Valuing Your Teammates

With both the season of giving and the end of the year upon us, this seems like a good time to discuss ways in which we value our teammates. Whether your team consists of only yourself and your sales assistant / secretary [ignoring, of course all of the other support people who make your success possible], or includes partner(s) and other associates, this is a great time to really examine the many ways they have contributed to your success in the past year and to communicate genuine appreciation for all their hard work.

Today seems more than ever to reflect the "ME" generation. As if each of us is solely responsible for our successes and someone else is solely responsible for our failures. A brief review of all the things others do to help free our time and attention so that we can focus our strengths on what's most important now, might help us to recognize where we would be if all of our successes really did depend solely upon our personal efforts.

So, with Christmas right around the corner, take a moment to thank each person who has affected your business this year [e.g., referral sources, administrative staff, the bond specialist on the other side of the country who helped you solve a client's problem, the compliance staff who's timely intervention helped you avoid a costly mistake, etc.]. A card, a small gift, in some cases a check or even just a few minutes of your time won't cost much but can have a real impact on their work and motivation in the coming year. Remember, communicating to someone that you value them is the single most important message you ever send. Have a Merry Christmas and a very successful 2011. Thanks. kfg

Coaching / Counseling Employees

Whether you manage a single team or an entire office of employees, you need to meet at least yearly with each of them to counsel about their performance. How you approach this task as well as how you communicate your observations and judgments of the employee's performance / behavior will have a major impact upon how they respond. This problem occurs most often when the manager focuses more on the specifics of the performance than on the employee.

Although most employees have enough survival instinct to respond positively on the surface to negative feedback, they may be defensive and resentful underneath and express that reaction once the interview is completed. That kind of response rarely leads to positive change and can result in poorer rather than improved performance following the interview. Worse, since people tend to complain to at least a dozen people when they are unhappy, it can even poison the atmosphere within the team or office. In fact, research completed by the Gallup organization demonstrated that if negative employees have actual contact with clients or prospects their negative feelings can result in the loss of those clients [see, Rath & Clifton, How Full is Your Bucket?].

To improve positive results when coaching or counseling an employee, consider using three effective tools as part of the process:

1. Determine first the reason for any substandard performance. Was it a matter of their not knowing how to complete the work properly? If so, get them the needed training. Was their performance substandard because of obstacles they couldn't overcome? If so, consider the possibility that removing those obstacles might be your job. Finally, was the problem a lack of motivation? If so, discuss it with them and try to determine the cause. Then develop an effective process to help the employee maintain motivation. Remember, one size DOES NOT fit all. What motivates you may not motivate them.

2. Negotiate expectations with the employee instead of just dictating demands. Demands almost always result in defensiveness and resistance. A negotiated settlement requires the employee to own the outcome and take responsibility for all future results.

3. Follow a few simple rules-of-thumb for giving feedback. For example, praise in public but rebuke in private.

As managers, when we focus primarily on performance rather than the individual we can actually hurt rather than help future results. Focus first on the individual and then on the specifics of the performance. For a free PDF copy of my article, "Tips for Coaching and Counseling Employees", go to my website at www.GretzConsultingGroup.com and register as a member.

Holiday Prospecting

The holidays are upon us. While many advisors find themselves busy helping clients make last minute adjustments for tax purposes, others seem to find themselves with too much time on their hands. This is a tremendous time of year to expand your prospecting pipeline in a powerful way.

Attend as many holiday gatherings as possible that will also be attended by some of your best clients. While there, socialize with them and ask them to introduce you to people you don't know. Note: this should be low key. Don't shove your card at anyone unless they ask. Obtain names and information you can use later, but be sociable rather than business oriented. If the opportunity arises, introduce your clients to each other and to individuals who might be able to help them in some way. This can create a tremendous amount of good will on both sides.

Successful financial advisors tell me that some of their best contacts have been made at this time of year and in just this way. Good luck. kfg

Working With Large Clients

Research by several major financial firms has demonstrated that a single financial advisor is able to provide Ritz Carlton level service to only about 100 client households and still spend 20 percent of their time prospecting to build their business. If you're focusing on client households with $1 million or more to invest, you already know that they expect only the best service and will go somewhere else if they don't get it. Despite this, a remarkable number of financial advisors fail to create a formal, consistent client service program to meet the needs of these clients.

If your / your team's client service is less consistent that it should be,there are several easy steps you can take to improve it:
1. Discuss the "best" service you are currently providing to one or more of your clients and write down everything you do for them, the frequency with which you do it, and its cost in time and effort for your team.
2. Once you've written it all down, organize it in terms of when and how you provide the various services and specifically whom on the team provides each service.
3. Is there a specific schedule for each service (e.g., quarterly review of their financial plan or portfolio performance)? If so, be sure to include that when describing the service.
4. How does each client respond to each service [what thrills one client might only elicit a yawn from another]? If you don't know, ASK!
5. Are there services your clients would like that you don't currently provide? If you don't know, ASK! Can you provide these services? Will it be worth your time and effort to do so?
6. Now that you have a complete list of services and their cost in time, effort and money, do an analysis to determine if you can really afford them. If you can't [e.g., they take too much time], you may wish to consider adding another advisor and/or sales assistant to your team, cut back on some of the services or reduce the number of your clients.
7. Now that you have a list of all the services you're prepared to provide, create an SOP [standard operating procedure]for those services to guarantee that they're provided in a consistent manner. Remember, inconsistent quality of service can be worse than mediocre service.

In #6, above, we suggested the possibility that you might wish to reduce the number of your clients (i.e., give up a million dollar client). Sounds crazy, doesn't it. However, at one time or another, we've all had at least one large client who was more trouble than he was worth. Super demanding of our time and effort, often unappreciative of our efforts and sometimes not very friendly at all these clients can be a great source of stress for the team. If you are managing one hundred or more large client households the odds are near 100 percent that you have at least one or more of these clients. Discuss it with your team and then seriously consider offering them to another advisor. The time and effort you save will enable you to quickly replace these individuals while making it easier to provide better and more consistent service to your other clients. Don't risk losing good clients by wasting time on bad clients. Thanks and good luck. kfg

Its All a Matter of Rapport

What is "rapport" and why should you care? Have you ever had two meetings with a prospect or client and one of the meetings went very well and the other failed? If so, the odds are that you were in rapport with your client in the good meeting and out of rapport during the bad meeting. Of all the definitions of rapport, I think the easiest to understand is simply being "in sync" with the other person. When we're in sync, we feel that we have a lot in common with the other person -- they're just like us. It lets us both be comfortable and open up to each other.

Most people respond somewhat negatively to sales situations. For example, when you go to a store and a clerk offers to help you, do you ever find yourself saying, "No thank you. I'm just looking," even though you entered the store with every intention of making a purchase? We all have. Its called natural sales resistance.

The key to overcoming that resistance when working with a client or prospect is to focus on helping them to identify, define and achieve their financial goals. Then, rather than trying selling yourself or a product, just LISTEN. Whenever you give someone your undivided attention, your unconscious will naturally work to place you in rapport with the way they think, speak and make decisions. That rapport will open doors and reduce resistance to the solutions you offer to their needs. In the end, any successful relationship is just a matter of rapport. Thanks and good luck. kfg

Why You Should Ask for Referrals

Many of the financial advisors I meet with each week hate to ask for referrals. Some feel that it makes them look like they're begging while others fear rejection, and still others think it might make them look as though they are intrusive. This is particularly unfortunate because the most successful advisors in the industry use referrals as their primary source of new QUALIFIED prospects.

When you receive a referral from an existing, qualified client, the chances that the referral is also qualified are close to 100 percent. Think about that. No risk. In addition, there is no better form of advertising than a third party endorsement, especially from a satisfied client. If you call someone to whom your current client has spoken to about you, you are already through the most difficult part of the prospecting process. They already know you're competent, honest, trustworthy, loyal, etc., etc., etc. Now its just a matter of establishing rapport and demonstrating that you can solve their specific needs.

Of course, we're still back to the question, "But, will my clients give me a referral?" Too many FAs are afraid that asking for a referral will appear an imposition to their clients and offend them. Yet, firms such as UBS Financial Services, Hilliard Lyons and Merrill Lynch conduct client satisfaction surveys on a regular basis and report that, on average, over 80 percent of clients surveyed reported that they would be happy to provide a referral, if asked. I repeat, over 80 PERCENT of clients said they would be happy to provide a referral if, asked. Its up to you. So, ASK! Thanks and good luck. kfg

Investing In Your Business: The Cost of Coaching:

Too many financial advisors and advisor teams never achieve the level of success they desire and deserve because they are unwilling to invest in their business. In some cases this means refusing to purchase the right computer hardware or software to help their team run more efficiently because they are holding out until the firm pays for it. In other cases, it's failure to pay for an additional sales assistant out of their own pocket when their firm says they don't have the budget for it. We've all seen cases like these and seen the result in slower growth or even the inability to manage current clients. Why won't some people invest in their business?

The answer is simple. Too many of us have an employee, instead of a CEO mindset [we'll address this in more detail in our next post. As a CEO, you know that you, and only you, are responsible for the growth and maintenance of your business. Letting your business practice lie fallow because your financial firm isn't willing to invest as much in it as you think they should is foolish. It's your business. Any CEO will tell you that if you want it to grow, you have to be committed enough to your goals to allocate not only your precious time resource, but also your capital. This is also true for coaching, training and even mentoring.

The question is not, "Can I afford to hire a good Business Development Coach?" but instead,"Can I afford NOT to hire a good Business Development Coach to help me take my business to the next level?" The answer lies in what level of business you or your team are currently doing.

A January 2009 "Harvard Business Review" survey of business coaches in America reported that the cost of coaching ranged from $200.00 / hour to $3,500.00 / hour with the median cost being $500.00 / hour. If you are currently generating enough revenue to be paid at a 40 percent or higher rate, then to justify spending $10,000 on a coaching program you need only increase your revenues by $25,000.00 in a year. A good coach should be able to help you improve by several times that amount. In addition, many firms [and even many money managers] are willing to reimburse as much as half the cost of a coaching program if you achieve your goals.

Only you know if your business would benefit from the help of a good coach and if you think the results would be worth the investment. Thanks and good luck. kfg For more information on finding the right coach for your need, click on Selecting the Right Business Development Coach.

What Kind of Business Do You Want?

What kind of business do you do? Sounds simple but even many "successful" financial advisors fail to take the time to really examine the structure of their business. So many advisors have been in the business for so long that their practice has grown almost of its own accord. For example, inherited accounts may outnumber those found through prospecting and referrals.

"So what?" you say. The problem here is that when successful financial advisors and teams prospect, they carefully select a specific target market that fits their niche business, their "sweet spot." However, over the years, as other advisors leave the firm, their accounts are distributed throughout the branch and "inherited" by the remaining advisors. Unfortunately, the inherited accounts rarely fit the target market of the receiving advisors, making it far more difficult to create an maintain an effective client service matrix. Further complicating this for many advisors is the mindset that you NEVER give away a client, no matter how small. Who knows, they might win the lottery or some other windfall. Instead of a well-ordered business with a solid, effective client service matrix, the result can be a hodge podge of clients of every size with every conceivable financial interest.

Don't get me wrong. You can create and maintain a very successful business based on helping "smaller" clients identify, define and achieve their financial goals. In fact, one of the most successful financial advisors in the industry has done just that. It simply requires a different business practice model to achieve. The one thing you can't do, is succeed by trying to be all things to all people.

Examine your business; the demographics of your clientele, their investment size, needs and resources. Then determine how you want to do business. Do you want to limit yourself to clients in the million dollar plus range? Fine. That will require one kind of business practice model. Would you prefer to work with clients in the $400k - $700k range? That will require a different model. And if you want to work with those in the $200k - $500k range, that will require a different model still. You can become extremely successful working in any one of these ranges.

Don't let a business development coach tell you that you have to do business a certain way. A good coach will help you examine the kind of business you have, the kind you want, and then help you to get it. In other words, a good business development coach will help you identify, define and achieve the kind of business you want. Thanks and good luck. kfg

Finding the Right Coach

When considering a coach to help you build your business, one of the first questions you need to answer is, are you a sole practitioner [even if you have a support staff of 4-6 people] or a team? There are many outstanding coaches available to help individual advisors take their business to the next level. However, coaches with a real understanding of team dynamics and solid financial industry experience on top are few and far between.

Individual coaching is fairly simple and often revolves primarily around practice management issues or some specific aspect of sales, e.g., prospecting, client servicing, creating an effective value statement, etc. However, while coaching a team also usually includes these issues, they are typically overlaid with other dynamics ranging from internal communications, intra-team relationships, how each team member feels valued (or not), compensation, etc. The affects of outside influences on the team [e.g., family issues, health, etc.] are also more complicated because of the increase in complexity of the team system. When working with teams, the "identified problem" is RARELY the core cause of difficulty but simply one more symptom of the underlying issue.

Of course, once you decide you need a team coach, you need to do the same due diligence as we suggested for individual coaches in an earlier blog. Thanks and good luck. kfg. For more information on finding the right coach for your need, click on Selecting the Right Business Development Coach.

Do You Need a Business Development Coach?

Let's face it, the last two years have not been a lot of fun for financial advisors and advisor teams. The markets have been all over the place and there is considerable concern about a possible double-dip recession. During this stressful time many advisors have chosen to retire and leave the business. Others have hunkered down hoping to outlast the current mess and the proposed regulatory changes coming out of Washington. However, a few of the top advisors / teams have chosen to move forward in this best of all possible prospecting environments and build their businesses. One such team with whom I have been working is on track to bring in additional net new money in excess of $35 million this year after adding $26 million net new last year. They have chosen to move forward with enthusiasm. So can you.

What's all this have to do with whether or not you need a business development coach? Think about your business, your practice management, your clientele, your team, etc. Is everything going the way you wish? If so, great! However, if not, you may benefit from a business development coach if:
-- there is infighting within your team over money or responsibilities
-- you feel that your practice management is overwhelming you or your team
-- you have difficulty prospecting, asking for referrals, etc.
-- with the market so unstable you have difficulty asking clients for more assets
-- you have difficulty communicating your added value to clients and prospects, or
-- you don't feel that you are making the progress you should

If you answered "Yes" to any of these questions and are prepared to invest in your business, you may benefit from a good business development coach. Over the next series of blogs we'll discuss how to find the best coach for your / your team's needs.

For an article on how to find the best coach, go to Selecting the Right Business Development Coach.

Giving Correction

I'm often asked the best way to correct an employee or even a family member without creating resentment and defensiveness. Below are eleven simple, effective rules that I have taught thousands of financial advisors over the years:

Rules of Thumb for Giving Feedback to Employees

1. Be sure to choose an appropriate time and place before you give feedback. A good rule of thumb is: "Praise in public, rebuke in private." In addition, it is generally unwise to respond to someone when one or both of you is angry or upset. Wait for a calm time.

2. Always establish rapport before you begin to counsel. Do this whether they have come to you or you have gone to them. It's the surest way to communicate that all important, "I care," message.

3. After you listen to what someone has said, use paraphrasing to make sure you understand what they mean and, especially, what they feel. Remember, if you're going to work from their point of view, you need to be sure you understand what it is. For example: You: "Don, it sounds as though you're feeling a little frustrated with having to work late this week. Is that right?

4. Always discuss the individual's behavior rather than the individual. For example: You: "Sally, it's important that you be in to work on time each day." [effective] Not: "Sally, you have developed the bad habit of coming in late to work." [ineffective]

5. Share your observations rather than trying to read the individual's mind regarding why he/she did something. If you don't know what someone is thinking or feeling, don't guess, ASK! Mind reading builds barriers. For example: You: "Bill, you haven't completed your assignment for the last three days. Is everything all right?" [effective ‑‑ opens further communications] Not: "Bill, it's obvious that you don't care enough about this company to even complete the projects assigned to you." [ineffective ‑‑ promotes immediate defensiveness]

6. Describe what you feel and what you have experienced rather than making judgements about the other person or their actions. Judgmental statements make people defensive and closes lines of communication instead of opening them. For example: You: "Harry, it upsets me when you criticize your team mates. It affects the morale of the entire group." [effective] Not: "Harry, you must be the most sarcastic man on earth." [ineffective]

7. Don't deal in extremes or generalities. In other words, don't label people and remember that no one is all good or all bad. Avoid words like "always" and "never." Once we label someone, we paint them into a corner that leaves them little room to improve. After all, if you think that they're always late, why should they bother to try to improve? You probably won't give them credit for it anyway. For example: You: "Bill, you have returned late from lunch three times this week. What seems to be interfering?" [effective] Not: "Bill, you're always returning late from lunch! You're never back on time! Why can't you get with the program?" [ineffective]

8. Avoid giving advice. Whether the advice is good or bad it changes the nature of your relationship. If your advice is bad (or improperly followed) and fails, he/she may blame you instead of taking responsibility for the outcome him/her‑self. If your advice is good and it works, you will have gained a dependent who will be tempted to come to you to solve all of their problems instead of doing it him/her‑self.

Of course, there will be times when it may be necessary for you to go beyond giving advice by giving an employee an order. As a rule, however, aid your employees in their exploration of alternatives until they feel comfortable in making a decision for themselves. Even if you have a better solution, let them try theirs and experience the consequences ‑‑ either good or bad ‑‑ unless their idea is illegal or unethical and/or will endanger them or the firm.

9. Before you release your emotions, ask yourself why you are communicating to begin with. Are you trying to help them and the relationship, or just to blow off steam? Remember, your emotional release may make you feel better but may also cost you both the relationship and their confidence. What value do you wish your communication to have for them?

10. Only give the person you're counseling as much "feedback" as they can handle. Most of us have many habits or failings that we could afford to improve, but when someone shares all of them with us at once they can be a little overwhelming.

In most cases, it's best to comment on only one or two behaviors in a given meeting. More than that can be both hard to remember and discouraging. Once progress has been made in those areas, praise them for their progress, then go on to the next area for change.

11.Finally, remember to "speak their language." If they have a visual orientation, use visual terms. Auditory words may only confuse them.

I'm Really Listening

Often, we become so caught up in our own agenda that we fail to really hear what another person is saying. When this happens we send a clear message that we do not value that individual and that builds a barrier between us. As we mentioned previously, while that probably isn't the message we want to send, it is often the one received.

Many authors have told us over and over that we need to be fully present when speaking with someone. However, with the constant distractions of email, text messages, the market, driving, television [you get the picture], we often find ourselves "multitasking" instead of giving our undivided attention to our listener. This is particularly common on the telephone because of the assumption that the other person -- not being able to actually see what we're doing -- doesn't know that we're involved in three other things. Sometimes, we even justify our behavior with, "Well, they're doing it, too." Ever heard that one before?

Over the last decade, dozens of studies have proven that multitasking is not only far less efficient than giving our entire focus to one task at a time, it leads to constant, costly errors. No where is this more true than in communicating with others. Whether you're speaking with a client, a loved one or a member of your staff, give them your undivided attention. You'll be surprised at the rewards.

One way to not only listen effectively to another but also to communicate that you are listening is to periodically paraphrase back to them what you think they have just said. Simply summarize what you've heard and repeat it in your own words [never just parrot something back in their words]. If you're right, they'll say so and you get credit for really listening -- you'll also learn a great deal. If you're wrong, they'll tell you and not only will you avoid further misunderstanding, but you'll get credit for trying to understand.

We all want to be valued and understood. Really listening communicates both. As Steve Covey is fond of saying, "Seek first to understand, then to be understood" and the dividends will be constant and rewarding. Try it. Thanks. kfg

What Did You Say?

Have you ever seen that sign on someone's desk that said, "I know you think you understood what you thought I said. I'm just not sure you realize that what you heard was not what I meant." Its humorous on someone's desk. Its not humorous when you're communicating to a client, peer or someone you love. Yet, here lies the root of more problems than almost any other.

During the recent market crash, and throughout the tumultuous follow-up many FAs and their teams failed to maintain their relationships with their clients for fear of having to explain how they could let them lose so much money. While that's certainly understandable, it doesn't get the job done. Remember, everything you do or fail to do sends a message to your "listener" [client, loved one, staff, etc.]. Unfortunately, especially when you fail to follow up you may find that the message they receive and understand is not what you meant.

After all, who intends to tell their clients, "I don't really care about you. I only care about your money?" No one. Yet when we fail to maintain regular contact / to explain what's happening in the market and why / to review their current situation and options and offer recommendations for the future / that may be exactly what they hear.

Keep up the courtship. Take time to listen to your clients and their frustrations and fears. Be honestly sympathetic. Avoid becoming defensive. Then help them decide what to do. Thanks. kfg

Its All About Courtship

There are still those who will tell you that sales is all about timing and price. However, today most slaes professionals will tell you that selling is all about service and relationships. These are the ways we set ourselves apart from the competition. I'm not knocking timing or price. After all, many sales opportunities appear only during brief windows and if you miss that window you've missed the opportunity no matter how good your service or potential relationship. As for price, you have to be reasonably competetive. I stress the word reasonably because in most cases you don't have to be the lowest bidder. As I mentioned in my last few postings, most of the clients you want want Ritz Carlton service and are willing to pay for it. Why? That brings us to courtship.

Courtship is the way we communicate to someone that we value them. While value can and should be communicated verbally, it must be communicated through action. Everyone wants to feel valued. Our favorite restaurants are often not the fanciest or most expensive and, sometimes, not even those with the best chefs. Often, they are those restaurants that make us feel welcomed and valued; where they remember our name, our favorite drink, even our favorite dessert. Really good ones remember our birthday and anniversary and make a big deal of it when we come on those dates. They also provide consistantly excellent service and quality.

Manitaining any relationship depends upon constant, consistant courtship and when the courtship ends, the relationship soon follows. This is true of marriage [the major reason for "falling out of love" is the end of the courtship at the marriage alter -- "Well that's done, I don't have to worry about that anymore."], friendships, parent child and, of course, clients. Once you stop courting your clients you will find them vulnerable to someone who does.

Whether you intend to or not, every day, in every way, you communicate to others how much and in what ways you value them [if at all]. The major reason for creating a client service matrix is to establish a consistant program to court your key clients and communicate how important you feel they are. Make certain that the message they receive is the one you mean to send. Thanks. kfg

Your Client Service Matrix Pt II

In my experience, one of the hardest things for any financial advisor / team to do is to "give away" clients [no matter how small. "But, I've known her for years," they say. Or, "Yes, they only generate a few hundred dollars each year in gross revenue, but they don't take any time to service. It's like found money." Note: at this point they notice that their sales assistants are rolling their eyes because they are the ones spending hours servicing these small client. Hours they then do not have to service the large clients that pay the rent.

The thing to remember is that your practice/business has changed over the last decade. When you first started in the business you were like a new intern, fresh out of medical school. You took anyone as a client because you had to create your business and were not very sophisticated. Now here you are, a decade later, more like a brain surgeon. Over your career you have amassed a wealth of knowledge and experience to help your clients deal with their most sophisticated financial needs and problems. For this service you charge a significant fee -- just like the neurosurgeon. However, just like the surgeon, you can only really effectively help a limited number of clients. Neurosurgeons do NOT take patients with hang nail or acne or other minor medical problems. They send them to the pharmacist who gives them the level of service and support they need at the appropriate price.

There are two reasons the neurosurgeon doesn't see them; 1) he would have to charge them the same fee for his time as someone with a brain tumor, and 2) the time spent with them would mean someone who really needed him wouldn't get helped. You are no different! The reason you shift your lowest client households to someone else is because you owe it to them AND to those clients who have problems that need someone with your level of experience and expertise to solve [and who can afford to pay for it]. There is a third reason, of course. These clients expect Ritz Carlton service and are willing to pay for it. If they don't get it because you and/or your staff are too busy taking care of small clients, they will go somewhere else.

Remember, the only thing that really sets you apart from and above your competition is YOU and the consistent service you provide. Good luck. Thanks. kfg

Your Client Service Matrix Pt I

Now that you've analyzed your clientele, you're in a good position to determine the amount and type of service you wish to provide to each level of client. As you answered each of the questions needed to analyze your clientele you should have developed a sense of where each household fits within your business model. If not, go back and assign points to each of the most important questions on the list, i.e.,

1. What is the size of the assets I manage for this household -- total for all of the accounts? [Give one point if they are median size or larger and 2 points if they are significantly larger.]
   
2. What percentage of this household's total investable assets do I manage? [Give 1 point for 50% and 2 points if over 80 percent.]
   
3. What is the realistic potential for increasing that percentage? [Give 1 point if the potential is over 70 percent.]
   
4. Realistically, for this client household, what is the likelyhood that they will significantly increase their assets with me in the future? [Give 1 point if over 70 percent.]
   
5. How much time does this client household require to serve? [Both your time AND your staff's.] [If this household is median or below, deduct 1 point if it is the same as that required for a top client and 2 points if it is higher. Add 1 point if it is significantly less.]
6. What kind of referrals has this household provided in the past? [Give 1 point if they actually give good referrals. No points for referral potential.]

Do this for each client household. Next, add up their scores and divide your households into five segments based upon their total scores. Seriously examine the revenues generated by the lowest two segments when compared to the time and effort they require of you and your staff [time and effort you are not spending either prospecting or taking care of your top clients]. Remember, the quality and consistency of your service is your most important that sets you apart from your competition for your clients. Now, migrate those bottom clients to another advisor -- perhaps someone new who needs to build up their assets -- or to your firm's service center for small accounts. In the end you'll be doing them a favor. Thanks, kfg

Step One: Analyze Your Current Clients

The first step in re-starting your prospecting efforts is to analyze your current client households. To do this, you'll want to ask yourself a series of questions about your clients and your current and future business, such as;

1. What kind of business am I currently doing -- e.g., transactional? fee based? Trust? etc.
2. What kind of business do I want to do in the future?
3. How many households am I / my team currently serving? Remember, ideally around 100 households per financial advisor to provide premium service.
4. What are the average and median sizes of the assets I manage for the households I serve?
5. What percentage of each household's total investable assets do I manage?
6. What is the realistic potential for increasing that percentage?
7. Realistically, for each client household, what is the likelyhood that they will significantly increase their assets with me in the future?
8. What is the breakdown by revenue of the households I serve [this is another way of expressing question #4]?
9. How much time does an average top client household require to serve? [Both your time AND your staff's.]
10. How much time does an average bottom client household require to serve? [Again, both your time and your staff's.]
11. What kind of referrals has each household provided in the past?
12. What is their realistic potential for providing good referrals in the future?
13. What is the demographic breakdown of my current clientele?

That's a lot of questions. However, too few financial advisors /teams take the time to regularly analyze their business to determine how they are generating revenues, the quality of service they provide to all clients, etc. Unfortunately, the first wakeup call for many is clients leaving for advisors / teams that provide better service.

Answer these questions about your clientele and, based upon the answers, segment your households into five groups. Remember the 80 / 20 rule ; you receive 80 percent of your revenue from the top twenty prercent of your clients. How much time and potential revenue are you wasting on the bottom twenty percent of your clients? Next time, we'll discuss how to improve both your efficiency and your client service matrix. Thanks. kfg

Prospecting in Today's Economic Environment

Let's face it, too many of us have stopped prospecting. Since our recent Black Swan many already successful financial advisors / advisor teams have hunkered down and focused on trying to keep as many clients [and their assets] as possible and avoided the heartbreak of rejection that inevitably comes with prospecting. After all, enough advisors are retiring or moving to other firms that you could always increase your book of business by avoiding risk and waiting for "new" clients to be assigned to you by your manager [of course that assumes that these new clients aren't already irritated with their past advisor/team and/or the firm].

Those with this attitude not only miss great opportunities, they also often find themselves unable to adequately service the clients they already have. Twenty-seven years ago [when I started in the business] virtually all revenue was transactional and you needed to build not only a large clientele, but also large positions in selected securities which turned over on a regular basis. This meant taking virtually anyone who could proverbially fog a mirror as a client and holding on to them until they or you died. This also meant that most of your clients "only heard from you when you had something to sell." For many advisors [we were called account executives then] the result was often a letter placed in their permanent file by smaller clients who NEVER heard from them because they couldn't ethically justify turning over their positions.

So what? What's that have to do with today? Today most revenues are generated by fee-based business, whether you use professional money managers or select all the securities yourself [or some combination of the two]. Most of the larger firms have conducted research that indicates that a good financial advisor can provide Ritz Carlton levels of service to only 100 relationships and still have time to prospect. That's right! Only 100 per advisor [so if you are on a team with two other advisors, your entire team can effectively manage and service only 300 households]. How many households/relationships do you currently manage in your book?

I have worked with hundreds of advisors / advisor teams who had five and even eight hundred households on their books per advisor and couldn't understand why they and their staff were constantly overwhelmed. Take some time this weekend to really examine your clientele. On Monday we'll discuss taking control of your business so you can increase not only the assets you manage but also the revenues you generate by working smarter, not harder. Thanks. kfg

Paperwork

Great! You've thought through all the questions we posed, found one or more people you're comfortable working with for the long haul and made your own personal commitments. Now comes the legal part. Like a marriage, a partnership is contractual obligation freely entered into by all parties. Also like a marriage, legal formalities are put in place to protect all parties. That's one of the reasons why many people decide to just live together. However, in most forms, there are added benefits to making the relationship contractual instead of just one of convenience -- e.g., some firms increase the way gross revenues are compensated for each member of a formal team vs. an informal team. You'll want to discuss this with your manager, the legal department and possibly your own lawyer before making a final decision. In the meantime, it can be useful to work together informally for a period [you might think of this as the engagement] to see if you really are compatible on every level.

Once you're ready, your manager can provide you with forms already created by your firm's legal department. Read them carefully and have your own lawyer read them and comment BEFORE you sign. Then, when you're ready, sign the papers and begin your life together. Note: if you haven't already done so previously, you might find this a very opportune time to bring in a professional coach to help you get your new partnership off the ground [they can often help avoid many misunderstandings and bumps in the relationship as you get your team started. Good luck. You've got a great adventure ahead. Thanks, kfg

Still Another Important Step

Having satisfactorily answered the questions in our last post, what's the next step to forming a team? [Note: if you are already part of a team and did NOT answer the previous questions to your satisfaction, you may wish to discuss them as a team. If the results are not satisfactory, please visit our web site at www.GretzConsultingGroup.com. We can help.]

There are several steps you'll wish to take BEFORE signing any team legal agreements your firm or your own lawyer places in front of you. One of the most important is to answer several critical questions for yourself -- we don't necessarily recommend that you share the answers with your prospective teammates.

1. Am I prepared to make and keep the kind of long-term, come heck or high water commitment required to make a team work? Do I have that kind of stick-to-it when membership in the team becomes a pain in the neck [like all relationships, at times it will]?
2. Do I really believe the other members of the team have that kind of commitment?
3. This next one is even harder. Do I have the character to do the right thing when times get tough? [Please don't be insulted or give a flip answer. Really think about this one. We remind you that our recent "Black Swan" saw the demise of hundreds of teams throughout the industry.]
4. Do I sincerely believe that my prospective teammates have the needed character? Why? What makes you think so?
5. Am I prepared to court ALL of my new teammates for the rest of our careers as hard as I court my biggest clients? Courtship is the way we communicate to others that we value them. Soon after the courtship ends, so will the relationship. Remember, divorce is ALWAYS painful and expensive.

We realize that all these questions may make you wonder if a team is really the best answer for you. Good. Teams are really a great way to do business and the pros can far outweigh the cons. However, they are not for everyone and, like any relationship, they take constant, consistent effort to be successful. But, when they are successful, the payoff is huge in every way.
Thanks again. kfg

Key Questions Before Forming a Team

There are several things you must examine BEFORE you begin to create any kind of team. Among them are:

• How will income be distributed within the team [that includes ALL the members of the team, not just the investment advisors]?
• What process will you use to adjust the payouts over time as various members of the team increase or decrease their activity and / or responsibilities?
• Are you compatible emotionally?
  
• Do you share the same work ethic?
• Do you share the same investment and client service philosophies? [Note: this is incredibly important.]
• What are your respective areas of expertise? Are they the same or do you complement each others strengths and weaknesses?
• What role will each of you play in relationship [e.g., will one bring in new clients while the other(s) manage them and their assets]?
• How will you resolve conflicts within the team?
• Should the team divorce, how will you divide the assets?
• If one or more of you wishes to transfer the team to another firm, how will you make the decision?
  

These are just a few of the questions you need to address before making the needed commitment to create an effective team. However, addressing them now can save a great deal of money and hard feelings later. Good luck. kfg

Divorce in the World of Investment Advisor Teams

Over the last two years there has been a staggering number of divorces / breakups among investment advisor teams that had been together for years. What happened? What do you think? If your team broke up, why do you think it happened?

Among the most common reasons given has been the division of money during and following the "Black Swan" that devastated the financial markets recently. During the bloodbath, major firms went into a feeding frenzy trying to lure successful advisors and advisor teams to move under their roof. In the process, they spent billions of dollars to "buy" the assets these individuals and teams could bring to the table. At the same time, to stop the hemorrhaging of their own managed assets, firms began to offer substantial financial bonuses to their best advisors and teams to stay.

So, what's the big deal? In a down market, with falling fee and investment income, a big check can look pretty good. For many teams, the problem arose when it came time to 1) decide whether to stay or go, and / or 2) how the spoils were to be divided.

You may be tempted to lay it all on simple greed and, for a few, that was probably the case. However, the question is more complex and involves a variety of factors from the pros and cons of moving to a new firm vs. staying with the current employer to how each person on the team felt valued by the others on the team and how well that was communicated.

Over the next few postings, we'll be discussing just that and ways to avoid expensive breakups because, lets face it, divorce is ALWAYS expensive, whether its a marriage or a team. What do you think? Thanks. kfg

Getting Started

During the coming days and months, we at Gretz Consulting Group will be discussing topics of interest in the areas of consulting, coaching, training & curriculum design and web marketing to meet the needs of executives, managers and sales professionals. We welcome comments and questions of all kinds from interested readers and look forward to learning how you address the challenges in these areas in your business and industry. We also look forward to contrary opinions and questions. Thank you. kfg