I had just hung up the phone with a longtime financial planner friend of mine who had spent over a decade at his firm. During the course of our conversation, he lamented that the time had come for him to leave his current employer. Management turnover, ever-increasing amounts of paperwork, and an erosion of supportive corporate culture were all defining obstacles to a harmonious future for him. I asked him where he thought he might go and he really didn’t know yet, but added that it would have to be somewhere he could purchase a new book of business. When I asked why, he commented that he didn’t know how many clients would follow him. I was blown away.
“John”, lets call him, had literally been at the same desk for over ten years, which just so happened to coincide with the greatest bull market in history for his clients, had built up his clientele to over $150 million in assets under management and 400 households, and provided excellent Certified Financial Planner designation-backed advice to his clients. Stability? Check. Good enough returns? Check. Quality advice? Check. Confidence that clients would follow were he to move? Nope.
The reality of John’s concerns are not unlike many advisors I speak with. I get it. Great advisors don’t work 8am to 5pm jobs. They take their clients’ pain and fears home with them at the end of each day, put them back in their briefcase in the morning and lay them out on their desks again until they are solved. John was a great advisor. John solved hundreds of client issues. He should have been confident that his clients were going to follow him. He just wasn’t certain, it caused him anguish and it took a toll on him. I was going to help my friend.
I had spent my entire professional life in financial services; the first ten years in a client-facing role and the last seventeen in a leadership capacity. I had built books of business as a representative and helped build them as a manager. I had been recognized as a top tier producer at my firms when in a client facing role and my regions and divisions often appeared at or near the top of the leaderboards year after year while in management. I was qualified to lend my friend some advice.
I had been working on a new process that was born out of seeing situations exactly like the one my friend John was facing. His reality was not that he needed help expressing how qualified he was or that he could deliver best-in-class solutions. His issue was that he didn’t build (or reinforce) a connection between his clients and his entire practice that lay beyond his services. But his firm did!
In John’s case, his firm was a bank brokerage firm and they did an extraordinary job of communicating with his clients via regular mail, email, in-person greetings, internet and TV advertising, and over-the-phone. In the minds of many of John’s clients, he was an extension of their enterprise, not a separate destination of choice for the solutions they needed specifically from him. He was an avenue of convenience. If he wasn’t there tomorrow, they had faith that the bank would certainly find someone else equally as, if not more, capable than he was.
John didn’t do anything wrong. He delivered everything that was expected of him and more. He was easily accessible. His numerous awards on display throughout his office was enough visual confirmation for anyone to see that he was genuinely good at what he did. He stood out when compared to his peers. And that, as I explained to him, was exactly his problem.
John’s understanding and vision of what he wanted to build in the financial services industry was largely driven by what he saw other successful advisors doing to ensure their longevity. They acquired assets. They built recurring revenue streams. They evolved how they offered advice. Again, there was nothing wrong with how John built his practice. John’s milestones of success became a certain percentage of recurring revenue, a certain amount of assets under management and a certain number of high net worth clients. He focused hard on those and he got them. And in a sea of his peers, he stood out. He didn’t need me to tell him that. Those awards in his office backed that assertion, as they caught his eye every time he glanced over his monitor to see if anyone new might be in the lobby. What he did not account for properly, however, was how much he leveraged his firm’s brand in the extremely critical client acquisition process.
As good as he was able to position himself when comparing certain metrics of his practice to those of other advisors, he couldn’t compete effectively when he faced the prospect of comparing his brand to that of his firm’s. Because he could not compete effectively, and by that I mean that he could not offer something of value that would overcome the value proposition (implied or real) that every client held when choosing between John and the current firm, he gave up his ownership rights to the relationship. His right to say the client was “his” was conclusively denied in each moment John executed the firm’s call to action, using the firm’s resources, emphasizing the firm’s best features. He was literally reinforcing the firm’s comprehensive value over his individual knowledge to all of his clients with each passing meeting and phone call. To put it succinctly, he didn’t proactively and conscientiously offer something distinctive that inspired client loyalty on a scale that gave him confidence in his book … in HIS book … built over the last decade plus … following him wherever he may go.
What John needed to do was to focus on having areas of distinction as parts of his practice that would help clients connect his services to their needs at a level materially beyond cost and convenience. Loyalty is not bred of cost and convenience. Someone can always be cheaper, and the internet makes convenience rather ubiquitous. Loyalty, especially brand loyalty, is built on distinction. The brands Coke and Pepsi might be synonymously sodas but offer a Coke loyalist a Pepsi and see what their reaction is. Book a flight for a United Airlines loyalist on American Airlines and note how quickly the attempt to rebook is. You understand.
In John’s case, he didn’t have to offer something that no one else did and corner the market in an area of service, scarcity or strategy, but he did have to emphasize why he was distinct, even within the walls of his current firm. Distinction is powerful. By it’s own definition, it separates you from your competition, from your peers. His current firm marketed an in-house wealth management process to clients that was not available at other firms. Distinct. They touted the advanced training their advisors received. Distinct. They painstakingly messaged separate phone numbers and off hours personnel available to John’s level of clients. Distinct. John’s messaging? “I provide excellent client service, best-in-class advice, and access to some of the best money managers in the country.” Distinct? No. Honest? Yes.
The financial services industry will continue to evolve to meet the needs of our clients. Excellent client service, good advice, and world class money management are base level expectations, not distinctions to promote a client acquisition or retention model around. Clients plan and invest because those two components offer the opportunity to lead better lives. John, and every one of us, needs to connect with clients on that level first.
Planning and investing are seldom fun exercises for clients. Markets are scary. Planning eventually leads us to address our own mortality, as well as that of our loved ones. Not fun. But what lies beyond the exercise of those two bastions of our industry is the promise potential brings with it. The connection of that promise to how we offer the possibilities to fulfill that promise distinctly binds our clients to us. It does not make us stand out in a sea of our peers. It shines a spotlight on us as an individual. It makes us peerless.
That is our calling, our true north in the industry, to distinctly connect with clients in a way that emphasizes our individuality, is centered around their potential to enact a plan, and one that fulfills the promise of leading a better life. In that peerless connection everyone wins. The advisor wins a loyal client on the basis of their individually distinctive service or strategy. The client wins by being drawn to a practice that both identifies with and promotes distinct solutions that speak to the potential of a better life through those planning and investment opportunities. The firm that embraces distinct local focuses wins by retaining long term advisor-client relationships that mutually satisfy each other’s greatest need, the potential to achieve a better life.
In the end, John had to move and he found a firm where he could buy a book of business and make a new start. In some ways he will again achieve success knowing that the bills will be paid, he will be able to retire before he is 75 years old, and he will help clients invest. He has already told me how much he has targeted as a benchmark for assets under management in his first year, how many client households he will need to retain, and what amount of recurring revenue he will need to achieve to in order to feel truly comfortable. John is a great advisor. He will care deeply about his client’s concerns and he will put together solid solutions to overcome client issues. John will standout next to his peers. John will not be peerless.
Next week: Becoming Peerless
Terry Newman is a registered representative of Lincoln Financial Advisors Corp. Securities and investment advisory services offered through Lincoln Financial Advisors Corp., a broker/dealer (member SIPC) and registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates. CRN-2744063-092419