trade-offs; it’s also about deliberately choosing to be different.” Making choices was also identified as a key to success by Peter Drucker, widely considered the twentieth century’s leading thinker on business strategy. Among his comments on the topic: “Efficiency is doing things right. Effectiveness is doing the right things.”
The common traits of top producers
In my years in the industry, I’ve spent time with many multi-million dollar producers. These highly successful advisors bring different philosophies and approaches; attack different client segments and utilize a broad range of business models. The one thing that most have in common is an incredibly high degree of focus in their business.
· In most cases they concentrate on a well-defined client base. Whether retirees or business owners, physicians or retiring university professors, CEOs or farmers; the most successful advisors typically bring a singular focus on one or two clearly articulated niches. And often the most successful advisors focus on micro niches; I’ve seen advisors successfully focus on snowbirds, divorced women and owners of Canadian Tire franchises and Toyota dealerships.
· Because they focus their business they can tailor it to the needs of their target group in a way that a generalist advisor never could. They understand the issues and speak the language of their clients; as a result they become the “safe choice” among their client community and become more referable as a result.
· Their focused business model identifies prospective clients and builds visibility among target clients. If you’re targeting car dealers, it’s relatively easy to put together a list of prospects in your community and to identify the association they belong to and the publications they read.
· They have focused policies and procedures in place to deal with prospective and existing clients. They have a consistent process for getting in front of prospects. They also have clear minimums on the clients they’ll accept and a well-articulated process for welcoming new clients once they’ve signed on, and for how they communicate with clients on an ongoing basis.
· They have a clear model on how they’ll run their business; including the role of fee based and managed money business, the formulation of investment recommendations and the role of financial plans.
The reluctance to leave your comfort zone
I’ve had many conversations with advisors about changing their business model or bringing greater focus to their business. While most acknowledge the potential benefits of a more tightly targeted and better defined business, the majority is reluctant to make the leap. Quite simply, the status quo is too comfortable for them to abandon it.
A stand pat approach can work very well in a status quo world, but the reality is today’s world is anything but that. The road is littered with once dominant companies who have been left by the wayside (think about iconic brands like Polaroid and Kodak; or one time retail leaders such as JC Penney or Montgomery Ward).
The difficulty was not that these companies didn’t try to alter course; each of these companies ultimately saw change coming and tried to adapt. The problem was that they waited too late, only embracing change when they were already in decline.
I’m not suggesting that successful advisors are going to go the way of Kodak and JC Penney. Inertia is a powerful force and if you have an established client base that you are serving well and evolve your business gradually over time, you can run a profitable business for many years to come; perhaps the balance of your career. What you can’t typically do with a traditional, generalist approach is to achieve dramatic growth. Advisors with unfocused practices tend to look very much alike. And if you look like every other advisor, differentiating yourself, challenging at the best of times, becomes almost impossible.
I sympathize with advisors who’ve spent 10, 15 or 20 years of hard work to build a successful business and comfortable lifestyle and don’t want to jeopardize it by moving to a significantly different model. The comfort of the status quo is incredibly seductive. In my view, deciding to take an incremental, evolutionary approach to changes in your business so as to reduce risk and stress is an absolutely legitimate choice; no different from clients who want to avoid market volatility by staying on the sidelines.
But just as those clients shouldn’t then complain if their long term returns are lower than investors who took greater risk; advisors who take a low risk approach in their business shouldn’t complain if they’re not growing as quickly as other advisors who have taken a more focused approach.
If you’d like more success, think about Michael Porter’s and Peter Drucker’s insights on how making choices drives successful strategy. And consider whether you need to evolve your business to one that has a sharper focus and clearer direction.
Tags: Appetite, Business Model, Business School Professors, Client Focus, Corporate Strategy, Financial Advisors, Generalists, Harvard Business School, Human Nature, Michael Porter, Peter Drucker, Profitability, Recent Poll, Reluctance, Standout, Tendency, Thinkers, Trade Offs, Will Allow People, Willingness
Posted in Dan Richards | Comments Off
Wednesday, December 21st, 2011
During the last month stock market have dropped and gyrated; some days by a whopping 5%, and in the case of many clients, wiped out this years gains. While this is bad for portfolios, it doesn’t have to be bad for your client relationships.
Will the market bounce right back, or continue going down? Is this the beginning of the next bear? Who knows. In terms of the growth of your practice, it may not matter. You do not have to be slowed down by the direction of the market. The fact is the best and most successful advisors add clients in down markets.
I don’t mean to suggest that it will be pleasant. Is going through a down market easy? No. Can it be rewarding? Absolutely. Everyone looks like a genius in an up market. The professionals standout when things are rocky. How do you build and strengthen client relationships when the markets are bad? Here are some suggestions.
- Review your client portfolios and make sure you are prepared for a market downturn. Confirm that positions and allocations have not gotten out of whack because of market gains over the past couple years. Evaluating how those portfolios might respond if markets or interest rates changed suddenly or significantly, and make any adjustments you think appropriate.
- Be ready to describe to your clients how you have prepared for the possibility of a market change. If the markets begin moving against you, have a communications plan that includes mass e-mails or letters and the conversations you will have individually in client appointments.
- If the markets continue their slide, send out a communication to all clients. Let them know you are watching what’s going on, and are prepared to make any changes that are appropriate when the time comes. One of the more interesting things I have learned from working with client groups is that they have little understanding of all the work you do on their behalf when they are not in front of you. Let them know. You don’t necessarily have to see them more frequently when times are bad but they need to understand that you are always diligently looking out for their best interests.
- Bring your clients together. If you have put off or neglected an advisory board, or have been considering starting one, now is the time to get it on the schedule. Engage your clients to tell you what they worry about. It may not be what you think. Get there guidance on the best ways of keeping in touch with the markets turned bad again. Whatever their concerns, get them to tell you what kind of communication with most effectively addresses their worries. Would it be letters, individual reviews, or group meetings? Should you be discussing their portfolios, or showing them the impact of a downturn on their financial plans?
- Act on their advice. When you implement your communication strategy, refer to your advisory board. Let all clients know that there is a group of clients you are actively engaged with to help you understand what kind of response would most effectively address what’s on their minds.
Many of the advisors I worked with in 2001 and 2008 were drained and exhausted by those difficult markets. The ones who kept in touch with their clients most effectively were rewarded for all that additional work with larger practices. Engaging your clients when things are bad will make your existing client relationships stronger and attract new ones.
Tags: Allocations, Bad Relationships, Bounce, Client Appointments, Client Groups, Client Loyalty, Client Portfolios, Client Relationships, Communication, Communications Plan, Conversations, Direction, Genius, Interest Rates, Interesting Things, Little Understanding, Market Downturn, Market Stock, Standout, Stock Market, Whack
Posted in My Practice | Comments Off
Wednesday, March 23rd, 2011
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Communications expert, Dave Paradi, discusses how advisors can streamline their message to prospects to make it more relevant, memorable and compelling.
Paradi outlines the four steps to a standout presentation.