Most firms that engage our consulting services want three outcomes:
- to build a business that is independent of any one person’s personal efforts in the areas of sales, administration, advice or management;
- to grow a community of ideal clients who value their services year in year out, are enjoyable to work with, and act upon the advice and services provided; and
- to be paid profitably every year for the value they add to their clients regardless of factors beyond their control.
Over the years we have identified a few key implementation criteria which have proven reliable indicators of a firm’s potential and willingness to match their efforts with their goals. These are simple signs that provide glimpses into a firm’s character even before they become familiar with new approaches and methods that we introduce.
Test 1 – Advisers will record their client conversations
Properly positioned with clients, recording is as integral to the implementation of developing industrial-strength, non-person-dependent advice as roads are to the passage of vehicles.
The benefits of recording include:
- enabling full focus on the client rather than extensive note-taking;
- ensuring that nothing is missed by providing a complete record of meetings;
- providing valuable refreshers of early conversations for important reviews;
- providing the ability to critique and improve advisers’ meeting performance;
- differentiating through demonstration of a professional approach;
- providing the opportunity for other team members who weren’t in the meeting to better support the client.
Despite the benefits, people are initially not comfortable with taping their client appointments. Their reluctance is natural. However, like oncologists refusing to treat smokers who won’t quit, we cease our relationships with new clients if they fail to get over their discomfort in our first three months of working together. We can’t help advisers build world-class advice practices if we can’t see, critique, and support what they say, how they say it, and when they say it, particularly in ‘tough’ advice conversations with their clients.
We’ve heard all the excuses –
- “I didn’t think it was appropriate for existing clients”
- “I haven’t had an ideal advice client yet”
- “It raises too many questions in the client’s minds about confidentiality”
- “We only have one recorder, I pressed the button and it didn’t work”
- “We couldn’t find the recorder so we went ahead without a recording”
Like any tool, recorders need to be used and introduced properly. All of the above are excuses and reflect the adviser’s mental discomfort more the client’s discomfort. After years of successfully recording, most of our consulting clients now disengage from clients or prospects that refuse to be recorded. To them, it’s like surgery without anaesthetic – too hard.
Test 2 – Firm implements a minimum pricing policy
All our client firms are growing at a rate greater than the needs of their clients. This is one of the classic challenges of being successful and good at what you do and is as natural as night following day. Few firms, however, are ready for the ramifications of this.
Lifting minimum prices is tough, but the alternatives are even tougher. If firms fail to lift minimum pricing they will end up doing too much for too many clients for too little return.
Advisers naturally don’t want to ‘leave behind loyal clients’ who they perceive can’t or won’t pay the new minimum prices. So they reason that they will continue to service a growing majority that can’t afford the value they’re delivering.
No tools will help these firms. They’re destined to end up working in a professional salt mine, with lots of work and untapped opportunity, but increasingly lacking the very thing they seek – discretionary time.
Getting good new clients paying higher advice fees is a good indicator of growth and potential, and we acknowledge that initially, it is crucial for building the confidence for change. But it isn’t as good a measure of real progress and growth as getting loyal existing clients to accept price increases in fees as good value.
Test 3 – The right mindset
Like most consulting firms, we have a swag of templates, workflow models, training manuals, power point presentations, research reports, scripts, success stories, and other tools that we can throw into any of our assignments. But, unfortunately, many of these are only as useful as the ashtray on a motorbike if our client’s mindset isn’t ‘right’.
It’s not the firm’s size, experience, location, dealer group, or offerings, but rather, the mindset of our clients, that is the fundamental success factor of our engagement. It acts like a rudder and is the foundational element to the direction and attainment of outcomes of our work together.
Mindsets are like manners – you either have them and use them, or you don’t. You don’t turn manners or mindsets on or off to suit circumstances. We dropped a client a couple of years ago when they said that they were too busy in the middle of the year to use our methods and happily reverted to old practices during their ‘busy’ periods. Like surgery without anaesthetic, they were going to be too hard to work with.
Our clients really want to maximise the probability of their clients achieving their financial goals. That is the belief and mindset that drives them through the necessary discomfort of change programs that firms like ours impose.
Unfortunately, our industry too often looks upon developing product initiatives such as SMSFs, or ETFs, or new software as the silver bullet for their longer term success. Unfortunately too many see the risks associated with legislative change, global market movements or excellent initiatives such as APES 230 (Accounting Professional and Ethical Standards Board (APESB) – Financial Advisory Services draft standard. Refer to www.apesb.org.au) as threats rather than opportunities to build even better businesses.
I believe the lack of a supportive advisory mindset is hindering the growth of our profession more than anything else. The power of proper mindsets was a favourite topic of Dale Carnegie, who wrote in 1944 that “our life is what our thoughts make it” (“How to Stop Worrying and Start Living” Cedar Books (London ) 1944, page 113). He was quoting the Roman Emperor Marcus Aurelius.
Our business lives are what our business thoughts make them.
These are the best of times to be building world-class advisory firms whose fundamental quest is to get the financial lives of its clients in order and to keep them in order forever. It’s much more than a slick proposition. It’s a fundamental set of beliefs.