Good riddance, 2020. We welcome you with open arms and high expectations, 2021. Now let’s get to work and make the coming year one of great success and fulfillment. But how?
There is no shortage of people who will tell you what you need to do to give your firm an edge and make 2021 your best year ever. Gurus are everywhere like ants at a picnic.
“Reinvent your tech stack.”
“Develop a full-immersion digital marketing strategy.”
“Add Bitcoin to your portfolios.”
“Embrace Big Data.”
“Sell out to bigger firm.”
On and on.
Well, I may be just another ant at the picnic, but I think you need to start with basics. Before you can determine if Bitcoin, big data or any other prepackaged, recipe-for-success advice is right for your firm, you need to get in touch with your values.
What Are Values?
Values are principles we internalize to help guide our behavior and serve as criteria for the evaluation of people, events and actions, including our own.
According to the academic research (Shalom Schwartz, 2012), values have the following characteristics:
- Values transcend specific situations.
- We prioritize our values in order of importance to us.
- When values are activated, they evoke strong feelings.
- The impact of values in everyday decisions is rarely conscious.
- Values enter awareness when contemplated actions create conflicts among our values.
I have dipped my toe into the literature on values enough to know that there is no universally accepted list. But Shalom Schwartz, a preeminent values researcher, developed the following framework for understanding what he maintains are the 10 universal, cross-cultural values.
An Overview of the Schwartz Theory of Basic Values (2012)
Schwartz distilled his list of 10 universal values based on research involving thousands of individuals in 67 nations (Ronald Fischer and Schwartz, 2011). He found that the nature and structure of value systems across culturally diverse groups were consistent. However, individuals within each group have vastly differing value “priorities” or “hierarchies.”
As you review the Schwartz circle of values, you probably identify strongly with some values, moderately with others and not at all with others. Now you are getting in touch with your own personal values hierarchy.
You can probably think of people who are motivated by a values hierarchy similar to yours. Others come to mind who are motivated by a values hierarchy very different from your own. This confirms Schwartz’s finding that individuals prioritize their values differently.
Why Are Values Important?
“Know thyself,” is an ancient Greek aphorism carved in the forecourt of the Temple of Apollo at Delphi. It appears in the writings of Socrates, Benjamin Franklin and Ralph Waldo Emerson. The importance of self-knowledge has been recognized for centuries and for good reason.
Values drive behavior (Versnal and Koppenol, 2005; Schwartz, 1992; Locke, 1976). We see it every day in the headlines and in our own personal lives. Although they often operate at an unconscious level, we are the product of our deeply engrained values.
Values also drive the behavior of organizations (Abbott, White and Charles, 2005; Schwartz, 1992). Therefore, a firm’s values affect its performance.
Since values drive both individual and organizational behavior, they have a significant impact on our successes and our failures. This makes understanding them crucial as we plan for success in the new year and beyond.
There are a number of practical reasons why this is so. First, since your values drive your behavior, they determine the type of experience clients will have interacting with you. This will, in turn, determine the types of clients you attract and their satisfaction working with you.
Let’s take an example using the Schwartz circle of values. Imagine an individual whose top three values are Achievement, Security and Tradition. Now imagine another individual whose top three values are Benevolence, Self-Direction and Stimulation. The experience of dealing with these two individuals will be very different. Clients will sense and react to the difference.
Knowing this allows you to target your messaging to attract prospects whose values and inclinations more closely coincide with your own. This will save you time and improve engagement. It is also likely to have a positive impact on the level of referrals you receive.
Messaging based on your values will reduce the size of your target market in the same way niche marketing does. But it will increase your appeal to those who share your values. Those that do will identify with you at a deeper, more genuine level.
Values can also help differentiate your firm from others. In a world of sameness, your values may set you apart in a positive way. We are all sick of tag lines, slogans and manufactured sales pitches. Focusing on your values may help you establish an authentic connection to your target market and provide prospects with an insight into the “why” that drives your firm.
Understanding your values can help you determine what products and services to offer your clients. To use the Schwartz framework again, if Benevolence is at the top of your values hierarchy, you may limit your offering to low-cost investment products that you believe will provide long-term benefits to your clients. If Achievement tops your values hierarchy, you may offer products that are easy to sell or compensate you well for your efforts.
If you run your own firm, understanding your values can contribute to its success. The research shows that organizations that align firm values with individual values experience and sustain “improved performance.” (Lagan and Moran 2005).
Examining your values can help you determine if financial services is even the right business for you. Our industry is becoming more of a service-oriented and less of a product sales business. The days of the “big producer” are far from over, but what it takes to be successful is changing.
If you are not willing to assume the mantel of a fiduciary and become your clients’ trusted advisor, your days are numbered. Churn ’em and burn ’em is dead, or at least dying. You will need to embrace a true servant mentality to remain competitive. It’s not for everyone.
Don’t try to fake it. Research suggests that humans can detect trustworthiness with better than chance accuracy after very short periods of face-to-face interaction (Bonnefon, Hopfensitz and De Neys 2017). This ability may flow in part from the findings of French neurologist Guillaume Duchenne, who in 1862, published his discovery that real and fake smiles use different muscles.
Obviously, this ability is far from flawless. Fakers and con men have been with us forever. But over time, the untrustworthy and the self-serving are eventually exposed. If you are not prepared to provide dedicated service to your clients, you are swimming against the current.
The Most Important Value of Knowing Your Values
Knowing thyself frees you to be thyself and define what you want your life to look like. This is far more rewarding than gaining wealth and power based on a script written by someone else.
The research confirms this. Consciously aligning your values with your actions can contribute to your professional satisfaction and personal happiness (Wang and Milyavskaya 2020). Laboring at a firm with values that differ from yours can contribute to inner conflict, unhappiness and even depression.
If you are at a crossroads, knowing and embracing your values can help you develop a clear path forward. You will know what you want to accomplish and have passion for your goals.
Knowing your intended destination does not mean you will safely arrive there. You will encounter obstacles and may even fall short of your goals. But in the words of Theodore Roosevelt, you will “at least fail while daring greatly, so that [your] place shall never be with those cold and timid souls who neither know victory or defeat.”
What to Do Next
Now that you understand the value of values, consider proceeding as follows.
Reflect on and identify your values. If the Schwartz circle works for you, use it. But don’t feel compelled to define your values in those terms. It’s fine to use terms like honesty, teamwork, respectful communication, reliability or any other terms that resonate with you.
If you run your own firm, articulate your values to your colleagues. Make sure everyone knows how those values are to be translated into action. Don’t just post them in the breakroom. Establish a culture that reflects your values in every way every day.
Hire only people who buy into the values of your firm. You might have to pass on some talented people, but maintaining the firm’s values culture is more important long term.
Then reward behavior that is consistent with your firm’s values. It’s fine to compensate the big producer for revenue generation, but not if it is accomplished at the expense of your firm’s values. If teamwork and respectful communications are cherished values, make those part of the compensation formula. Doing so lets everyone know you are serious about your values.
Know thyself and dare greatly in the new year and in each year that follows. According to this ant, that’s how you build a successful practice and a fulfilling life.
Scott MacKillop is CEO of First Ascent Asset Management. He is an ambassador for the Institute for the Fiduciary Standard and a 45-year veteran of the financial services industry. He can be reached at [email protected].
