Clients may want to string up Bernie Ebbers and Ken Lay when they see what the corporate scandals are doing to their portfolios. But this is an opportunity for you: Investors aren't holding their financial advisors personally responsible for their losses. They're looking for solutions, not someone to blame. The question is: Where are they looking, and who is really stepping up to the plate to help them?
If you fill that need, you can come out of this a winner. Be proactive and take full advantage of the window that many upper middle class and affluent investors have thrown open. Although they have sought financial advice from their accountants, their lawyers, their brothers-in-law, they are now eager to find that “go-to” advisor who can provide strategic direction to all their financial affairs. Far too many advisors aren't grabbing this opportunity. Here's a case in point:
Following a recent workshop, Marty told me that a client called to report on a meeting with his accountant and attorney to discuss the profit sharing plan for his business. The attorney, he was told, made switching to the Safe Harbor Plan seem like a no-brainer. Then Marty sheepishly told me, “My client asked why I wasn't there — and his attorney replied, ‘He's not smart enough.’” Ouch!
He admitted that the attorney's assessment wasn't far off. “My entire focus has been on fielding phone calls and trying to keep clients in the market,” he told me. “I have failed to think through and explore all the other ways I could proactively refocus and service my clients and demonstrate my ability to be at the center of their financial decisions rather than on the outside looking in. If all I'm going to do is focus on the fluctuations of the stock market, I'm in serious trouble.” This was a hard lesson learned well.
Who was the business owner's financial VIP? Was it the accountant who set up the meeting, or the attorney who provided the solution? It's hard to say, but it sure wasn't Marty. The term “financial advisor” doesn't even fit here. Marty readily admitted he was a “broker” whose greatest fear was being criticized by his client for his portfolio being down.
Fear causes us to hide. Marty should have attended the meeting. Actually, the meeting should have resulted from his strategic direction, even if it was the accountant who arranged it. Marty not only missed this chance to be the VIP for that client, he lost out on the word-of-mouth influence that could have been generated by the attorney, the accountant and his business owner client. It's a huge loss.
The irony became apparent. This client doesn't expect Marty, his financial advisor, to be the expert in recent tax law changes or Safe Harbor Plans. What he does want is someone coordinating his financial affairs. Now Marty is worried about losing not only this client, but also his substantial center-of-influence.
I share this with you not to embarrass Marty, but to highlight the lessons he learned. Our conversation didn't end there. We also talked about how Marty could change his direction. Here is a handful of suggestions that came from that discussion.
Do your homework on new platforms, changes in legislation and financial opportunities, 529 plans, Safe Harbor Plans, interest rates, etc. Keep asking yourself, “How can I use this to uncover and capitalize on the VIP windows out there?”
Contact a specific number of clients every day and discuss every aspect of their finances. It's also important to understand the difference between a hand-holding market contact and a knowledge-based financial solutions contact.
As you schedule each client meeting, determine specific objectives for that meeting and identify any outside experts needed to meet those objectives.
Make a specific number of prospecting contacts every day.
I suspect there are many advisors like Marty. They're not stupid, but they aren't being smart about the opportunities out there. They've regressed into thinking and acting like brokers, not financial advisors. It's your choice. Capitalize on what's out there, or pull the blinds shut and wait for the market to be kind.
Matt Oechsli is an author and president of the consulting firm Oechsli Institute. oechsli.com