Required Reading for Wealth Advisors

Book Review:  Behavioral Finance and Investor Types: Managing Behavior to Make Better Investment Decisions - Michael M. Pompian, John Wiley & Sons, Inc., New Jersey, 2012

So much of the content around Behavioral Finance and Neuro Economics is simply new information. Albeit valuable information it often leaves both the practitioner and the individual investor left without an answer to the question, "so what do i do?" Pompian combines his research and insights into our fundamental cognitive and emotional biases together with research and insights into fundamental personality types. By doing this he has created easy to use archetypes and provides concrete, practical action steps for advisors and individual investors to use in order to avoid making big mistakes.

The genuine value in this work is that Pompian provides a framework for how to treat biases in the asset allocation decision. Pompian's work truly aligns the higher purpose of the financial advice business. For the practitioner, the application of this work is really about improving the quality of the advice. The framework provides guidelines for how to answer these two central questions. First, when should and advisor attempt to moderate the way a client naturally behaves in order to counteract the effects of behavioral biases so that they can fit a predetermined asset allocation. ie. The recommended portfolio. Second, and alternatively to the first, when should advisors create asset allocations that adapt to clients' biases so that clients can comfortably abide by their asset allocation decision.

This is practical, usable and valuable. A must for anyone who professes to be a financial advisor.

4 Points Needed to Build Your Personal Branding Message

Brand is all about what people see when they look at a product or service.  What is your brand?  What do they see when they look at you?

Brand identity is a mental or emotional association in the consumer’s mind.  It is initiated by the images used in advertising and by the words used to describe a product or service.  Marketers and advertisers know that by repeating these images and messages, the consumer remembers these associations.  Thus, a brand is born. For the wealth management professional this phenomenon creates both a risk and an opportunity.  The risk is that if the message is not managed properly, people may form an incorrect perception of you.  This could result in limited or even lost opportunities.  But for those professionals who carefully plan and proactively manage their branding messages, they can create a brand image for themselves that will help them create more opportunities for business with new and existing clients.  

Anyone who has client-facing responsibility in a wealth management firm needs a story to tell about what they do.  This message should simply and concisely communicate how they serve the holistic wealth management needs of their clients. In short, they need a Personal Branding Message.  

The Personal Branding Message is a series of authentic, flexible points that you can use in part or together with the intention of setting expectations for the type of comprehensive relationship you would like to have with the client.  Sharing this Personal Branding Message is the first step in shaping, or in some cases transforming, the attitudes and opinions of clients, prospects and potential referrers.  

Articulating your Personal Branding Message is really about creating awareness.  It is a catalyst to engagement.  The Personal Branding Message in this context can help to create a readiness for the client or prospect to engage with you in a broader wealth conversation.  The desired client outcome from this conversation should be that the client or prospect says to herself, "I understand that you have something valuable that could benefit me.  Therefore, I am willing to share my time and my information with to see just how I might benefit."  

Your Personal Branding Message must align with your firm's value proposition.  It is really your own script of how you serve your clients in order to deliver on the promise made in the value proposition. It is important to note that the scripts and phrases you frame-up for your Personal Branding Message are a starting point.  Each individual you engage is unique and each situation is unique; thus you will vary your Personal Branding Message slightly for each situation.  But, when you have your Personal Branding Message down pat, you have a tool box of well-thought-out themes and phrases that you can use individually or in combination to set the proper expectations with anyone. How you describe yourself will have a lasting impact throughout the entire client journey.  

In the absence of a Branding Message people will fill the void with assumptions of their own that may or may not be accurate.  With this absence of clarity, people are left to draw their own conclusions.  It happens all the time.  You see something one way and someone else sees it another.  This same thing happens with you and your firm.  You clearly see it one way, but many of your clients may see it another.  Many clients are unaware of all you can do for them.  When a client thinks about wealth management, you need to make sure that they see you and your firm as an organization that has the insight and capabilities to judge their needs holistically and help them plan for the long term.  In short, you are the first and only call they need to make.

An effective Personal Branding Message has four main elements.  These elements answer some basic questions about you, your firm and what differentiates you.  The four questions a Personal Branding Message answers are:

1. What do you do? 
2. How do you do it? 
3. What are the resources of your firm?
4. Why do this with you?

A Personal Branding Message can be used in whole or in parts depending on the situation; it can be shortened or lengthened as needed.  Two people with the same job function can have two different Branding Messages that are still consistent with a firm's value proposition.  Each of the four points serves a unique purpose so the words you choose matter.  When completed, your Personal Branding Message is not meant to be read word for word in a robotic fashion; but rather it is meant to be internalized and changed to fit each unique situation.  

Start by building your Personal Branding Message one point at a time.  Each point is designed to generate interest and solicit more inquiry on behalf of your audience.  Breaking your message into points allows you to draw on all or just certain parts of the message, depending on the circumstances.  Your final Personal Branding Message will be made up of the phrases and terms that are rooted in  your firm's value proposition and commingled with your own personal perception of how you add value to your clients.  The resulting unique message will help differentiate you from the alternatives and the competition in market. 

Remember the words you choose must be your own.  The samples provided here are meant to show "What Good Looks Like."  You need to come up with your own unique Personal Branding Message.

The first point really answers the question “What do you do?”  Some might call this an elevator speech.  It is a short message that captures the essence of what you do for your clients.  Here is an example:

"We work comprehensively with our clients’ wealth management plans to help them achieve the goals that are most important to them and their families."

If you hold yourself out to be a wealth manager then it is important to emphasize that you can help clients manage all their wealth planning needs.  This is particularly important if the legacy identity of your role or even your firm may be narrowly focused in just one area, such as private banking, investment management or even brokerage.  No doubt that as your firm and your role evolved to include a more comprehensive set of solutions in your offering, too many clients and prospects had an incorrect perception of what you could do for them.  It is likely that this still persists to this day.  You have clients that may not understand the full breath of your capabilities.  Therefore it is important to use words that capture a more holistic, planning-based, comprehensive approach to managing wealth.

The second point answers the question "How do you do it?"  This might have more talking points to it than the first point because you are describing, at a very high level, your process for managing wealth.  To be clear, this is not a product push.  You always want to begin with the client’s goals in mind.  However, one way to build trust and rapport is to demonstrate competence. Clearly and concisely articulating your process demonstrates competency.  Here is an example:

"We utilize a defined and disciplined approach to help our clients make decisions.  Our focus is always helping our clients maximize the likelihood of realizing their goals.  We have found that there are thirteen common wealth planning challenges that are likely to come up in course of anyone's financial life.  Therefore we have built our process around helping our clients to look out on the horizon and identify the areas for focus and attention so that we can help them put in place the appropriate plans and solutions to ensure their success.  This helps ensure that clients will be able to stay on track and accomplish the goals that they have set out for themselves and their families."

Be certain that in this second point you describe how you work with clients to help them address the important challenges or realize the financial goals that you have identified in your own process.  If the setting is appropriate, show an example of the supporting collateral material that highlights your process.  When you do this, you create engagement.  People are able to see the tangible areas where you can help them.  Don't use a list of products and services here.  No one wakes up in the middle of the night thinking, "I need Trust Services"; instead they may wake up thinking "What am I going to do with my business given the fact that my kids are a mess?"  A list of challenges or goals is going to connect emotionally with the client. And that's where decisions are made, in the part of our brain that is responsible for our emotions.  

The third point is to answer the question "What are the resources of your firm?"  Here you can reference the vast array of services of your firm.  Highlight your firm's commitment to serving the wealth needs of your clients.  This may be of particular importance if your firm has a legacy identity that may be more aligned with another arena of financial services such as consumer or commercial banking.  It is critical that you appropriately position your capabilities to highlight all the solution categories available on your shelf. 

"Standing behind me are the vast resources of my firm, which includes a diversified suite of banking, investment and insurance solutions.  Additionally I have access to the professionals and specialists who can help you match the right solutions to your plan.  It’s important you know that all of us here are committed to some simple but important core values.  Our firm has been doing this for over fifty years with the sole purpose of providing sound advice and exceptional service to the people and the families we serve.  This is reflected in the diversity of wealth products and services that we have developed to meet the needs of our clients."  

When you discuss this third point you can speak to the specific resources of your firm, your core values or purpose, the size and scope of your firm –– any of these are appropriate.  What you are really doing here is sharing some of the important credentials of  your firm.  

In the fourth point “Why do this with you?,” talk about how you deliver this service in a very personalized way.  If you are local, capitalize on your proximity to the client; if not, highlight the way you make yourself or your team accessible to clients.  Provide some specific examples of your commitment to providing an outstanding client experience.

"Best of all our entire team is right here in (use your location), and all of us our committed to delivering an outstanding client experience.”

or

"Best of all I am just a phone call away, as is everyone on our team."

  

When you discuss your team and your client experience, share some specific promises that you make to you clients of the things that you commit to deliver consistently.  These do not have to be monumental promises.  They can be the little things.  But they are the things you know will appeal to your client.  Some examples include returning calls the same day, developing personalized communication plans for each client, and promising to each client the opportunity to develop a written financial plan and reviewing it annually.

“My team members and I are passionately committed to help each individual client accomplish their goals.  We recognize that information is critical and that time is of the essence, that is why we work with each client to develop a personalized communication plan, so that our clients will have the information they need to make decisions to protect their interests and stay on track to their goals.”

Additionally, personalize your message with some specific things about you.  One of the best ways to determine what you should say here is to reflect on the things you have heard from clients.  Think back on the times when your clients have complimented you or thanked you for the way you worked with them.  Those comments are evidence of how you personally add value.  These "endorsements" are very powerful statements when they are linked to the fact that these are things your clients have told you.  

“What my clients have told me they value most is that I have a clear methodology for helping them stay focused and on track to achieving their goals."

The way you introduce yourself and the words you choose will have a lasting impact throughout the entire client journey.  First impressions go a long way to confirming or correcting any preconceived ideas about who you are and what you do.  And it is important to repeat the message as often as you can.  If a prospect or client does not perceive you in the right way it will limit your ability to engage them in the kind of discussions required to serve their wealth needs.  When that happens not only does it mean lost opportunity for you and your firm, it also means that potentially your client is being undeserved in an area where they may need the most help.  

A Paul Harvey Story of an Expression of Gratitude

The Old Man And The Gulls

About sunset it happened every Friday evening, on a lonely stretch along the eastern Florida seacoast. You could see an old man walking, white-haired, bushy-eyebrowed, slightly bent.  One gnarled hand would be gripping the handle of a pail, a large bucket filled with shrimp.  

There, on a broken pier reddened by the setting sun, the weekly ritual would be re-enacted.  At once, the silent twilight sky would become a mass of dancing dots . . . growing larger.  In the distance, screeching calls would become louder.  They were sea gulls, come from nowhwere, on the same pilgrimage . . . to meet an old man.  

For half an hour or so, the gentleman would stand on the pier, surrounded by fluttering white, till his pail of shrimp was empty.  But the gulls would linger for a while.  Perhaps one would perch comfortably on the old man's hat . . . and a certain day gone by would gently come to mind.

Eventually, all of the old man's days were past.  If the gulls still return to that spot . . . perhaps on a Friday evening at sunset . . . it is not for food . . . but to pay homage to the secret they shared with a gentle stranger.  And that secret is THE REST OF THE STORY.  

Anyone who remembers October of 1942 remembers the day it was reported the Captain Eddie Rickenbacker was lost at sea.  Captain Eddie's mission had been to deliver a message of the utmost importance to General MacArthur.  MacArthur was headquartered in New Guinea, and Rickenbacker was given a B-17 and a hand-picked crew to take him there.  But there was an unexpected detour which would hurl Captain Eddie into the most harrowing adventure of his life. 

Somewhere over the South Pacific the Flying Fortress became lost beyond the reach of radio.  Fuel ran dangerously low, so the men ditched their plane in the ocean.  The B-17 stayed afloat just long enough for all aboard to get out.  Then, slowly, the tail of Flying Fortress swung up and posed for a split second . . . and the ship went down, leaving eight men and three rafts . . . and the horizon.  

For nearly a month Captain Eddie and his companions would fight the water, and the weather, and the scorching sun.  They spent many sleepless nights recoiling as giant sharks rammed their rafts. The largest raft was nine by five.  The biggest shark . . . ten feet long.  But of all their enemies at sea, one proved most formidable: starvation. Eight days out, their rations were long gone or destroyed by the salt water.  It would take a miracle to sustain them.  And a miracle occurred.  

In Captain Eddie's own words, "Cherry," that was the B-17 pilot, Captain William Cherry, "read the service that afternoon, and we finished with a prayer for deliverance and a hymn of praise.  There was some talk, but it tapered off in the oppressive heat.  With my hat pulled down over my yes to keep out some o the glare, I dozed off."  

Now this is still Captain Rickenbacker talking . . . "Something landed on my head.  I knew that it was a sea gull.  I don't know how I knew, I just knew.  "Everyone else knew too.  No one said a word, but peering out from under my hat brim without moving my head, I could see the expression on their faces.  They were staring at that gull.  The gull meant food . . . if I could catch it."  

And the rest, as they say, is history.  Captain Eddie caught the gull.  Its flesh was eaten.  Its intestines were used for bait to catch fish.  The survivors were sustained and their hopes renewed because a lone sea gull, uncharacteristically hundreds of miles form land, offered itself as a sacrifice.  

You know the Captain Eddie made it.  And you also know . . . that he never forgot.  Because every Friday evening, about sunset . . . on a lonely stretch along the eastern Florida seacoast . . . you could see an old man walking . . . white-haired, bushy-eyebrowed, slightly bent.  His bucket filled with shrimp was to feed the gulls . . . to remember that one which, on a day long past, gave itself without a struggle . . . like manna in the wilderness.

Paul Harvey

Battling the "Robo-Advisor" - Human Connection and Client Engagement

For some time now technology has been reshaping and changing the role of the financial advisor, but could technology actually replace the financial advisor entirely?  That's what some observers would have you think.  

Today's advisor has a vast array of  technology enabled tools and resources to help them provide planning solutions.  These tools crunch numbers and illustrate various scenarios.  They can match plans with the appropriate financially engineered products, and even provide up to the minute online goal tracking.

Could these tools actually threaten the viability of the financial advisor?  It is true that technology can cheaply replace once highly valued quantitative analytic skills.  "Robo-advisers" incorporate sophisticated planning software that can equip the novice user with the the ability to generate a plan that is comparable to a custom plan developed by a CFP or a CPA.

I have heard one observer predict that these "robo-advisors" will be the doom of the financial advisor and that advisors are destined to go the way of the travel agent.  You remember travel agents?  They were the people who used to sell airline tickets for a living.

I, on the other hand, do not agree with this assessment of the future.  I happen to believe that there is one thing that advisors can do better than any technology.  It is ability to put things in the right context so that people can make the right decisions.  It is about creating a personal human connection with the client.  Helping the client develop a vivid and achievable vision for their goals, their hopes, and their aspirations.  This is something that no machine can do.

Being a financial advisor is really about being an "enabler".  The "value add" is not that you have the right answers, it is that you have the right questions.  

The fact of the matter is that people don't act on what they know, they act on how they "feel" about what they know.  To be effective at enabling people to act, advisors should use these five steps to engage clients.

1. Emotionally Connect
2. Inform Key Principles
3. Involve Exploration of Outcomes
4. Enable Decision Making and Implementation
5. Track and Monitor Progress

The first step is to Emotionally Connect.  Advisors must draw out the client's visions for the future, the emotional picture of the goals.  What will it actually look like?  What will it help your achieve or realize?  Why does that matter?  Advisors must seek to understand the clients feelings about this future vision, both positive and negative.  Most importantly, advisor must listen for the underlying values that give this picture meaning.

The second step is to Inform Key Principles.  This is very much a teaching part of the process.  In contrast to being the expert with the answer, i.e. "here is what you should do", this is being the expert with a framework for the decision process and providing guidance along the way. The skills here have to do with how you package and share the needed information, such as being prepared with "knowledge objects", prepackaged "bite size" chunks of information.  Framing the content appropriately and posing questions along the way to help facilitate engagement and test for understanding. The objective is to equip the client with the information needed to make the right decision.

The third step is to Involve Exploration of Outcomes.  The questioning process continues with the goal being to help the client explore how to best realize their vision.  Using questions that help clients explore various outcomes and determine what is most desirable.  It is through this step that the client begins to arrive at their decision.

The fourth step is to Enable Decision Making and Implementation.  Summarize the points covered in exploration.  Demonstrate how positive outcomes are achieved and negative outcomes are managed.  Connect the solution to the emotional context established for the goal.  Enable the decision and implement the plan.

The fifth step is to Track and Monitor Progress.  This is critical to the entire value proposition of the financial advisor, particularly if your business model involves an ongoing fee arrangement.  After all, what is the "value add" of the advisor if there is no ongoing effort to ensure the desired outcome will be achieved?

At first blush, these steps would appear to resemble most common planning processes.  These are the same steps you would likely see on a "robo-advisor" platform, but here is where an advisor makes the difference.  It is the emotional intelligence, aptitude, skill and underlying intent of the advisor that technology cannot replicate.  The human connection is not programmable.  These are the things that are certain to retain their value even in a constantly evolving environment like financial services.

5 Steps to help you find the best and highest use of your time.

A big part of generating your own success is knowing where to focus your effort and energy.  What's the best and highest use of your time?  A friend of mine Kevin Johnson, CEO of  Ontrack International shared with me five simple steps to find, and then prioritize, your best and highest use of time.  

The first step is to start by identifying your goals or priorities.  Let's look at this through the lens of improving your performance at work, although these steps can be applied to any area of your life.  If it's work related then it would makes sense to validate your goals or priorities with your boss.  Ask your boss what he or she wants you to achieve in the next 90 days.  This is a critical step because there may be some things your boss has in mind that are not yet on your radar.  My partner John Brantley, who has helped me develop the Performance Coaching programs we deliver at Cannon Financial Institute, refers to this first step in our coaching process as Clarifying Expectations.  Make certain that both you and your boss are on the same page as to what the expectations are.

The second step is then to take an inventory of all of the activities in which you could engage.  Consider how you have spent the last 30 or 60 days.  What exactly are you doing with your time?  Don't get too granular with how you inventory these activities.  A smaller list will be easier to work with than a list of 60 or 70 discrete activities.  Organize these activities into a matrix and compare them to the goals you have identified.  This is will help you find your "high impact" activities.  To do this create a table.  List the goals across the top of the table.  These will become "column headers."  Then list the activities down the right hand side of the page.  Now for each "cell" where the activity (row) intersects with a goal, rank the impact of that activity against the goal or priority.  Is it high, medium or low in its impact?  Do this for each activity.  

The third step is to study the completed activity impact matrix and identify those activities that are likely to have the most impact on your goals.  You are looking for those activities that have impact across multiple goals or priorities.  

The fourth step is analyze how much of your time you actually spend on these high impact activities that you have identified.  If you are like most people you will be surprised to learn that you are probably spending 20% or less of your time on the activities  that count the most.

The fifth step is take charge.  Time management is really about choice management.  Spend one hour each week planning.  Make the right right choice about where and how you spend your time and you will be certain to realize significant performance improvement.  

Video Content and Community Learning - Observations from my colleague Bill Trigleth

Several blogs and Social media expert sources are beginning to promote the use of video marketing as a part of their  “presence” strategy. We have seen pieces oriented to advisors and already there are ones oriented to consumers.

My colleague Bill Trigleth recently shared some of his observations with me.

Clark:  Bill what are you seeing that is new with video content?

Bill:  As you look at these videos the first thing you will notice is that they are short.  Less than 2 or 3 minutes.  But they do some really interesting things to capture your attention in that time frame.  

Clark:  Really, like what?

Bill:  For one, you see a lot of people using the "animator technique".  This is currently popular and promoted in many different domains including brainstorming sessions at high end venues.  What you see is an artist drawing out the concepts in simple sketches, step by step, while the narration tells the story.   The completed picture provides a visual metaphor for the concepts discussed.  And it makes for a great take away piece as well.

Clark:  But these are short.  Can they really get enough information across in 2 or 3 minutes?

Bill:  Absolutely.  The concept is to "boiled down" the information into is essence, no extraneous information.  Just what needs to be shared.   

Clark: But there is a story line that holds it all together, right?

Bill:  That's right.  The story line helps bring clarity.  The objective is to get it crisp.  It takes a lot of work.

Clark:  How do you see using this in the work we do with advisors?

Bill:  If this was used for training purposes, an example might be to have a summary sketch listing the 5 types of retirees who need life insurance. Then perhaps a suggestion the advisors go into their book and do an analysis to see who needs the conversation. 

Clark: So how would that work?

Bill:  Imagine you are in the classroom  and there is one of these videos for each major learning objective.  You run the video.  Do some facilitated discussion to flesh out sub topics add context.  And then lead an exercise to have them apply or practice the teaching points.  

Clark: That's similar to how we have used other videos in the past.

Bill:  True.  But these can be sequenced as a part of a broader learning system.  They can be deployed on a Community Learning Platform so advisors can re-access them for refreshing as needed. Imagine these videos sequenced together to create a whole set of curriculum that has an accompanying workbook, maybe even a mobile app that has the videos and instructions.  Using a Community Learning Platform participants could then post their learning from executing the prescribed activities.  They could  even post their own skill demonstrations for peer to peer coaching and feedback.  

Clark: That would be very engaging for the participants.

Bill: Best of all, this is an on line learning experience.  Easy to deploy and very scalable to any size origination across any geography.

Clark: That's exciting.  Of  course we have already been working with a Community Learning Platform for some time.

Bill:  That's right Clark.  Cannon is certainly a leader and early adopter in this space.  This is the future of where learning is going.  As my new "unmet" friend Daniel Burris wrote in his book Flash Foresight “ If it can be imagined it will be built” If not by you then someone else”

Clark:  Bill thank you for your insights on this.

Bill:  You're welcome.

Bill Trigleth is the Director of Research and Development for Cannon Financial Institute. 

Leading Change

Choosing what to change always seems to be so easy. But making change happen is much more difficult. The solutions are there. We often know exactly what we need to do. The practice management routines have been defined by consultants, published in books, taught in workshops. And even when the problems are so complex, and the answers are not found in a three ring binder, we can use our intellect, our analytic skills and logic to determine what needs to change. There is always some "root cause" lurking behind all of the symptoms we experience. Symptoms if you will, of something more deeply rooted within the system. But still, knowing what to do is the easy part. Leading the change and inspiring others to follow is the hard part.  

Research has shown that individuals who are effective leaders operate at a higher level of maturity. These leaders are rare.  The research in this area has shown that only 10% of adults ever reach this level of maturity, regardless of how long they live. A friend of mine here in Athens, Karl Kuhnert Ph.D., is a Professor at UGA and has dedicated much of his work to Leader Development. He and his colleague Keith Eigle Ph.D. are among a group of academics who are leading the way to a better understanding of how leaders develop and what differentiates effective leaders from the rest. In some academic circles this has been referred to as "Authentic Leadership". Their company The Leaders Lyceum has developed programs that facilitate and accelerate the development of leaders.

The link below is from the recent TEDx in Atlanta (TED stands for Technology, Entertainment, Design) where Keith Eigle addressed a group of some of the "world's leading thinkers and doers". In this video clip you'll see Keith give a brief overview of what it takes to become an effective leader. The kind of leader who can make change happen. As you will learn from Keith's talk, whether you are trying to affect change at your firm, with your team, or with your clients, the change starts with you.

As for me, I feel inspired by all this new learning. It has driven me to ponder new questions for how I can better serve the the Wealth Management community. I hear in Keith's words something worth exploring further. My colleagues and I have been the thought leaders who have helped to shape much of what we see as the Wealth Management industry today. There is hardly an organization that we have not touched in some way through training or consulting. But yet as we have helped to prepare the professionals with the knowledge, skills and practice management components needed to be effective advisors, it seems that those necessary elements are not in themselves completely sufficient.

So this year I resolve to change that. I pledge to continue my learning and study and I ask you to help me in this endeavor. I will keep you posted here on my learning and findings, and I hope to draw on you as well to share with me what you know to be true. Challenge my ideas. Share your perspectives. Together as a community we will shape the future of the business of advice.

So with this Blog posting I welcome in 2010, and an embark on a new quest, the quest for the "Authentic Advisor".

Watch Keith's video at this link. I highly recommend it.

http://www.youtube.com/watch?v=LPPuc_UXXk