At the crux of every business is (or should be) the desire to help your clients and customers while also generating revenue to benefit yourself, your family, your employees, etc. In the financial services industry, this typically manifests itself as the ability to attract new assets and do good work for your clients. Today’s show is part 1 of a two part series explaining how both Preston & Cleveland Wealth Management and Abacus Planning Group have developed effective techniques to attract prospective clients and convert them into long-term relationships.

When Brian conducts a prospect meeting at P&C, he uses individual handouts. He notes that when going into a meeting, he never has a specific order in which he plans to present the information. Rather, he attempts to feel the prospect out and determine if there is a real connection being made. This allows him to not spend a ton of time meeting with “tire-kickers” – or individuals who shop financial planning like it was a commodity. This feeling-out process also allows Brian to gauge not only if he is going to be a good fit for the client, but would this client be a good fit for his firm? An advisory relationship is by no means a one-way street, it is (or should be in most cases) a life-long commitment by both parties. Brian recognizes that determining this solid fit at the onset of the relationship isn’t just good business, but it also provides him with a better quality of life by avoiding those relationships that could potentially be too large of a time or emotional drain.

One of the first pieces of information Brian shares with prospective clients is an article by MSN Money columnist Liz Pulliam Weston titled “8 things your financial planner won’t tell you“. Providing prospective clients with information like this is great because it immediately gives you the opportunity to disarm some common worries they have such as:

• Are you qualified to be an advisor?
• Do you have any obligation to put their interests ahead of your own?
• How do you get paid?

She goes on in the article under each of the 8 points to include ‘Your best bet’ which details what an individual should look for when searching for an advisor and specific questions they should ask in the initial meeting. Brian allows the prospect to take this article with them and encourages them to ask those very questions of any other advisors they may be meeting with. Brian notes that this works very well for his niche client base because it appeals to those who have a “wounded” investment heart. Cheryl also mentions that meeting with as many people as possible and role playing in the early stages can help you better refine the narrative and story-line you present to each of your prospective clients.

The next pieces of data that Brian shares are his Power of Diversification handouts . These are internally created documents developed at Preston & Cleveland to show prospects how powerful very simple diversification can be as well as why it is absolutely necessary to have an adequate time-horizon when investing in the equity markets. It shows the best, worst, and average 1,3, and 5 year returns for portfolios ranging from very conservative to very aggressive. Brian states that this is a great tool because it allows him to set and control expectations at the very beginning of the relationship.  After using these handouts to explain the power of staying-the-course, he educates his prospects on The Cycle of Market Emotions  , and lets them know that there are going to be ups and downs peaks and troughs, but to be a successful investor it is necessary to remove unreasonable emotions from the financial decision making process. He notes that he is often able to pick up on an individual’s appetite for risk based on their responses to these illustrations.

Another piece that Brian often uses is Playing the Odds . This is another internally created document that is used anytime a prospect mentions “Well isn’t investing in the stock market just like gambling?”. This piece shows significant bull and bear markets that have happened since 1950. The length of each colored line is the duration of that market in weeks and the depth of the line shows how severe that market was. Just looking at the graphical illustration, it is very easy for prospects to see that the “odds” are in the favor of making money rather than losing money over the long-term.

The next piece is one Brian shares with prospects who are at or near retirement. It is a very simple illustration titled Volatility vs. Longevity Risk . This shows how sometimes a less volatile (safe) portfolio can actually be more risky for someone in their decumulation stage than a portfolio that experiences a little more volatility. Showing this slide is great lead-in to the conversation on the difference between risk tolerance and risk capacity.

The next handout Brian mentions actually comes from a Chris Davis (of The Davis Funds) presentation at the 2010 National Association of Personal Financial Advisors (NAPFA) National Conference. Brian refers to it simply as the Great Depression Slide . This is an incredibly powerful piece considering the poor economic conditions and unstable economy we have been experiencing over the last 2 – 3 years. It very clearly illustrates how powerful systematic investing can be during periods of uncertainty. Brian recommends only using this illustration with current accumulators as it may not be appropriate for those in retirement or the decumulation stage.

One of the final two slides that Brian shares is a piece from The Market Analysis, Research, and  Education group of Fidelity Management & Research Co. The Perils of Herding to Cash shows how investors are typically sheep. They fall prey to the herd mentality and, because of that, tend to do the opposite of making sound financial decisions. It chronicles the movement of cash positions in the U.S. versus the S&P 500 performance. As you can see, when the markets are doing great cash is at all time lows and when the markets are doing poorly cash is at all time highs. This is counter to the way a wise investor would behave. The second piece is another one from the Chris Davis presentation. The Market Timing illustration shows how detrimental trying to move in and out of the market can be to an individual’s long-term performance. The counter argument to this piece is always ‘but what if you showed what would happen if you missed the worst days?’ The answer to that is fairly simple: if you know someone who can consistently do that… please share with the rest of us .

Brian closes out the show by mentioning that you can always use columns you have either written or been quoted in to market yourself. Once you have these articles, send them to everyone. It is a way of showing you are an expert in your field and, as time passes, it can show that you are consistent in your philosophy. One important point Cheryl notes is that we need to remember that our clients are always prospects no matter what stage of the process they are in.

Resource Recap

Websites

MSN Money – 8 Things Your Financial Planner Won’t Tell You
National Association of Personal Financial Advisors

Attachments/Tools

Power of Diversification
The Cycle of Market Emotions
Playing the Odds
Volatility vs. Longevity Risk
Great Depression Slide
The Perils of Herding to Cash
Market Timing

Professional Partners

The Davis Funds
The Market Analysis, Research, and Education group of Fidelity Management & Research Co

If you have studied finance or managed assets for any period of time in the modern era, you have no doubt come across some form of complicated investment or investment strategies. Whether it was options, private placement, hedge funds, limited partnerships, CDOs or any other type of investment, the common thread has been the complexity by which these vehicles were designed. Therefore, considering the prevalence of these types of investments, does more complicated mean better?

Brian starts off the show by sharing how his firm has grown from the infancy stage with a $75,000 minimum to now working with executives with 8-figure net worths. The question he poses is, ‘As your clients get bigger, does your investment strategy have to become more complex?’ He expands on this by asking if it necessary to use some of these complicated strategies or more complex investments as a way of “proving” your value to your clients. Cheryl, whose firm has a $5 million minimum, states very simply that there are “many paths to the mountain top”. In other words, there is no one-size-fits-all strategy for managing assets or designing portfolios. If fact, Cheryl mentions that it is probably a wealth neutral issue that depends on your individual skill sets up to somewhere around the $50 million range.

Brian goes on to share how some of his clients actually initiate the conversation to ask about these alternative investments, or even how they may have an inside track to an up-and-coming hedge fund or private placement deal. The question that arises is: Should an advisor mold themselves to make the client happy or to satisfy that client’s curiosity? While Cheryl notes that there are times when this can be beneficial (she shares a story of clients who had previously held investments that her firm now uses), it is usually best to stick to your tried and true strategy of managing assets. She adds, however, that you should stay open-minded and, while you may not use a particular investment or strategy, you should do your best to thoroughly understand it and be able to explain it to your client.

One idea is, if you truly want to understand hedge funds, private placements, venture capital, etc., then you may want to contact other advisors whom you respect and start a study group. This allows you to not only share your thoughts and ideas but also leverage the experience of others. This is the exact mechanism Cheryl used 15 years ago when she first became interested in alternative investments. Brian notes this is the same sort of group think-tank he was able to use when he worked for a very large firm.

An important consideration to be made is does your firm have the bench depth for the due diligence these types of investments require. If you are a one or two person shop, it may be very difficult to truly understand and be able to follow-up on many different private placements, direct oil and gas partnerships, real estate partnerships, etc. all at the same time. Many times, after you have done the due diligence and broken down the ins-and-outs, explained how they work, and shown your client the true fees and risks associated with these vehicles, your client’s curiosity will be quenched and they will no longer have a desire to participate in an investment that really may not make sense for them.

So how do you do due diligence? How can you understand the ins and outs and really know how these investments work? Cheryl’s answer is simply read and listen. Often times it is incredible the amount of information you can obtain from a “sales” call. Most of us receive them on a daily basis and simply ignore or shrug them off. If you are curious, though, about a specific type of investment or a particular vehicle; it may make sense to listen in on a web-conference or a sales call even if you have no intention of ever using that particular investment or working with that specific company. Ask tough questions and really try to digest the free information they are willing to provide.

But what if complicated isn’t your strategy? Is there a way to gain exposure to these non-correlated asset classes when you don’t have the bench depth to directly participate? The answer Brian and Cheryl give is yes. Brian shares how he has successfully used long/short mutual funds as a way to invest in an asset class that tends to not trend with the broad market. While he understands the investment strategy being implemented, and continually monitors the fund to make sure they are acting within that strategy, he is able to outsource the necessary due diligence to that particular fund manager in exchange for a few basis points. He has found that the transparency and liquidity he receives by using these funds is very valuable considering he doesn’t have the time or resources to do it all himself. Additionally, he has found that, on a risk-adjusted basis, the returns he has received through this well-diversified selection of long-short mutual funds isn’t very different than the returns he received on an after-tax net of fees basis in some of these more complicated, illiquid investments.

Brian and Cheryl go on in the show to describe what due diligence looks like and specific things you may want to watch out for when you are going through a prospectus or an initial offering. Many times there are very obvious red flags that can help to rule out a particular investment as an option for your clients. Cheryl shares a story of a product her team dissected where the client would have needed an investment to return 25% in order for the client to make 8%.

They close out the show by touching on “black-box” proprietary investment strategies. These “strategies” are the very thing that got many investors tied up with criminals such as Bernard Madoff. A typical rule of thumb is that if you come across an investment that you just cannot understand, it probably doesn’t make sense to use that investment. A great resource you may want to start with to begin understanding alternative-type investments and portfolio construction is a book by Yale Endowment manager David Swenson titled Uncoventional Success: A Fundamental Approach to Personal Investment. You may also want to look at some of the writings by former University of North Carolina at Chapel Hill Endowment Manager, Mark Yusko. His firm, Morgan Creek Capital Management, specializes in advisory services based on the University Endowment Model of investing to wealthy families, individuals, and institutional investors.

Resource Recap

Books/Magazines

Websites

Morgan Creek Capital Management

Today’s show is part 2 of a 2 part series covering the best technology available to advisors. In part 1, Brian and Cheryl broke down the best hardware advisors should consider using. In part 2, they walk through the best available software and programs you can use to increase the efficiency of, and grow, your practice.

The first area they touch on is which is the best business software. Brian, being an accountant by training, recommends using QuickBooks by Intuit. He notes that this is the easiest to use software but also does a great job with record keeping, data management, and organization. They both also recommend using Microsoft Office for programs such as Excel and PowerPoint.

They go on to discuss document management software. The program used at Abacus Planning Group is Worldox. Cheryl chose this program due to the ease of searching as well as the ability to store different formatted documents (PDF, PowerPoint, Excel, etc.) and find them near instantaneously. Being a small firm, Brian uses PaperPort and suggests starting with a sophisticated file structure from the very beginning. Here is the File Structure Brian uses in PaperPort for each of his clients. One suggestion that Cheryl adds is that you should designate one individual at your firm to do all of the scanning rather than have everyone do their own. This increases overall efficiency and creates continuity in your system.

From there they move on to Client Relationship Management (CRM) software. At his firm, Brian uses ACT! with the addition of Act4Advisors. While this is an older system, Brian reminds us that sometimes “if it isn’t broke, don’t fix it”. Cheryl uses a more complex CRM called SalesLogix. She selected this software because she wanted her CRM to “talk” to her data management software (Worldox) as well as her portfolio management software (Portfolio Center). With SalesLogix, you are able to customize the program to specifically match your needs. After having it Cheryl notes that, even though it is a more expensive system, it was worth every penny.

Brian and Cheryl both agree on their favorite portfolio management software and that is Schwab Performance Technologies’ Portfolio Center. While having this type of software isn’t inexpensive, it may make sense not to skimp in this area. Brian shares his woe story of trying to be too cost conscious when he first started the firm, whereas he could have saved in the long run had he gone with the better product.

For financial planning software, it depends on your specific style and needs. Brian uses MoneyGuidePro and Cheryl uses Money Tree. They both note that, while having planning software is definitely beneficial, you can still get a lot out of programs like Microsoft Excel by designing your own customized spreadsheets and illustrations.

As far as investment research for individual products (stocks, mutual funds, annuities), they both use Morningstar Principia.

As they close the show, they share that they both use BNA for tax projections and there are even free resources available from your custodian on specialized issues such as the 2010 Roth Conversion. While it may not make sense for smaller firms, Cheryl states that rebalancing software (she uses iRebal) is a near must for larger firms services a large number of clients. They also share their thoughts on meeting software such as GoToMeeting and GoToWebinar.

Resource Recap

Websites

QuickBooks
Worldox
PaperPort
ACT!
Act4Advisors
SalesLogix
Portfolio Center
MoneyGuidePro
Money Tree
Morningstar Principia
BNA
iRebal
GoToMeeting
GoToWebinar

Attachments/Tools

File Structure

Technology has driven, is driving, and will continue to drive business. Whether you are an aged veteran or young and ambitious, technology is an issue that you have faced and will continue to face throughout your career. In the constantly evolving and advancing world in which we live, it is a must to stay up-to-date and “in the know” with technology.

Today’s show is part 1 of a 2 part series covering the best technology available to advisors. In part 1, Brian and Cheryl break down the best hardware to use to have an efficient and productive firm. Cheryl starts the show with the following quote:

“You don’t have to know how technology works, but you need to know what it can do for you”

Cheryl explains that, at Abacus, they actually have a written Technology Plan that allows her firm to visualize what they want the technology at their firm to look like. She notes that these are very interesting to look back on 3 or 5 years down the road and give you a great measure of how far along your technological competency has come.

They go on in the show and discuss the necessity of having IT professionals and consultants to use at your firm. If this is something you are not familiar with, you may want to contact David Druker or Joel Brukenstein at T3, Technology Tools for Today. These are two of the best practice management/technology gurus for financial professionals.  The main reason, Brian explains, for using consultants is because “when technology works, it is oh so good, but when it doesn’t you can easily double or triple your workload”.

At Abacus Planning Group, they handle all of their technology in-house. They made the decision to have multiple servers, back-ups, etc inside of their office building rather than using some of the newer web-based products. As you listen, Cheryl will explain her thoughts and why she chose this for her firm.

Brian and Cheryl also discuss some technology tools you may not immediately think of such as: wireless head-sets, using in-house shredders vs. outsourcing to a shredding company, staplers, and even the best types of PDAs and Smart Phones.

Throughout the show, they both share some personal stories that may be very similar to experiences you may have had in your practice. These experiences include Brian recognizing the value in having data back-ups after his firm was robbed in 2002 and Cheryl switching over phone systems when she moved her firm into a new building.

A great article you may want to read is the 2009 Software and Technology Survey covered in the December 2009 issue of Financial Planning Magazine. This article by Joel Bruckenstein even chronicles which types of Hardware and Software are used most by other financial advisors.

As you listen, Cheryl and Brian also share their thoughts on:

• The most efficient way to use servers
• Desktops vs. lap tops
• What type of processor should you buy and how much memory is sufficient?
• The best way to think about buying or leasing a copier
• Printers
• Back-up drives

As mentioned above, this is part 1 of a 2 part show. Be sure to check in next week when Brian and Cheryl discuss the best Software systems and programs you should be using at your firm.

Resource Recap

Websites

2009 Software and Technology Survey

Professional Partners

T3, Technology Tools for Today

It is common trend for business owners, especially small business owners, to feel anxious when trying to decide how and when to grow their workforce. This is probably even more pronounced for financial advisors considering their natural “dollars and cents” way of thinking. It is, in most cases however, a necessary part of growing a successful and prosperous firm.

In this show, Brian and Cheryl walk through the ins and outs of making hires from the very first addition, usually an administrator, to the more complex additions of specialists and revenue producers. They start by breaking out the four main types of hires for most advisory firms: Admin, Associates, Specialists, and Rainmakers.

Brian and Cheryl both admit that an admin is probably the first and easiest hire. Right out of the gate, there are duties such as covering the back office, phone calls, scanning, mailings, etc that can be delegated to an admin in a very cost effective manner. The second hire, however, tends to be a more difficult decision. Hiring an associate is a much harder decision because of the financial commitment and career path obligation. No longer are you and your family the only individuals who are dependent on the success of the firm. While Brian recognizes that many advisors are scared to “pull the trigger” on that hire, Cheryl states that she has never heard anyone say, “I sure did make a mistake hiring that associate”. Even if the relationship didn’t work out or wasn’t the best fit, the employer seemed to have always gained valuable knowledge about the process of hiring as well what would need to be done differently to make the next hire more successful. Brian goes on to tell the story of his first hire, a graduate straight out of college. He recalls the apprehension associated with the financial commitment he was making. He now had to think about creating a career path, covering a salary plus payroll expenses, offering a retirement plan, etc. He notes, however, that by some “magic”, the revenue came in such a way as to not only cover the cost of his new employee, but to also increase his personal income and the productivity of the firm.

Another concern is whether there will be enough work to keep an associate busy. Cheryl agrees that this is a common thought, and she goes on to explain that she has learned through experience that a 20 hour task for a managing principal may be a 40 hour task for as associate due to the inefficiency associated with being new to the firm and the firm’s processes. Because of this inefficiency, it is important to continuously have employees of your firm in differing stages of development. As you hire new associates, it creates an opportunity for your existing employees to move into leadership and mentor roles for those newer additions. A great tool that Cheryl uses at her firm is her Player Yet to Be Named . This gives every employee an opportunity to write down tasks that they either don’t like or don’t feel they are good at. This list then becomes the duties and responsibilities of your next hire. As an employer, you can then use this to “target” the personality and work type of the next member of your team.

Another great tool for you to use as a leader, or even to give to your employees, is the Task Breakdown Chart . This chart allows you to hone in on and differentiate between those tasks you are very good at and give you energy and those that you may not be so good at and drain your energy. Another area that Brian and Cheryl address is making sure you are paying your employees what they are worth. Brian tells the story of the first firm he worked at and explains what ultimately caused him to leave even though he loved his co-workers and work environment. To make sure she is staying with the times, Cheryl purchases the Moss Adams Compensation and Staffing Study of Advisory Firms each year. Her goal is to keep all of her employees within the 50th to 75th percentile among individuals with similar credentials and skill sets. In addition to this, every year she will provide each of her employees a Compensation Worksheet . This worksheet shows the employee their total pay including salary, incentives, perks, benefits, etc. This is a great way for younger associates to track their career progress as well as understand a true picture of their entire compensation package. Cheryl also explains her annual Formal Annual Review Process . By doing a personal annual review as well as having an outside third party conduct performance interviews, Cheryl is able to understand both the strengths and weaknesses of her individual employees as well as here specific traits as a leader.

They go on in the show to share some personal duties of their associates and how delegating those duties has allowed them to focus on big picture items and grow each of their firms. They also explain how your firm can grow to house specialists such as CPAs, JDs, CFAs, etc.

To close out the show, Brian and Cheryl share each of their interview processes. A good interview process for a developed firm should consist of 3 prongs:

A written resume – Make sure to actually check references and verify any credentials.

An in-person interview and/or an interview with a corporate psychologist – As you conduct your in-person interviews; you may want to construct your own list of Cultural Norms . This list should essentially explain what the culture of your firm is and give you an idea of whether or not this candidate will prosper in that type of culture.

A criminal and credit background check – A great company to use for background checks is General Information Services, Inc. (GIS). Rather than reviewing the findings yourself, however, you may want to have an attorney review each employees report and only bring to your attention those matters that require specific action by you.

Resource Recap

Websites

Moss Adams Compensation and Staffing Study of Advisory Firms 2009
General Information Services, Inc. (GIS) Background Screening

Attachments/Tools

Player Yet to Be Named
Task Breakdown
Employee Compensation Worksheet
Formal Annual Review Process
Cultural Norms

It is almost impossible to have not done some form of goal setting at some point throughout your career. Entering into the financial planning arena in and of itself is an example of setting and reaching a goal. There was a time where you decided this was a career you wanted to pursue, and you made the necessary decisions to turn that thought into a reality. However, it is probably safe to say that many advisors have either 1) nearly skipped this step altogether or 2) have neglected to give it the attention required to truly be an asset to their practice.

As you listen to the show, Cheryl explains the importance of putting your goals in writing. These goals include what type of business model you subscribe to, who your ideal client is, and what type of work environment you want to create. This step isn’t as easy for some as it is for others. For those who are left-brained (very calculated and analytical thinkers), there is a great book by Daniel Pink titled A Whole New Mind: Why Right-Brainers Will Rule the Future that teaches how to explore the creative right-side of the brain.  It conveys the body of thought that an individual should not only play to their strengths, but also explore and engage their weaknesses. By doing this, they can actually transform their weaknesses into positive attributes. If you are unsure of your own specific personality type, you can contract an individual to perform the Myers-Briggs Type Indicator ® personality assessment. This is one of the tools Cheryl uses with all of her new hires. A lower-cost mini version of this assessment is the Keirsey Temperment Sorter. This is a great tool to use not only do a personal assessment or assessment on new hires, but is great with clients. By understanding the individual personality of each client, you and your team will be better equipped to both understand and interpret their most important thoughts and goals as well as communicate in a way that they can easily understand and relate to. The book that goes along with this tool is Please Understand Me: Character and Temperament Types by David Keirsey and Marilyn Bates. In their words, “The point of this book is that people are different from each other, and that no amount of getting after them is going to change them, because the differences are probably good, not bad.”

Another wonderful technique to employ while goal setting is mind mapping. A mind map is a diagram used to represent words, ideas, tasks, or other items linked to and arranged around a central key word or idea. The The Mind Map Book: How to Use Radiant Thinking to Maximize Your Brain’s Untapped Potential is a great resource to walk you through how to create some really thought-provoking and insightful mind maps. Many advisors are incredibly surprised when they realize the number of great ideas that arise from this seemingly simple exercise. If you prefer working on the computer to working with colored pencils, you may enjoy the software offered at Mindjet.com.

One of the very first issues to address when setting goals for the future of your practice is to determine your business model. Brian notes that many firms, in their early stages, tend to focus solely on investment management because this is typically what generates tangible revenue. As a quick recap, the three basic business models are:

• Investment Only: Focuses primarily on assets under management.

• Comprehensive: Targets the five areas of financial planning: Investment, Taxes, Retirement, Estate, and Insurance.

• Holistic: Focuses on all aspects of life and the financial implications of changing life circumstances.

When trying to determine your business model, Cheryl states that you should do what you enjoy most. If you like investments, then focus on investments; if planning is your passion, then that should be where you direct your efforts. By doing this, it allows you to not only pursue that which you enjoy, but also provides your client with the greatest value. George Kinder’s The Seven Stages of Money Maturity walks you through how to “achieve a harmonious relationship with money”. This will be beneficial for you in determining your business model and will also be instrumental when helping your clients set goals for themselves. The entire book explores the emotional issues associated with money. An individual can be the best and most knowledgeable advisor in the world, write the most wonderful plans, but still not connect with or add value to a client because they failed to address the emotional connection that client has with their money or their behaviors. Understanding this emotional attachment is what spurred and intrigued Cheryl to pursue the Holistic planning model. Recognizing and understanding his personality type encouraged Brian to develop a Comprehensive practice. Cheryl goes on in the show to explain how her firm utilizes the services of wealth psychologist, Dr. Jim Grubman.

After determining your business model, the next immediate step is to define your ideal client. Setting boundaries of who you accept is a sign of a maturing firm. This is so true that, at a certain point, who you chose not to work with becomes nearly as important as who you chose to work with. Without performing this step early on, it is likely that you will end up with a firm that is not very profitable and servicing clients who do not appreciate the service you provide. A tool that both Brian and Cheryl use at each of their firms is the ABC Client Spreadsheet . This is a concept that many people have heard of, but few actually implement. When you look at your client base and segregate them into A, B, and C clients, it allows you to determine 1) where you are currently spending the majority of your time and resources and 2) where you should be spending your time and resources. Brian uses this spreadsheet as a “check-up” each quarter to determine if his firm is growing in the right direction. Another tool that Cheryl uses is her Ideal Client Rating System . This has been something she even takes into prospect meetings to determine who will and won’t be a good fit for her firm. As you do this analysis, make the goal that 80% of your clients fall into the ‘A’ category. Brian realized early on in his career that to keep a quality of life for his family as well as provide the best possible service to clients, he couldn’t be the advisor for every prospect that called. When prospects come who don’t fit your ‘A’ model and don’t have the upward potential to become an ‘A’, don’t be afraid to refer them to other individuals in your area. Having other advisors around you doing good work will only make your firm, and our industry, better. Cheryl recommends a great tool, The Wheel of Life, to help you find that balance that Brian mentions. This will very clearly illustrate to you those areas that are out of balance and require additional attention.

Resource Recap

Books/Magazines

Websites

Myers-Briggs Type Indicator ® personality assessment
Keirsey Temperment Sorter
Mindjet.com

Attachments/Tools

ABC Client Spreadsheet
Ideal Client Rating System

Professional Partners

Dr. Jim Grubman

Let’s face it, for the most part, traditional marketing is dead. So, if magazines and print ads won’t really get the job done anymore, how do you go about marketing yourself and growing your firm? Well, according to Brian and Cheryl, it is all about turning your clients into advocates. While we recognize that asking a client to refer their friends and family may feel uncomfortable at first, there is no doubt that once you’ve mastered it, your client base will become your most effective marketing tool.

To start the show, Brian and Cheryl introduce a book that is a “must read” for professionals looking to grow their business. Bill Cates is a renowned author and hosts seminars and conferences explaining how to master the art of the referral. His book, Get More Referrals Now!, is almost an instruction manual on how to become an effective marketer of your practice.

Cheryl explains that it is not uncommon to feel uncomfortable when you first begin to ask clients for referrals, but there is a continuum to the level of comfort you will experience as you understand how and when to have that conversation. After reading Cates’ book, Brian realized he had to change his mindset. He recognized that rather than being excited and content when he received compliments from clients, he needed to become prospect minded and begin to look for Value Added Moments. A Value Added Moment is a time when your client recognizes and addresses a place that you have added value to them or their financial situation. This is the perfect time, while your client recognizes and is satisfied with the work you have done, to ask them essentially “Would you tell your best friend about us?” or maybe “Who else do you know that could benefit from this type of service/advice/relationship?” Brian gives some examples of very common client statements that can lead to a Valued Added Discussion:

• “No one has ever done this before…”

• “I’ve never heard it explained that way…”

• “I wish I would have found you years ago…”

• “Thank you for making me stick to the plan…”

• “I can’t believe we finally reached this goal…”

Cheryl goes on to explain that, not only do you need to listen for Value Added Moments, but sometimes it is necessary to create them. At her firm, Abacus Planning Group, they have a business development team. One responsibility of this team is to have a packet ready to give clients every time they come to the office. In this packet are recent articles or features that Abacus has been in or been quoted in. The purpose of this packet is two fold. First, it says “Look what we are doing, do you think any of your friends would like to see this?”, and secondly, it reaffirms your clients’ decision to choose you as their advisor.

A very important piece of information that Abacus puts into this packet is their Ideal Prospect Sheet . This handout describes to your client what an ideal prospect for your firm looks like. If your client doesn’t know who you are looking for, how can they send you referrals? Cheryl is amazed at the positive feedback she receives from handing out these packets, and also can’t believe how many calls she gets from friends, family, or neighbors explaining that they saw the magazine cover or read the article and they are intrigued to learn more.

Another way Cheryl creates Value Added Moments is by having Interim Assessment Interviews as well as a 1 Year Assessment Interview with all of her new clients. After a client has been with them for a year, Cheryl and her team sit down and ask for feedback. They want to know how the client feels about the process, what they liked, what they disliked, and what they would change going forward. She notes that typically this is a fun meeting because the client has the chance to look back and see all of the progress they have made over the last year. Once the client has recognized the value and is excited about their own personal progress, it is an opportune time to ask the client if they know anyone else who could benefit from a similar experience. The Harvard Business Review, a phenomenal publication, had a featured article titled “The One Number You Need to Grow ” by Frederick Reichheld. The article states that to really measure customer/client satisfaction, you need to know what they tell their friends about you. Essentially, would you refer your friends to us?

They go on in the show to discuss what happens if asking for a referral goes bad, or what if your client says no? Cheryl explains that, even though this is probably very uncomfortable, it is still a positive outcome because it provides you with necessary feedback to strengthen the planner/client relationship.

Another method Abacus uses to obtain valuable client feedback is to create online surveys. Services such as Survey Monkey make it very easy to create online surveys that are a very effective and efficient way to gather information about how your clients view their experience with your firm.

Cheryl and Brian also explain how to handle difficult situations such as when a client sends you a referral who isn’t an ideal prospect for your firm, or how to handle clients you feel are not, and will never be, advocates for you. Cheryl shares an encounter she had with this type of client and how it turned out to be a very positive experience for her and her firm.

To close out the show, Cheryl recommends the book Raving Fans: A Revolutionary Approach To Customer Service by Ken Blanchard and Sheldon Bowles. This is the first book that every new hire at Abacus must read, and it is a wonderful illustration of how to turn your clients into advocates for your firm by providing them with unequaled customer service.

Resource Recap

Books/Magazines

Websites

Survey Monkey

Attachments/Tools

Ideal Prospect Sheet
Interim Assessment Interview
1 Year Assessment Interview

No matter what stage of the business cycle or size of firm, we all face the same issue of choosing the most efficient and productive allocation of resources. What are the best (and most necessary) tools to spend your money on and when is the best time to spend money on each of them? Being financial advisors and the general “money people” that we are, it comes as no surprise that we are all constantly looking for the biggest ‘bang for our buck’.

In today’s show, Brian and Cheryl explore and answer these very questions. Through the show, they break down expenditures by size of firm: small start-up, mid-size, and large firm. One thing they both agree on, no matter how large or small, is that creating a brand and focusing your resources on building that brand is a must. To be successful, an advisory firm needs to create a corporate presence. Once you have refined that presence, you must find a way to incorporate that into your brand.

Considering the constantly evolving and advancing technological landscape, it comes as no surprise that they both recommend devoting time and resources to a website very early on. In an age where information is readily shared and exchanged almost instantaneously, trying to maintain and grow a successful practice without a web presence would be extremely difficult. A website is a very efficient and cost-effective means of marketing yourself and your firm.

Cheryl suggests that, even when it comes to choosing a website, you should spend money on your weaknesses. If creativity and design isn’t in your skill set, then it may make sense to hire a consultant or web designer to help you with that piece of the puzzle. When considering whether to go with a custom website versus a more packaged website, they both agree that you probably will want to go the custom route. Website construction and design are great projects to assign to your more junior employees. Not only will this more than likely be something they are more comfortable with, but it will also allow you to gauge how well they handle projects or work with other team members. For you younger associates, offering to head-up a website design and implementation team will show the senior members at your firm that you are committed and devoted to taking the practice into the future.

When it comes to putting your brand on paper, you will probably want to stay simple in the beginning. Business cards and letterhead are a good place to start. As your brand evolves and changes over time, you can build on that corporate presence you have already created. The most important thing you can do is put in the time early to get your brand right and develop a base you will be comfortable with 5, 10, or even 20 years from now.

Obviously, because of the era in which we live, technology is going to be another very large expenditure category. Don’t, however, agonize too much over the equipment you decide to go with. Rather, focus on the processes that will allow your firm to be efficient and productive going forward. One such process that Brian and Cheryl both recommend is going paperless from the very beginning. Brian shares his experience with a previous firm and how inefficient and burdensome maintaining paper records was. Being paperless also makes it possible to use and share virtual employees.

They go on to discuss that sometimes skimping on quality in exchange for cost may not be your best bet. Brian shares some of his woes from going with less expensive start-up companies for his portfolio software. He admits that, if he could, he would go back in time and purchase the more expensive software. He recognizes that not only would this have been cheaper in the long run, but it would have saved him a lot of time and a whole lot of heartache.

The next area that you may want to focus your resources on is marketing. Focusing resources, however, does not always mean spending money. There are now tons (thanks again to the internet) of alternative marketing forms that are not only effective but also very cost-effective. For younger firms, you may to avoid the more traditional print-type media because of the excessive cost and less than impressive results. Both Cheryl and Brian agree that you must find ways to create your own media. They explain how to do this through press requests, journalist relationships, blogs, etc. As you listen, they explain and give tips on the most effective way to respond to press requests. One thing that Cheryl notes has been instrumental in allowing her firm to create their own media is instituting internal policies that set them apart from other advisory firms. Specifically, she shares how her month long sabbatical for employees who have been there for 5 years has created an enormous amount of media attention.

A fantastic resource that Cheryl recommends for distributing the media that you create to clients and prospects is MyEmma.com. This service allows you to not only create and customize email, but it also give you the capability to track who your email gets forwarded to and how many click on links or attachments in the email. This is a great service if you want to start providing an e-Newsletter to your clients. Another  very popular similar service is Constant Contact.

Some other ideas of ways to get your name in the public’s eye are to do a monthly press request like Cheryl’s firm, or to become a columnist for the local newspaper like Brian did. Additionally, you may want to join professional organizations such as The National Association of Personal Financial Advisors (NAPFA) or the Financial Planning Association (FPA).

To close out the show, Brian and Cheryl share their thoughts on spending money on office space as well as when it makes sense to spend money on additional employees. Their concensus is that when you are only able to work IN the business and not ON the business, it may be time to use your resources to increase capacity.

Resource Recap

Websites

MyEmma
Constant Contact
National Association of Personal Financial Advisors
Financial Planning Association