Digging Beneath the Surface

By Ray Sclafani

April 1, 2007 – Think back a ways. If you’ve been an advisor in the past 15 or 20 years, you may remember a time when you picked up the phone to call a client and had a conversation that went something like this: “Mrs. Jones, I want to give you some background on the stock I mentioned to you last week. Our equity analyst recently gave me his view on the company’s P/E ratio, its growth rate and what we think the price target is going to be. I think this company is really going places, so I’m going to put you down for 500 shares. My assistant will call you with a confirmation number later today.”

Things have changed dramatically since the go-go years of the 80’s–when being a stockbroker was enough. First we became financial consultants. Then we became financial advisors. We’ve introduced financial planning into the sales process while taking a more consultative role in addressing our clients’ needs. But at the end of the day, many of us are still talking with our clients about issues that are relatively easy to solve.

In today’s competitive environment, we need to do more than just scratch the surface. We need to have deeper, bigger and more meaningful conversations with our clients.

The Art of ‘Going Deep’

It’s no longer enough to simply talk to our clients about accumulating wealth. We need to find out what wealth means to them. What is the legacy they want to leave for future generations? How will their wealth affect their children? How can they create a financial safety net for family members, while still allowing each child to independently achieve success? These are the types of questions we’ve got to start asking our clients. In addition, we need to convey to them that as advisors, we can assist them by engaging them in a bigger conversation while also addressing their total financial objectives.

“For me, going deeper means really getting to know my clients on a personal level, as well as a professional level,” says John, an advisor in Plano, Texas. “I needed to do more than just have portfolio reviews with my clients–especially with my most valuable accounts.”

To grow and develop his business, John took the time to have a deeper conversation with all of his top clients. For example, upon learning that one of his biggest clients was interested in keeping the arts program alive in his local school district, John jumped at the chance to pitch in. He ultimately helped the client create a family foundation to support art education in grades K through 12.

John now has an even stronger bond with his client, who views this professional as his primary advisor for all of his financial needs and objectives. As for those clients who weren’t willing to expand their conversation with him, John made an effort to help them find other advisors who could assist them.

Becoming a Wealth Advisor

When I talk to advisors, I often tell the story of how our jobs as financial professionals have evolved over time. To better serve our clients, we’ve gone from being brokers to advisors, offering access to a broader suite of services in the process.

More recently, we’ve evolved from being advisors to facilitators–people who make our clients’ lives easier by understanding and anticipating their needs. There’s one more leap, however, that we still need to make in order to achieve our full potential as facilitators. We need to make the transition from being merely financial advisors to being fully developed wealth advisors.

Wealth advisors manage more than just investments. They oversee the entire relationship with their clients and the other trusted professionals these individuals use. The most successful wealth advisors generally focus first on assembling a team of experts who can address all of a client’s specific objectives. (These goals could be personal, professional or charitable.) In addition, the best wealth advisors ensure that any team assembled is truly a team–working together to create integrated wealth management solutions for their clients.

Such solutions should minimize taxes, reflect estate planning goals and ensure that clients’ long-term financial plans are in tune with their most deeply held values.

Updating Your Business Cards

If your business card doesn’t say “wealth advisor,” it’s time to find out how to upgrade your job title. Every firm has different requirements for becoming a wealth manager.

These may range from receiving formal educational training to increasing the amount of assets under management in your practice. Talk to your branch manager about your firm’s prerequisites and what you need to do in order to earn the wealth advisor designation. The time and effort will be well spent.

I believe that wealth advisors will see their businesses continue to grow in the future, while many financial advisors could potentially see their businesses shrink. Traditional wirehouse advisors are going to see increased competition from nearly every angle. For example, banks are offering a broader menu of investment choices; regional broker-dealers are becoming more competitive; and, finally, online investment tools are getting more powerful.

Yet wealth advisors–by acting as an essential link in all of their clients’ financial relationships–will have a much better chance of long term success.

If you’re already having a bigger conversation with your clients–and many advisors today are doing just that–be sure your clients understand the value of what you do. They should be able to articulate the services you provide, including any offerings that relate to the big picture. Protecting clients’ legacies, understanding their family dynamics and serving as a quarterback for their financial needs, are all services that will add real value to your client relationships. Indeed, those services will help you grow and build your business. That should be enough motivation to get out there and start talking.

Ray Sclafani is President of ClientWise LLC, an organization founded to support the financial advisory practice of the future. Delivering unique practice management strategies focused on client acquisition and retention, ClientWise provides coaching and training for leading financial advisors. For more information, e-mail ray@clientwise.com or call 1-800-732-0876.

Originally published in On Wall Street, April 2007.

Copyright Ray Sclafani 2007.