February 2010
Never Doubt Yourself
By Don Connelly
I live with a nagging concern. The concern is my relevance, or lack thereof. The doubt began three years ago. My source dried up.
For forty years I went to work every day with and among Financial Advisors. I was tuned in, I was connected and I was aware. I shared my ideas, I took ideas from others and I do not recall one moment when I doubted myself or my ability to communicate. All day, every day, I knew what was relevant. That all changed when I went into business for myself three years ago. I lost my community. When you change firms or retire, the phone calls stop after two months. Probably the best analogy is that it was like going from being a wire house rep in a big boardroom to being an independent Financial Advisor in an office of one. The noise stopped, the chaos subsided and the mother lode of great ideas was suddenly gone. I was cut off. Yes, I still do quite a bit of speaking and I am around Advisors on those occasions. And yes, Camp Connelly subscribers are great about giving me a lot of feedback. But it's not the same as constantly mingling with the crowd. I fear I've lost the nuance, however slight.
Think of those people you know who speak English as a second language. No matter the richness of their vocabulary or the absolute lack of an accent, you can always tell they are speaking in a second language. Something is detectable. That something may be ever so subtle, but it is there. That subtle distinction is nuance.
Problems with living in a bubble. That's my concern. For forty years, I've never been without a great sales idea or an innovative prospecting idea. At any time, I could articulate my ideas and get immediate feedback. It was my own special form of sonar. When you are alone, you can't employ sonar. You have to assume that you are on the mark. And you can't help but think that you might not be getting it right.
Couple that lack of feedback with the speed and magnitude of the changes in world and local politics, domestic and international economics, and the financial markets in the last three years and you begin to appreciate the magnitude of my dilemma. Is my message still relevant or have I fallen prey to what Alvin Toffler called "The great growling engine of change?"
To find out, I got proactive. When in doubt, get proactive. It's the best slump buster of all time.
I asked for help. I spoke with a lot of people, Advisors, wholesalers and investors over the last month. The investors are friends of mine who are wealthy and have Financial Advisors. I talked with Advisors in big cities and small towns. I interviewed wholesalers calling on national firms, banks and independent advisors, representing mutual funds, REITs and ETFs. I was quite open with everybody. I asked for their help in framing my message for 2010.
The first area of discussion was the obvious one. What's different from last year and the year before? Are we in uncharted waters? Is it truly different this time? Are we in what Pimco has dubbed the "New Normal?"
I next asked both Advisors and clients about the challenges facing today's Advisor. Do clients still see the stock market as a viable medium? What do affluent investors want? How are Advisors prospecting? Why am I hearing that referrals have dried up?
Some of the answers were especially insightful. They are not surprising, but they will most likely reinforce what you instinctively know to be true. It was nearly two hundred years ago that Jean-Baptiste Alphonse Karr said, "The more things change, the more they stay the same."
Here is my advice to you after talking to them. The consensus was, as you can well imagine, that the landscape has been altered, perhaps irreversibly. This recession differs from recessions before it. The failure of Lehman Brothers was the biggest bankruptcy filing in United States history and it triggered the near collapse of commercial mortgage-backed securities. The reputation of money market funds has been tarnished. Debt is piling up and government spending is out of control. Unemployment is dangerously high. Investors have suffered staggering losses. Bernie Madoff's Ponzi scheme unleashed rampant distrust of the financial services industry. Nobody's betting on an economic recovery anytime soon. It's a whole new world.
It may be different this time. Time will tell. Since America's birth, she has gone through the repetitive cycle of crisis and recovery, crisis and recovery. It's probably going to be that way this time, as well. However, perception trumps reality. If clients perceive that this time it's different, it's different. If you feel that this time it's different, it's different. I know we both agree that what has happened is now history. The events are regrettable and the effects are profound, but they are behind us. We can only learn from them and move on. The biggest single waste of time in earth is wishing things were different. Let's not worry about things we can't control. We've got to run our businesses and our clients need to accomplish their goals.
Clients are looking for leadership. Clients and Advisors are more wary than ever about the stock market. Bad three-, five- and ten-year performance figures have cast doubt in everybody's mind. Nobody wants to be big time wrong three times in ten years. Lack of self-confidence is a universal issue. Nobody wants to look stupid and nobody wants to be broke. I appreciate your caution, yet I am compelled to remind you that clients are looking for leadership. They long for certainty in uncertain times. All my wealthy friends acknowledge that the role of the Financial Advisor is an essential one that is now more essential than ever. Recent events have made the slope more slippery than ever. I asked every single one if they would consider going on without a Financial Advisor and everyone single one laughed in response. One especially wealthy friend said, "My Financial Advisor cannot do my job. Why would I ever think I could do her job?"
Client acquisition is the number one challenge facing today's Advisor. That has never changed and it has never been more urgent. Traditional prospecting has become difficult. One method gaining traction is niche prospecting. One client told me his advisor had taken him shooting at an upscale shooting range. Naturally he loved it. He felt significant. Discerning consumers love feeling significant.
There is no Silver Bullet for prospecting. Deserving and earning our clients' trust is still the surest path to introductions. The burden is on the Advisor to make sure he or she is referable. I refer my friends to my doctor because I like my doctor and I trust him. I have complete confidence that my friends will be better off knowing him. I know they will have a rewarding and beneficial experience just by sitting with him. He is eminently referable. I want them to meet him.
There's a certain smugness in which we all delight. It comes from being smart enough to have a good doctor or a good Financial Advisor or a good anybody. We all want the warm reward of welcoming our friends into our world. Tell a friend that you need a dentist and ask him if he knows one. He'll inevitably ask, "Want a good one?" There's that smugness. I don't have any old dentist. I have a good dentist.
"Want a good one?"
"No thanks, I'd prefer somebody who'll drill through the roof of my mouth."
If you are referable and if you go about it the right way, you will be referred by your clients. Do not assume they don't want to refer you. To your advantage, people derive pleasure from referring professionals they admire to their friends.
I caution you that a surprisingly large number of my friends are not terribly enamored with their Advisors. They're not unhappy. They're just not happy. When I asked them why they didn't leave, they pretty much said they didn't want to rock the boat. Unless the present Advisor does something to mess up the relationship, my friends aren't going to initiate the departure. They need to be dislodged. They need to be referred.
When I asked them if they would leave if they met the right person, they said yes. When I asked them who the right person might be, they all said basically the same thing. The person would have to be someone highly recommended by somebody my friends trust. Every single investor with whom I spoke, and there were several, used the word 'trust.'
Finding your value proposition. I know from talking with Advisors and wholesalers alike that there is a pressing need for a for a unique value proposition in this environment. What to say and how to say it is always a challenge.
Buy and hold doesn't work anymore, according to the consensus. It's too old fashioned. I never did find out what's better. Nobody seems convinced he has the answer. I urge you not to forget dividends. Dividend checks don't bounce. Dividends are proof that good companies don't use smoke and mirrors.
There is no bubble this time ushering in a new generation of well-heeled prospects. Instead of the real estate or tech bubbles of the past, the "New Normal" era sees today's American embracing what ABC News called his "Inner Cheapskate." That means there is a lot of client rustling going on. I urge you to love your clients so much that only God can take them away, not the competition.
Getting clients off the fence. This is a major challenge in this day and age. Skeptical consumers all but missed the phenomenal rally of 2009 and are still seeking further proof and validation. The chasm between being a prospect and becoming a client is deep and wide. Form an opinion and voice it. Sell yourself. Every firm and every Advisor has the same data. The data is commoditized. The data is not the star. You are.
I assure you that my wealthy friends don't think they are wealthy. Rich people never think they are rich. We think they are rich.
Rich people aren't worried about making money. They know how to make money. That's how they became rich. Rich people are worried about being poor.
I spoke at length with an Advisor whose clients are collectively worth billions of dollars. He deals solely with the very wealthy. He asks each new client an interesting question. "At what point would you feel poor?" Somebody with a million dollars will undoubtedly feel poor with a net worth of $100,000. Well, he had somebody worth $500 million tell him he would feel poor if his net worth fell to $200 million.
I spoke with another Advisor who deals only with wealthy people in the medical profession. One of his clients is a renowned surgeon at one of America's most prestigious hospitals. Even though the doctor is nearly seventy years old and wealthy beyond most people's dreams, he thinks just like you and I think. While sitting with his Financial Advisor recently, the doctor uttered an interesting admonishment. He told the Advisor that a ninety-year-old patient had been in to see the doctor that morning. The man was receiving the best of care although he was unable to afford it. He was poor. He didn't have enough money to pay the nurse, let alone the doctor. "Make sure I never go there," the doctor chided the Advisor.
Build trust. I learned from my wealthy friends that they think like lifers when they retain a Financial Advisor. They sign on for the long haul. They want the relationship to work. That puts the burden on the Advisor to never do anything for the short-term. Do not seek a short-term reward in a long-term relationship. You are invited into the inner circle because folks trust you. Violate that trust and there is no second chance. Affluent clients fire their Advisors for one primary reason. They have lost confidence in the Advisor. Don't do anything that would make a client lose confidence in you.
Obtaining theatre tickets for your clients or getting them a good deal on a new car may be a nice gesture, but that is not how they judge you. Providing concierge service may very well distinguish you from the next guy, but it's not a deal maker. Far more basic than concierge service is the fact that affluent people must like you, they must trust you and they must feel that what you are offering is right for them. Fail just one of those tests and hooking them up with all the travel agents in the world won't save your bacon.
Advisors from all channels told me that to be perceived as a salesman is the kiss of death. Interestingly, nobody said that being a salesman is the kiss of death. The obvious conclusion is that we need to be quietly good at selling. I think that's inescapable logic since 70% of our GNP is based on consumerism.
Here's what was unsaid that came through loud and clear. The 80/20 rule is very much alive and in force and the rich are getting richer. Twenty percent of the Advisors manage eighty percent of the wealth. Every top tier Advisor I spoke with had a honest-to-goodness, written down, followed to the letter plan for gathering assets; and a repeatable process that allowed that plan to become reality. As they always do, the top 20% is gathering the lion's share of the assets and monopolizing the referrals. Do you want to compete with them? Get good at what you do.
Any Advisor in the world is shooting himself or herself in the foot if he doesn't learn and master basic selling skills. The talents involved in prospecting, giving a presentation, closing and getting referrals are not innate. They are acquired. You need a basic skill set in order to compete.
Also unsaid but implied is the age-old notion that when all is said and done, near term performance still sells. The folks from Pimco, iShares and Putnam will acknowledge that. We are very much in a performance driven business. Be careful but act accordingly.
Also unsaid but so obvious that it's deceptive is that clients don't want financial planning. Clients want what financial planning can do for them. We're selling financial planning and they're buying peace of mind. Determine now how you want to be perceived by your target market.
Closing the deal. There are no new ways to ask for the order. If you want someone to open an account with you, present your case and ask. Periodic rejection comes with the territory. It's ok to be rejected. It may sting for a while, but you'll be fine.
Make every client feel like he is your only client, but make sure he knows that he is not.
Tacit, but loud and clear, is the awareness that this is a hard business. Hard work by itself guarantees nothing, but the right kind of hard work conveys enormous rewards. Don't waste your time looking for shortcuts to success. There aren't any. Do the right things week after week, month after month and year after year and you will prevail.
There's no room for doubt. I'm glad I went through the exercise of talking with those folks on the firing line. Reaffirmation is comforting. Just like you, I know down deep in my soul what works and what is needed to be successful in this and any industry. I chide myself for letting doubt creep in. There is no room for doubt in this business. My message is relevant. So is yours.
So much has changed. So much remains the same.
About the author:
Don Connelly, the nation's most successful advisor to the retail brokerage industry has long been a powerful beacon of wisdom to investors and financial services professionals. His career on Wall Street spans nearly 40 years and includes positions as stock broker, financial planner, branch manager, wholesaler, national sales manager and for nearly 19 years, was a company spokesperson and Senior V. P. and Senior Marketing Officer for Putnam.
Traveling tirelessly to educate audiences around the world, Don has lectured tens of thousands of investors and financial services professionals in large cities, small towns, boardrooms, and universities. Audiences at England's Cambridge University, Harvard, Wharton School of Business, Chapman College and Pepperdine have all benefited from his presentations. He has shared his wisdom with Investment professionals abroad in New Zealand, Australia, Spain, Canada, England and Ireland. And, in the past few years has given several presentations to the prestigious Million Dollar Roundtable as both a main platform and workshop speaker.