Are You a Pain Reliever?


by George Ray

I was recently stung by a bee in my backyard (one of the most painful places on the body to be stung). I’ve been taking some pain relievers to lessen the discomfort, and it got me thinking about how financial advisers can provide pain relief to their clients.  In fact, I believe that there are two primary ways that we provide value to our clients — by creating gains and relieving pains.

In my last post, we briefly looked at the need for financial advisers to continue to innovate and adapt their business models in order to avoid being disrupted — or wind up like Blockbuster, Kodak, or Blackberry (maybe soon). I’m a big advocate of completing an annual SWOT analysis (and have lead adviser workshops on the subject) so that advisers can examine their current strengths, weaknesses, opportunities, and threats (SWOTs).  This can be one of the most effective ways to build (and update) your business plan for the coming year (if done correctly). And although the SWOT analysis can be effective, I believe that we now have a need (because changes are occurring so rapidly) to actually take a step back even further by re-examining our business models much more frequently.

One of the key business model building blocks is your value propositionIt must describe how your firm’s products and services create value for your clients. If you can’t clearly show a potential or existing client how you can create value for him, you really have no business talking to the client. Most advisers think about creating value by creating gains for the client (and I’m not just talking about investment gains). We often suggest that we provide better service (although we have difficulty defining what that means exactly). We might focus on the array of solutions that we have available. Or how long we’ve been in business. Or how many credentials we have after our names.

But your value proposition isn’t about you.  It should be focused on your clients. And your clients often have pains — financial pains. You can differentiate your business from other advisers by letting clients know that you can be a pain reliever. In fact, here are some questions to ask yourself about the pain relief ability of your value proposition:

  • Can you make your customers feel better by killing frustrations or annoyances that give them a headache?
  • Can you fix an underperforming solution from a competitor by offering better performance, higher quality, or new features?
  • Can you relieve the pain of difficulties and challenges that your customers encounter by making things easier or helping them get things done?
  • Can you help your clients sleep better by diminishing their concerns or eliminating worries about their finances?
  • Can you limit or eliminate the conditions that develop from common mistakes that clients often make?
  • Can you break down barriers that are keeping your client from adopting better solutions?

Take some time to think about your ability to be a pain reliever for your clients. Consider all of the things that you do to help them to improve their financial wellness, and help them avoid getting stung in the backyard.  It really hurts.


What Will Disrupt YOUR Business Model?


It’s said that nothing is certain but changeLook at almost any industry these days and you’ll find it facing disruption from changes that are coming from multiple directions.  You really don’t need to look far for examples — just open up the business section of the newspaper. Oops. Wait a minute. You don’t get the newspaper anymore — do you?  Because as of the beginning of 2011, more people now get their news online than from reading a newspaper.  How do the newspaper companies feel about that? Disrupted, that’s how.

Ask the music industry how they initially felt about mp3s and digital music back in 2001. They were in the process at that time of making lots of money getting us to re-buy all of our old albums on CDs. They fought against digital music for years by suing college kids who were downloading songs over Napster on fast internet connections from their dorm rooms.   You could say that when it came to their business model, they’d ‘rather fight than switch’. (For the younger advisers out there, that’s a reference to a 1960’s Tarreyton cigarette commercial that you can watch on YouTube. By the way, since we’re talking about it, the tobacco industry’s business has also been disrupted — by industry regulations and societal trends.)

And when it comes to disruption, companies who have enjoyed success as a result of their business model often believe that their model can prevent them being disrupted. They believe that they’re invincible – kind of like Superman. Eastman Kodak had the market cornered on selling film, disposable cameras, and film processing equipment until smartphones got cameras. That was Kodak’s Kryptonite. Now people share photos almost instantaneously over Facebook and Instagram.  No more film. No more disposable cameras. No more selling expensive processing equipment to Walgreens.  Goodbye Kodak. You thought you were Superman, but you’ve just been disrupted.

Successful companies and industries can’t stand still.  They must continue to innovate. Even some of the shine has been taken from Apple recently as Google’s Android phones have been embraced by those who want a less expensive solution that also offers more control over how they may use it. And, disruption will continue. How will the automakers deal with the threat of Tesla and its amazing electric car (which is so safe that it broke the safety testing meter) as Tesla begins making more affordable cars for the general public?

I think you get my point.  If you’re a financial adviser who is complacent and you continue to believe that our business will look the same in the next 10 years as it does today, you are heading for the same fate as Napster, Kodak, and most of the small newspapers in our country.  So what can you do? You’ll need to adapt your businesses for the future by seriously thinking about what factors will cause disruption to your existing business model.

Disruptive changes come primarily from four key areas (and I’ve tried to include a few examples from our industry to help explain these factors):

1.     Industry Forces – Competitors (e.g., trends toward ensemble practices), new entrants into your business (e.g., will online robot advisers replace you?), substitute products and services (e.g., which products or services from another industry could replace yours?) changes in suppliers (e.g., to what extent do you depend upon a certain company to provide products or services?)

2.     Market Forces – Changes in market segments (e.g., where will the largest growth potential be?), their needs and demands (e.g., what are they trying to get done), revenue attractiveness (e.g., can they purchase less expensive services elsewhere?)

3.     Macro-Economic Trends – Global market conditions (e.g., how will financial market and economic changes affect your business? Remember 2008?), changes in capital markets (e.g., will your firm be able to get capital or credit if needed?), economic infrastructure (e.g., access to suppliers and customers), changes in costs of resources (e.g., human capital, benefits, etc.)

4.     Key Trends – Regulatory trends (e.g., will you have to become a fiduciary?), societal and cultural trends (e.g., will clients want to pay commissions or fees?), technology trends (e.g., desire for quicker access to data online), socioeconomic trends (e.g., changes in future disposable income and spending patterns)

Should you wait until these outside factors change the shape of your business model by pushing in from all sides, or would you rather proactively adapt? Is it possible to observe trends that are taking place and attempt to predict how they will affect our practices? Although it may not be easy, let’s continue to discuss business model innovation and how we can manage and adapt to the disruption that will inevitably occur in our business.

What Gets Referrals? It’s Not Always Obvious.

I love this article by Katherine Vessenes of Vestment Advisors titled “What Gets Referrals? Exceptional Service” recently published at ThinkAdvisor. The article is full of excellent ideas that her firm has implemented to gain more referrals. But, what I really liked is that right up front she says “Our system of getting referrals from our existing clients is counter-intuitive. We don’t ask for referrals at all. We just provide awesome service—it has worked great for us.” Katherine mentions that her firm does things for her clients that “are obvious to the client and things that are not so obvious”.

Although she divided them up a bit differently (‘obvious vs. ‘not so obvious’) than I did in my recent post (You Can Get Referrals. Just Don’t Ask for Them.), I think you’ll agree that it’s important to help clients understand what it is that you do for them (exactly), how and why you do it better than anyone else, and how it is helping them to reach their goals.  This should be obvious.  Although sometimes it’s obvious to us, but not as obvious to our clients – which is why it may take some extra effort.

I believe that the ‘not so obvious’ tasks (she calls them ‘covert’) need to be made more obvious to the client if we are to get credit for them.  In fact, making those task more obvious might even make them ‘remarkable’ for the client. Here’s an example —

Katherine’s first suggestion is ‘Make things easy’ for your client. It’s a great idea. The father-in-law in her example had already made the suggestion to move a 403(b) plan to an IRA. She agreed and offered to help. It’s interesting that what she did was actually ‘remarkable’ to the client, although it seemed ‘obvious’ to her. The reason it was actually remarkable to the client was because it was previously hard (i.e., Dad told son-in-law what to do, but never followed through to help). When she got everyone together on the phone and made the transfer happen for the client, it created a remarkable experience for the client (she made it very easy with a simple phone call).  I can just hear this client at a dinner party say to someone “Well, yes, my father-in-law is a financial adviser, but (although my wife won’t like me to say this) I would recommend Katherine. She’s made everything so easy for us and provides outstanding personal service.  She just picks up the phone and makes magic happen.”

I’d suggest looking at each of her ideas and consider what she did that helped the client understand the benefits of working with her and her firm, and consider when she also did something that the client felt was remarkable.  Then, decide which of her suggestions you can put into place in your own practice. As always, share your thoughts in the comments.

You Can Get Referrals. Just Don’t Ask for Them.

Duct-tape-over-mouthIn my previous blog post (Referrals? Don’t Bother Asking.), I suggested that most clients don’t feel the need to provide you with referrals because referrals are social currency, and your client has already compensated you (with fees, commissions, or both) for the work you did for him.  Unless he feels the need to increase his social status in your eyes, he has little incentive to provide you with referrals.  And, it’s likely that any referral you would get (as a result of asking) may not be ready to work with you right now.  Have you ever called a referral only to find that he isn’t actually ready to solve a problem that he may have (or may not even have a pressing problem at all)?  Who needs referrals who aren’t ready to do business?

In that post, I recommended that you must do two things to get referrals.  First, make certain that your client can easily talk about what you do and how you’ve helped him, so that when a situation does present itself, you’ll come to the top of the list as a solution. And, also give him something so remarkable to talk about that he will spontaneously combust if he doesn’t tell everyone what you did for him (so that he creates the situation himself, rather than waiting for it to happen).

      Before we continue, I’m also going to tell you that asking for referrals creates a negative experience for the client. No matter how much goodwill you created with the work you’ve done to help him, you just lost some of that goodwill by putting pressure on the client to provide you with a name of a friend, relative, or associate (out of the blue) before the end of your meeting. What you’ve done is made a withdrawal from your client’s emotional bank account. Do that every time you meet with him and you may end up with a negative balance in the account.

      So, how can you show your client how you are helping him?  There are many ways to do this, but here are two suggestions:

  • Open every review meeting with a list of specific issues that the client has asked you to help him solve.  And close every review meeting by summarizing those issues, explain exactly how you’re helping him to solve each one, and provide him with the current status.  These issues (i.e., goals) should be SMART – Specific, Measurable, Attainable, Relevant, and Time-bound. (Read more about SMART goals here.)  The less ‘SMART’ they are, the less likely that he will be able to talk about them when provided the opportunity. If you’re only helping him with ‘financial planning’, he won’t know how to explain what you’ve done for him to someone that he meets.  But, if he knows how much he’s going to need to send his kid to college and that he’s 50% there (and his son is currently in 3rd grade) — that’s something he can explain (by the way, that’s also pretty remarkable as well).
  • Keep your client focused on the results you are obtaining for him, not on the strategies or products that you are using.  He shouldn’t be telling anyone that he just bought a mutual fund or an annuity from you (especially if he doesn’t know why he did that).  He shouldn’t be talking about the features and benefits of the fund or annuity. Instead, he must be able to say ‘My adviser is doing a great job helping me to build a fund for my kid to go college.’  And, he must be able to offer specifics on just how you did this.  (“He found college cost projections for three schools we would like our son to attend, then showed us the amount we will need to save, helped us find money in our budget, and also opened an account for us to begin saving.”)

Your client will be overjoyed to talk about you without even being asked if he has something interesting, surprising, or unusual to say about you or something you did for him – something ‘remarkable’.  You had your assistant send him a birthday card – no, not remarkable in the least. Every adviser does this (we learn it on the first day of adviser camp). Called him on his birthday.  Better, but no.  Took him to lunch. Getting warmer. Sent him a sleeve of his favorite golf balls.  Better still (at least you knew which ones to send). Sent him an autographed note from his favorite golfer. Now we’re talking. But what if you were able to conference in his favorite pro golfer on the phone with you and him? No way! “I’ve gotta tell you what my financial adviser did on my birthday three years ago. You won’t believe what a great guy he is.” Remarkable? Yes, jackpot (He’s actually still talking about it three years later)!  Was it easy to do? Probably not.That’s likely what made it remarkable. By the way, you don’t need a special occasion for this (like his birthday).  Something can be even more remarkable when it’s done for seemingly no reason.

So ‘remark-able’ is surprising, unusual, out-of-the-ordinary, unexpected. It should be positive.  It should be personal – the more personal, the better. It will likely take some effort. Or at least it must look that way. When ‘remarkable’ occurs, we want to tell others about it as John Jantsch does with this story excerpted from his book ‘The Referral Engine’:

“One day my wife and I hit a sale at the outdoor gear retailer REI. During the trip she found a coat that she loved and bought it. A few weeks later, we went to an outdoor event and she took the opportunity to wear her new coat. As we went out the door she reached into the pocket and found a little slip of paper.

She pulled the slip out fully expecting something along the lines of “Inspected by #48.” Instead, the note read “You are a goddess!” That simple, unexpected message made her day. Of course, we both wondered, who made this coat? I checked the manufacturer’s Web site and discovered a very cool little garment company called Isis (www.isisfor, located in Burlington, Vermont.

This creative act, unrelated to the quality, cut, or color of the coat in question, compelled us both to think fondly of this company and voluntarily refer them to anyone who would listen. Something I’m doing right now.”

So, how do you help your client understand how you’re helping him, so that he can easily explain why someone should talk to you about a similar problem? What have you done that was so remarkable that your client wants to tell anyone who would listen? Share your thoughts with us in the comments.

Referrals? Don’t Bother Asking.

by George Ray

I just finished reading another article on how financial advisers should be asking for referrals. This one titled “Getting Referrals Your Own Way” by Ellen Uzelac appeared in Investment Advisor magazine ( on the web) in the August issue. It says that 90% of advisers don’t ask for referrals – even after firms host sweepstakes, offering luxury vacations.  These articles appear in the financial services magazines regularly. In fact, a quick Google search of the thinkadvisor website using the word ‘referrals’ produced 874 results – just from one financial advisor publication.

The article mentions Invesco’s new “Preferral’ program which begins ‘with a line that says something like this: “You have probably noticed that I don’t often ask you for introductions. That’s because I never want to make you feel uncomfortable, or seem like I am more concerned with my business than your family’s financial well-being.”

I can just imagine the client thinking: So why are you bothering me with this now? Just because you’ve never asked before doesn’t make it OK now. Just leave me alone. Are we done? Can I go now?

The article goes on to suggest that making the referral request more ‘personal’ by making an ‘appeal that emphasizes an individual advisor’s genuine thoughts, feelings and concerns’ is supposed to make this work.  Really?

20th Referral ImageLook, everyone has their own take on what works in terms of getting more referrals, better referrals, etc. There are referral coaches and lots of books about the subject.  But I truly believe that asking for referrals is not the answer.  In fact, if you have to ask, you won’t be getting anything that’s actually worth something.  And the more you ask for them, the less each one will be worth.  I heard a speaker once say that he could guarantee that his method would get you twenty referrals every time you asked for them.  So, how much do think the twentieth referral would be worth?

Let’s get something straight. You must understand that your client has no obligation to make a referral to you. Yes, even if you tell him that it’s one of the ways that you get compensated. (Most clients have heard that one, and are saying to themselves “No, I already did compensate you for the work you did for me.”)

Secondly, you should know that referrals are a form of social currency. If I make a referral, I’m making it to raise my status with whomever I am giving that referral to.  I’m essentially saying, “I know just the person that can help you with your problem. I’ve already vetted them for you.  I feel very comfortable telling you about them because I know that it won’t come back to haunt me. I’m secure in the fact that they will do a great job and you will come back with your problem solved, a big grin on your face, and a huge thank you for me. And, as a result, I know that to you I will now be a more valuable friend, associate, relative, etc.”

So, the client doesn’t receive an increase in social status by giving you a referral, Mr. Adviser.  Remember, you work for him.  And, he’s paying you.  In his mind, he’s already above you. Yes, you are his financial adviser, but essentially you are his employee — like his gardener, or his plumber.

Now, he may well refer his gardener or his plumber to someone in need of those services.  If he does, it’s for two reasons.  Firstly, he can say exactly what services are performed by this person. “I had a leaky faucet in the bathroom. This guy came and fixed it in five minutes, only charged me half of his regular rate, since it wasn’t a big job, and he was on time and put little booties on over his shoes when he came in the front door.”

Secondly, in order to get referrals, your clients need to be able to easily ‘remark’ about you to their friends and associates.  In order to get them to ‘remark’, you must make yourself ‘remark-able’.  The plumber did several things that made him stand out (i.e., ‘remarkable’) from other plumbers – only charging half his regular rate, being on time, and keeping the house clean by putting on his booties.

So, your client must know exactly how you have helped them, and your services must be outstanding compared to the ‘typical’ financial adviser.  If you satisfy both of these criteria, you’ll get referrals –without even asking.  But I believe that most advisers do a poor job at satisfying either one of these criteria – which is why they must attempt to beg ask for referrals (which, by the way, lowers their own social status in their client’s eyes every time they ask).

How can you make sure that your clients understand exactly what you do and how it has helped them? How can you make your services ‘remarkable’ enough to make your clients want to talk about you? Let’s discuss this in a future post.

You Must Be This Tall to Ride

lens2255369_1263225429Height_Sign_-_Laughing_PlI was looking through some old photos recently of when my wife and I took my daughter to Disneyland. (If you’re a parent, you’ve probably been there once or twice.)  One of the few maddening things about taking our kids to ‘the happiest place on earth’ is that there are rules to be followed that sometimes cause us problems — even though they’re meant to protect us.

Some of the best rides at the park have signs with characters holding out their hands to indicate how tall the child must be in order to ride. Small children are often disappointed when they find that they aren’t allowed to ride on certain attractions. Of course it’s for everyone’s safety, even if it doesn’t make life easy, but the park has a point — they can’t just let anyone on the ride.

As I was looking at the ‘You Must Be This Tall to Ride’ sign in that old photo, I began thinking about how valuable this might be for financial advisers.  Imagine that you have determined your requirements for becoming a client and could post them on the front door of your office — ‘In Order to Become a Client With Our Firm You Must Be This Tall to Ride’.

What I’m suggesting may make some advisers a bit uncomfortable. How could we dare keep potential clients out of our offices by pronouncing the requirements to become a client right outside the front door? You might tell me that it’s ridiculous. And, I’d have to agree. But that doesn’t mean that I couldn’t keep my ‘You Must Be This Tall to Ride’ requirements on my notepad or on my desk so that I can easily refer to them as I interview potential clients. And, maybe I should share the ride requirements with my staff as well.

As a practice management consultant, I’ve spoken to advisers about the importance of having an ideal client profile, and I’ve found that many challenges that advisers face in their businesses can be traced back to the simple fact that they can’t describe what their ideal client looks like.

Not having an ideal client profile can cause many different problems for you and your business. How do you know if you’re offering the right products and services, if you aren’t clear as to who your clients are? Are you wasting time, effort, and capital serving clients who are wrong for your business? How can you gain referrals if you can’t accurately describe to your referral sources the type of client you best serve and how you help them?

How do we solve this problem? Get a piece of paper and make yourself a sign.  At the top, label it ‘You Must Be This Tall to Ride’. Now write down what ‘tall ‘ means to you and to your firm. Is your client a small business owner? An architect? An engineer? A teacher? Does he live downtown or in the suburbs? On the north side of town or west of the river? Does he belong to a particular ethnic or religious group? What is his average age? What are his hobbies? What types of problems can you help him solve?

The more accurately you can describe your ideal ‘rider’, the more likely you will be to avoid ‘mishaps’ that can be costly to your firm.  Disney decides who gets to ride, and it’s still the ‘happiest place on earth’. You can be much happier by deciding in advance who get to go on your ride as well.

Let me know your thoughts in the comments.

Welcome to the Business of Financial Advice

Welcome to The Business of Financial Advice. As a veteran of the financial services industry, my intention is to share and comment on current news and issues that affect the management of a financial adviser’s practice. I hope that financial advisers will find some valuable thoughts, ideas, and insights on the complex business of providing financial advice to clients.