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What Have You Done For Me Lately?

What Have You Done For Me Lately? Articulating your value as a financial advisor is more complex after two years of market turmoil. And more necessary. By Marie Swift – Printed July 1, 2010 in Financial Planning Magazine.

Almost two years have passed since the financial markets cratered in 2008. You may have been shaken, but if you’re reading this, you survived. Your clients regained at least part of their losses. They may have learned a few tough lessons about risk, trust and patience. And they appreciate you for holding their hands through the worst. They’ll be your clients forever. Or will they?

Do your clients understand the true value of what you do? It’s an important question, especially now that volatility appears to have returned to the markets. Are you sure your clients aren’t wondering why they’re paying you a percentage of their assets-and losing money? Again? Is losing less than the S&P a sufficient measure of your worth?

The clients are restless. Client service and retention are still Job One. Your best defense may be to make sure that you’re articulating the value of the various services you perform.

“No doubt about it, 2010 will be characterized by the word change-clients seeking new advisors, advisors seeking new homes and mergers among firms that recognize that they can’t go it alone any longer,” says Andrew Klausner, founder and principal of AK Advisory Partners, a brand creation and marketing firm in Boston. “The common denominator among these trends, and the need we see, is that to be successful, advisors must clearly articulate their differentiating characteristics-their brand. Merged firms need to articulate the benefits of their new organization, and advisors who have switched firms need to convince clients to move with them.”


“There are lots of underserved clients,” says Chip Roame, founder and managing partner of Tiburon Strategic Advisors in Tiburon, Calif. “And while they may have been unhappy for a while, they were probably unwilling to move until now, because they were too scared. In addition, clients are aging, so we are going to see some account consolidation.”

Tiburon’s research shows that traditional full-service brokerage firms and banks are losing market share to independent advisors and, gulp, discount brokers. But contrary to popular assertions, he says, clients are not leaving wirehouses and banks en masse and running to independents.

One reason: It is easier and more tempting than ever for clients to go it alone. There is a wealth of information online via discount brokers (such as Vanguard, E*Trade and Schwab) and specialty online services (such as Financial Engines, Smart 401(k), Balanced Zone Investing and Folio Investing).

“Now that people have recovered from 18 months of seemingly endless bad news, they may be looking at you and the value you provide,” Roame says. “Clients now have a year’s worth of data to evaluate their advisors on how they reacted to the financial crisis and whether what they are doing for them is working. Investment management and advisory firms that have lost significant assets have had a year to see if they have been able to successfully adapt, operationally and strategically.”


“The crisis was one of those near-death experiences,” says Bob Veres, publisher of Inside Information. “The best advisors have been quick to communicate to their clients things like, ‘I’m going to be here worrying for you,’ and ‘I’ll see you through.’ They have built closer personal relationships,” Veres says.

The most important service the client needs? According to Veres, it’s hand-holding: “Someone who’s adaptable enough to help with personal life planning issues and put together a well-organized portfolio, who’s a good communicator, who can help them understand what insurance to buy. Someone with deep knowledge who can quarterback the entire process.” But clients have to recognize this multifaceted expertise-which means you have to make it part of everything you do.

Sue Stevens, founder of Stevens Wealth Management in Deerfield, Ill., and author of Put Your Money Where Your Heart Is, agrees with Veres. “At the end of the day, clients are looking for peace of mind,” she says. “It’s especially true when there’s a lot of volatility and uncertainty. Anything we can do as advisors to keep things calm is valued.”

She continues, “So we are very clear in laying out expectations. We’ve boiled our investment policy statements down to two pages; they are plain English and simple to understand. We update them every year and talk about them so that people know what to expect. Then if the market is volatile, we can say, ‘Look, we’re still within the parameters you were comfortable with,’ and generally that helps.”

Stevens also puts a lot of emphasis on deep diversification. She builds portfolios with 18 different asset classes; each one has a purpose in the portfolio. She goes through that individually, with each client, in the annual review. She also writes a monthly newsletter called Radiant Wealth.

“Stepped-up communications help clients understand what they are getting-the goal being peace of mind,” Stevens says. The firm recently upgraded its website, adding a client vault-something that’s become more important for today’s mobile clients. “It’s part of our value proposition when we talk to prospective clients,” says Stevens, who also rolled out two new tools last year: The Financial Bridge Binder, which helps clients organize their important information and documents, and a Personal Score Card, a life goal report card of sorts.

“It’s amazing how a simple tool can reassure people,” Stevens observes. “We try to make everything as visual as possible because a lot of people respond to that. They like colorful communications, they like simplicity and there’s a lot of giggling when I tell them this is their report card. So I think it adds a little bit of lightness to everything.”


Client retention may boil down to building trust, but the worst way to get anyone’s trust is to demand it directly. “The more you tell people, ‘Trust me,’ the more they won’t,” says Mark Tibergien, CEO of Pershing Advisor Solutions in Jersey City, N.J.

Even if you’re completely honest, don’t expect that to come across as obvious. You have to show, not tell, that you’re aboveboard, Tibergien continues. “Demonstrate the control processes, showing that you provide protection for your clients. Are you using an independent custodian? Are you affiliated with a well-known broker-dealer? Explain to your client whose interests are being served and how you’re compensated.”

Beyond your honesty, Tibergien adds, is the issue of your competence. You need to get across your expertise, not only the training that helped you become a financial advisor but also what you do for continuing education.

“My recommendation is a Rights and Responsibilities Manifesto,” Tibergien says. “This is a document you hand to clients, which explains both the expectations they should have about your performance and the responsibilities they have to meet.”

Stevens demonstrated her commitment to a transparent practice by writing a piece to her clients that described the rigors involved in completing the firm’s annual compliance review. “I talked about how the process helps us be better advisors. I also mentioned that the SEC will be checking independently with the custodian and possibly with our clients to make sure that the balances all tie up. It’s unnerving for the client to get a call from the SEC. The right thing to do is tell the client, ‘The SEC has a new rule, and you may hear from them. That doesn’t mean anything’s wrong, it just means they are trying to be more diligent.’ I try to communicate any time I can set expectations.”


Of course, trust is not only about how you communicate-although that’s certainly important. Scandal has tarnished so many distinguished Wall Street names that branding has become problematical; why not go with advice from some blog or a financial news show, since you aren’t going to get a fair shake from the big guys anyway?

It’s actually a fair question, and one an advisor should be prepared to answer. Financial advisors can provide what websites, news shows and Suze Orman can’t: customized wisdom. According to Blaine Aikin, CEO of fiduciary training center fi360, “Professional advice, the kind people value enough to pay for, cannot be commoditized. Advice is personal. It requires a relationship of implicit trust.” For him, problems begin when advice becomes intermingled with product sales, muddying the waters of what exactly advisors are offering.

Today advisors have to work harder than ever to show they are competent professionals and not just salespeople. “Competence is best demonstrated by professional designations and newsworthy accomplishments in the field, such as published works, public speaking experience and professional awards,” Aiken says. “Good judgment is evidenced by a compelling depiction of the processes the advisor uses to develop sound recommendations and by impeccable references to attest to the efficacy of these processes.”


With all the changes in the way the public is approaching financial advice, smart advisors have not been standing still. They’ve been working to grow and change with the new environment. “They are not so much reinventing themselves as continually improving,” Tibergien says. “These intellectually curious advisors ask themselves, ‘How can I better serve my clients?'” They display high integrity mixed with humility.

They also have a sense of history. Many of them have been in this business for years and have seen many changes. Individual advisors are holding one another to higher standards. “Anyone who has been around this business has seen the quality of the craft improve,” Tibergien says.

This may be in line with what Aikin sees-an evolution of fiduciary status, often embraced by high-end RIAs. He sees two kinds of fiduciary advisors today: the true, or what he calls “avowed,” fiduciary and the “functional fiduciary”-the advisor who provides ancillary advice without formally accepting fiduciary status. This kind of advisor is generally associated with a broker-dealer or insurance company. He or she is technically operating under the fair dealing or suitability standard. In these situations, by statute, advice provided is incidental to the advisor’s product sales role.

It is with this kind of advisor-the functional fiduciary-that Aikin sees radical change, as regulators, professional associations and the investing public push all advisors to become more accountable. In addition to regulatory change, there has to be cultural change as companies make the shift from a sales culture to an investor culture that makes clients’ interests paramount.

Aikin is optimistic about the advisors, if not the companies themselves. “The functional fiduciaries in the field are tired of being depicted as greedy salespeople,” he says. Indeed, Aikin sees a significant migration of top representatives to the RIA world. “They see that the future of advice is fiduciary, and they don’t want to be the last to adapt.”

If Aikin sees the moves as a big external change, George Kinder, founder of The Kinder Institute of Life Planning in Littleton, Mass., sees them as result of internal changes too. He’s seen advisors think about how they can deepen their relationships, improve their skills and deliver what clients want. “These past years have led to a lot of soul searching,” Kinder says.

All of these thoughts, of course, lead back to a discussion of value. What are clients getting from their advisors? What do advisors expect their clients to get? And is it more a matter of reality or perception?

Tibergien says the answer comes from listening. “You have to define value in terms of outcome you agree upon at the start of the engagement,” he says. “Let’s say you have a client who comes to you worried about being able to afford to retire or pay a child’s college tuition. You can characterize your value in terms of filling those objectives. But if they say, ‘I’m concerned about independence’ and you’re just talking about financial return, you’re missing the message.”

Aikin believes investors have taken a major turn in how they approach money management. “The financial crisis opened investors’ eyes to the fact that prognosticators of performance are of questionable value in long-term investing and serious financial planning. Most people will recognize value when they see it.”

So what’s an advisor to do? Not run away from the uncertainty, but embrace it: Aikin believes advisors can offer a message that will resonate with investors if they say, “I can’t predict what the economy and markets are going to do, but I can give you certainty about the sound approach we are going to take in working together to meet your financial objectives.”


All of this-a sense of value, the issues of trust and the historical understanding of investor attitudes-leads to your first meeting with a prospect. You never get a second chance to make a first impression. So what can you ask your prospect in order to start on the right foot in today’s environment?

“Broad, open-ended questions show that you really care,” says Kinder, who suggests these two key queries: Is there any thing urgent you need to talk about? If we were to work together over a period of time, what would you like to have happen? Kinder also stresses that how you deliver these questions is important. “Don’t leap in with spreadsheets. Pause after each question and leave several moments for them to say something else. Ask if they’re sure they’re done.” Follow verbal cues. For example, if they then answer, “No, not really,” that means a lot more is coming.

Steve Saenz, managing partner of Advisor Solutions Network in Atlanta, says the purpose of opening questions is to try to understand prospects’ relationship with money. What does money mean: A yardstick of how they’re doing in life? Flexibility and freedom? Creating a legacy? “You have to get to that understanding,” Saenz says.”


So how do you get clear on your value? Peter Boland, senior director of marketing at BlackRock iShares explains it this way: “You may think your appeal is your investment philosophy or service offering, but it’s probably a human quality you don’t realize you have.”

To find the key to your differentiation, Boland suggests talking to your loyal clients a couple of times a week for a few weeks. “In time, you’ll start to pick up on their language, rather than your own-and that’s where you’ll find the keys,” he says.

Now look inward, Boland continues. “Ask yourself: ‘Why am I doing this? Why do I like it?’ The journey in your mind and your client’s is, ‘What do I stand for?’ What part of that resonates with clients? Then meld those together.”

Stevens says the biggest value advisors bring stems from their critical thinking. “The ability to keep a clear head and to think things through, that’s why a client hires us-because we can think critically in completely new situations.”

 Marie Swift is founder and president of Impact Communications in Leawood, Kan.

One Response to “What Have You Done For Me Lately?”

  1. Petey Parker says:

    Great and informative article. Today’s market well defined! Petey

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