Dallas: "Even though I feel like we're reacting non-stop to incoming calls," says David, "It seems that every time I'm having a conversation with my better clients—and they're not usually the ones calling in—they're inquiring about how I'm doing, but not giving me any referrals."
What David described is not some idle phenomenon, but a trend that is building between affluent investors and their advisors. We have the data that supports this affluent investor conversation, but our data also tells us that most advisors are like David: They are not penetrating their affluent clients' centers of influence. In other words, they are not playing offense very well.
As you are probably aware, for nearly two decades The Oechsli Institute has been engaged in ongoing research projects that range from attempting to determine affluent investor wants and needs to what FAs are doing to successfully acquire affluent clients, to what sets elite financial advisory teams apart from other teams. Our most recent findings regarding the trust factor trend of affluent investors are very encouraging and speak directly to David's comments.
The Oechsli Institute's latest affluent investor research indicates the trust factor of financial professionals has experienced a statistically significant increase over the past 24 months.
Amidst this Category 5 Financial Tsunami—although not likely obvious to most financial professionals as the above chart clearly indicates—the trust factor the affluent place with individual financial professionals has improved considerably over the past 24 months. I recognize that most advisors will not be able to relate to these findings at first glance. The market is whipsawing on a daily basis and every "talking head" is trying to increase ratings by fueling the fire of fear and panic.
Yet, in spite of all of this—or better yet, because of all of the financial mess—affluent investors are desperately looking for advisors like David. This is a rainmaker’s dream. The affluent are desperately looking for a financial professional they can have a personal relationship with, who is professional enough and cares about them to the degree that they, the affluent clients, care about the advisor.
Statistically speaking, the affluent are searching for unbiased and trustworthy professional advice to help oversee their family's financial affairs through this Category 5 Financial Tsunami. These turbulent times, coupled with a lack of leadership, have prompted affluent investors to go back to basics with a 2008 reality check. They are looking for a personal advisor with whom they can sit down, and, if he or she meets their scrutiny, develop a personal relationship on a professional level.
The affluent clients are not usually the ones calling in crisis mode—unless they're not being attended to properly. David's affluent clients were not calling in a panic; when he was talking with them, they were concerned for him. David's practice has two core issues: One of his issues is that he has too many smaller clients. His other issue is much more common—he is not penetrating his affluent clients' centers of influence. In other words, he has no game plan.
You cannot discuss this opportunity and the strengthening trust factor without linking it to the "nuking" of trust in Wall Street; it is unlikely to fully recover within our lifetime. This is a perfect playing field for an advisor with a sound offensive game plan. Because affluent investors are getting increasingly concerned, they are becoming increasingly receptive to a second opinion on their financial affairs. The bottom line is that the affluent are looking for a trusted financial professional for guidance and advice. All indicators tell us that this is not a short-term trend.
How do you go about this? The answer is simple, but it’s not easy. First, unlike David—he's got too many clients and is not providing the proper level of service to his affluent clients—you must be the real deal for your clients. I suggested that David review the defensive game I outlined in the previous Practice Management e-letter. Assuming you have your defense in proper order, the following is a simple process of capitalizing on this strengthened affluent trust:
- Contact or meet with each affluent client.
- Uncover the name of someone who is center of influence (friend, family member, colleague) in normal conversation.
- Circle back to your affluent client (within two to seven days) and ask to meet the individual you uncovered.
- Make certain to emphasize that everyone needs a second opinion in today's environment.
- Schedule a "Market Update" breakfast/lunch/dinner for an intimate group of your affluent clients and the individuals you uncovered in their respective centers of influence.
- Always review your story and make certain that you are confident and reassuring both with clients and prospects.
As you reflect on your affluent clients and your game plan, keep in mind that although the trust factor has improved (49 percent to 73 percent for CPAs, 50 percent to 67 percent for financial planners, 36 percent to 50 percent for financial advisors), it is far from where it needs to be. Before you start quibbling over the individual data points (they are all statistically significant), imagine if you trusted your spouse only 73 percent of the time. Is it really that much better than 50 percent, or are you still headed to divorce court?
My point is simple: This is the rainmaking opportunity of a lifetime for financial professionals to perform the right services, the right way, for the right reasons to their affluent clients and prospects. Only through individual actions—one client and one affluent prospect at a time—can this trust factor propel your game plan forward within your affluent community.
Gone are the days of pitching financial products to earn a trip or because they pay well. Gone are the days of flashy brochures promising comprehensive wealth management, when only a fraction of this marketing message was being delivered. Gone are the days of trying to serve too many clients. (Sorry, David.)
Today is the time for the true financial advisor who serves his clients well (defense) and is mentally prepared (mindset) to aggressively prospect (offense) for new affluent opportunities.
As an aside to keep everything simple, in thinking about capitalizing on this improved affluent trust factor and to get it working for you, think in terms of framing every affluent client relationship as if that client were your mother. Within that context, affluent clients will consistently get the level of service and personal attention that would be showered upon an advisor's mom. With a little proactive prompting, your appeal to their centers of influence can be magnetic. And if you need any more incentive, keep in mind that over 96 percent of advisors are not playing offense in today's environment. In other words, there is no competition.
You must do everything possible to capitalize on this silver lining. Remember: Your actions over the next 12 months will define your practice for the next 10 years.
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Once again, we want to thank all of you who have emailed comments and questions to us. We will continue to do our best to answer each one. If you have any topic suggestions or special requests, please contact Rich Santos, publisher of Registered Rep. and Trust & Estates magazines, at firstname.lastname@example.org.