If You’re Seeking Profits, Try Leadership

Advisers are constantly telling me how hard it is to make money in this marketplace.

For me, there are two distinct markets operating at the moment. One is developing nicely, taking on more clients, and looking for more advisory staff. The other is considering cutting back wages and the drawings of owners, and wondering which financial index will provide first clues of a light at the end of the current crisis.

I believe the difference between the two markets can best be summed up by one word – Leadership. One group provides leadership for its client base; the other seems resigned to following market sentiment.

During my two years attending Dan Sullivan’s program in Canada (Dan Sullivan is President and Founder of The Strategic Coach, a firm offering excellent programs and courses for entrepreneurs – see www.strategiccoach.com), it was drummed into us that there are basically three things entrepreneurs can provide to add value to their clients:

  1. Direction – help clients identify objectives and forward paths;
  2. Capability – provide relevant options, choices, products, services, and expertise to assist clients’ attainment of objectives; and
  3. Confidence – grow and develop ongoing professional relationships which support the implementation of advice.

In the current marketplace, I believe lack of Direction is causing the most angst – amongst ourselves, and with our clients.

You can’t provide direction if you don’t first desire to be a leader. Thus, my original point – the difference between the two advice markets is Leadership.  Advisers taking a leadership attitude revisit their clients’ goals, outcomes, fears, and circumstances, and then show them the financial direction they need to be taking. Unfortunately, the majority of advisers are taking a followers attitude and waiting for clues on what direction to advise their clients on.

You trained hard and gained lots of experience to get into the position you are in today. You’ve made a career of financial analysis, maintaining your professional development requirements and constantly listening to clients’ needs, frustrations, hopes, and situations. If you’ve been in the industry for, say, ten years, and had on average one client appointment each working day, you’ve had approximately 2,000 conversations with clients about their financial lives.

On top of this, you’ve engaged with other prospects, advisers, product manufacturers, analysts, strategic allies, dealer groups, centres of influence, platform providers, team members, and consultants, about a whole range of topics that help you deliver the best possible advice for each particular client.

What I’m getting at here is that professionally, this is your world.  If anyone should know the best possible direction for clients to take, it’s you. So take a direction, make a line in the sand. Just do it.

Research on Adviser Leadership

Our USA partner CEG Worldwide (www.cegworldwide.com) conducted interesting adviser research three weeks post September 11, 2001. They asked advisers: “Why haven’t you been proactive in your contact with clients since the terrorist attack?”

Advisers replied that they were:

  • too busy (76%);
  • focusing on handling incoming calls (66%);
  • evaluating markets (61%); and
  • fearful of their clients being upset (36%).

Whilst the causes are different, this study clearly indicates that the majority of advisers aren’t thinking of being a leader by engaging with their clients.

Taking the Leadership Approach

Taking the leadership approach with your clients isn’t easy. Particularly when market returns and certainty have been your firm’s primary leadership pitch in recent times.

Let’s say you want to be more of a leader with your clients.  Does that mean –

  • You won’t doubt yourself?  Of course not.
  • You remove all uncertainty and risk from your advice?  Of course not.
  • You won’t wake at 3am, worrying about some of your recommendations with certain clients?  Of course not.

But in this marketplace, that’s what your clients are paying you for – your direction, your leadership.

The firms that are doing well are those which – despite the uncertainty, bad press, and fear-mongering – are taking a leadership approach with their clients. To paraphrase Rudyard Kipling’s IF, they’re keeping their heads when everyone else is losing theirs and blaming it on you.

These firms are being tested and challenged everyday by the fear and uncertainty in the marketplace. But that’s exactly why they are doing well. Whilst the majority of advisers await markets’ return to health, when they can add value by the alpha in investment funds, these firms are adding value while returns are negative, by adhering to their convictions and their experiences and remaining unwavering in front of clients.

Do these firms taking leadership accept their dealer group’s or product supplier’s doctrine like lemmings? Definitely not – these firms constantly debate internally, to challenge and fortify their stance.

As one of these firms challenged their clients:

“If you are tossing and turning at night with worry, then you are obviously not paying me enough money – that’s our job. If we need to do something different we will tell you. I appreciate your concerns (and in some cases, margin calls), but, in our opinion, you are still on the best possible direction to maximise the probability of you achieving your financial goals.”

Obviously, not every client is the same. Nor, therefore, is your pitch the same – but your intent must be to take leadership, back your judgement, and strongly advise your clients when they need strong advice.  Don’t retreat from that.

As for clients in your database who don’t take your advice – that’s different.

It’s hard to be an adviser when clients don’t see you as one. You can deliver all the leadership rhetoric under the sun, but it’s like trying to get a Collingwood supporter to back another team – it won’t happen. So what do you do for these clients?  Treat them with respect, but don’t count on them being long term advice clients.

Advice is like leadership. It isn’t a product or a commodity – it can’t be delivered like hamburgers. It’s intangible and hard to compare. It’s the glue holding together all the vital components of the plans your clients need to best achieve their financial goals.

Don’t undervalue it, give it away, or dismiss it. Your best clients will realise that your (properly delivered) financial leadership and morals will underpin and influence their most important decisions in these most uncertain of times.

The same leadership and morals must underpin the new advice profession that will emerge stronger from this crisis. The question for you is: Do you want to be a part of that new profession?

These are the best of times to be building a valuable advice firm.

Image: Salvatore Vuono / FreeDigitalPhotos.net

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