04.18.19

Why Advisors Must Up Their Game

by: Scott Stathis, Managing Partner, Stathis Partners, LLC

Here’s a question you should be asking all your advisors:

“Are you a trusted advisor?”

The question is a very easy one to answer. If you are managing the majority of your clients’ investable assets, then you are a trusted advisor. If not, then you’re an afterthought.

Unfortunately, most advisors in our channel are currently afterthoughts — they are managing the minority of their clients’ investable assets. If you’re “that” advisor, this should really bother you, and you should want to do something about it.

Our channel is in a race with other channels to gather assets and monetize them. It’s not a race we want to lose. The best way to gather assets is to be able to effectively serve as many client needs as possible (income now, income later, protection, legacy, as well as savings and credit needs referred to your colleagues). How do you do this in an industry becoming more and more commoditized?

What is your differentiator, your value proposition, your unique client experience?

These are questions you better be able to answer. If you can’t, start working on them. For clues, recall experiences in your life as a consumer that created “wow” reactions. Why were they different? How were they different? How can you translate them into the services you offer to create a “wow” reaction by your clients?

More importantly, how can you get to know your clients well enough to become their trusted advisor and manage the majority of their assets?

Notice the premise the question above is based on. The only way you can hope to become your clients’ trusted advisor is to get to know them well enough where they trust you with the keys to their financial lives.

Here’s what you must understand whether you’re a manager or advisor in our industry. Clients have three functional needs; transactions, money management and what I’ll call financial lifestyle planning.

Transactions have been fully commoditized. There is currently no need to put a human in the middle of a transaction. There is just not enough value to be added. Leave converting CD clients into annuities to another delivery mechanism.

With the advent of robo advice, we’ve gotten to the point where you could make a valid argument that money management (essentially ongoing investment allocation) has also now been commoditized. Again, it’s becoming more and more the case that there is less and less of a need for a human in the middle of this equation either.

All that’s left is financial lifestyle planning. This is the only one of the three that allows you, as an advisor, to add real value and become a trusted advisor.

Since basic financial planning has also been commoditized to a significant degree, I am using the term “financial lifestyle planning.” This is financial planning on steroids, and it starts with a deep discovery process.

Building the Advisor-Client Relationship

Your ultimate objective is to get to know enough about your clients so that you can have a major effect on your clients’ well-being. You can give clients a genuine sense of control over their financial lives. Allow them to sleep at night. Help assure their kids live a purposeful life and not be negatively impacted by wealth. You become a family advisor. Provide clients with peace of mind, a sense of fulfillment. Help them achieve their life goals.

Steven Grill, one of Barron’s Top 100 Advisors in the United States, says it this way: “Although their money is important, their families, their beliefs, their health and their lives are just as important.”

So, how well do you really know your clients? I’m guessing it’s time to step it up.

Based on the amount of time this inherently takes, you can do this only with a limited number of clients, but that is exactly how you want your business to evolve. Your highly-personalized and profitable service will be provided to the clients who have the highest degree of need based on the significant assets they have accumulated and the related complexity of their situation.

Do you not want to worry about becoming obsolete? Do business this way. Do you not want to worry about client attrition? Do business this way. Do you not want to worry about fee compression? Do business this way. Do you want to feel great about the amount of recurring revenue you have locked in on January 2 of every year when you walk into your office and turn on the lights to start a new year? Do business this way.

Here’s another question you should be asking all your advisors to get them in the proper mindset:

Assume that the products and solutions you provide have no commissions or fees, they are just the tools you use to solve for your clients’ needs, and you charge clients solely based on the value of the advice you provide. What is your fee structure, and how much do you charge?

We all better be ready to answer that question, because that’s the direction our industry is headed. Doing business as described above will provide a significant head start.