Advisors Change Is Good (Business)

By John Anderson, Managing Director, SEI Advisor Network on Tuesday, September 23rd, 2014

Last week, I had back-to-back presentations in Nashville and Seattle. The first was on using segmentation, niche marketing and service to build client affinity; the other was social media for financial advisors. Both were well attended, and I could tell that the audience was engaged because they laughed at my stupid jokes. But the conversations after the breakouts were a bit disturbing.
Let me back up. Typically in my presentations, I offer to send a copy of the slides to anyone in the room. I find it allows attendees to concentrate on the message, rather than writing notes. It also gives me the chance to meet and get feedback from them. As I finished my presentations last week, I was asked some pretty interesting questions and heard some puzzling comments. While a clear majority of the feedback was very positive and encouraging, human nature tends to focus on the “other” conversations.

Here is a sampling of what I heard:

  • If I segment my clients and begin to focus on some natural niches in my book, won’t I risk losing some of my clients?

  • Creating a marketing strategy around social media or niche marketing takes too much time; I’m too busy.

  • I simply don’t have the resources to start a niche from scratch, and I certainly wouldn’t turn away clients that aren’t in the niche.

Speaking to these concerned attendees, I made a classic mistake. I suggested that segmenting the book into natural niches would only help grow their business, as they would become more of an expert in their field and it could lead to greater referral flow. I offered that a marketing strategy around social media and niches would only create more efficiencies and focus in a business, rather than haphazard or general marketing activities. Both suggestions were meant to show them they could differentiate their business and create better client service. They stared at me in disbelief. I had addressed the issues they brought up, but not the root of the problem.

I’m sure the advisors were busy and I’m sure they haven’t “lost” clients simply because they don’t have a Twitter handle. But I don’t think that was the issue. Those attendees were saying, “I fear change.” They fear change because they fear possibly losing clients and the income they receive for their services.

I’ve said this before, but last year, I heard a quote from Bob Veres that has stuck with me: “Complacency is the biggest risk to a financial advisor’s business.” In light of competition from all areas, aging demographics, compliance and world financial markets, we cannot afford to be ostriches sticking our heads in the proverbial sand. We need to embrace change and capitalize on it. We need to evolve our businesses.

Try this the next time you hold an office-wide staff meeting:

1. Prepare a list of changes that you implemented in your business/career and share it with your staff. Consider things like:

  • Did you go from captive to independent? Was it a good move?

  • Were you commission based and moved to fee based? How is your revenue now?

  • Did you raise account minimums or even transition smaller clients to a junior advisor? Do you have more time to spend with better clients?

  • Did you evolve your investment philosophy or consolidate your custodial platforms?

2. Discuss how those changes impacted your business. Ask your staff (and yourself):

  • Are we in a better place today than before we made the changes?

  • Do we remember the pains that we went through to get there?

3. Look at the state of your business today. Really look at it. Are there things that need to be modified? Improved? Fixed? Changed?

4. Pick one (make it a small one first) and put a plan together. Hold bi-weekly or monthly meetings to check the progress. Keep yourselves accountable!

5. Keep at least one item on each meeting agenda going forward. Put a list together of the other changes that you want to make and add them as agenda items in all of your staff meetings. You may not get to it every month, but you can’t forget about it if it is in your agenda.

Get over it
The fear of change can negatively affect your business. Having a clear, concise goal (and a plan to get there) can make it a lot easier. Over the years, what I have found is that the hardest part of the journey is the first six inches. And by that, I mean the six inches between our ears. If we can overcome the complacency, then we can discuss niches and social media, but not before.
What do you want to change about your business? When are you going to do it?

John Anderson is a contributor for Practically Speaking and also serves as a managing director for the SEI Advisor Network.

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