The Future is in Retirement

By helping clients envision later-life goals, You can build value in your practice. An exclusive conversation with coach Dan Sullivan.

By Ray Sclafani

September 1, 2007- “Never has there been a more exciting time to be a financial advisor,” says Dan Sullivan in the introduction to his new book, The Advisor Century. The founder and president of the Strategic Coach believes that financial advisors play a unique role in their clients’ lives as facilitators who can help them achieve their most important goals. In addition, he believes that the surge of baby boomers approaching retirement makes the role of the financial advisor more important than ever. Ray Sclafani, founder and president of ClientWise, recently spoke with Sullivan about how advisors can find freedom, success and fulfillment in their own financial advisory practices. In our exclusive interview, they discuss how advisors can make the most of our “Advisor Century.”

Sclafani: What does retirement mean in the Advisor Century?

Sullivan: The very concept of retirement is changing rapidly. It used to be that retirement was the end of something. Now, people are seeing retirement as the beginning of the second stage in their lives. People want to have a multidimensional, enjoyable life when they are 60, 70 and even 80 years old.

Sclafani: Today, we hear a lot about the importance of visualization and having a clear goal in mind. How can advisors help clients visualize their retirement goals?

Sullivan: So much of the crisis surrounding retirement is not financial; it’s psychological and emotional. The key is to help clients start thinking about their goals, as well as time frames for achieving those goals. I encourage advisors to talk about a 20-year time frame, because most people can’t imagine anything more than 20 years out. It’s important to put numbers and specific goals to the future.

What this is all about is selling people on their own potential. People often don’t have a clear vision of what their future will be, in retirement or otherwise. The future gets created in the conversation. There is a shortage of the kind of financial advisors we need who can really help people develop these goals, so they can realize them. We need to have more financial advisors with this approach.

Sclafani: You talk at great length about the complexity of modern life. Why is this concept important for advisors to understand?

Sullivan: Complexity is a key issue in the Advisor Century. We live in a microchip-driven world, with new innovations coming at us every day. Clients are overwhelmed, not only by their finances, but by modern life itself. Successful advisors help their clients deal with new information and challenges in a creative and positive way. For example, you could have a business owner who is very confident in his ability to run most parts of his business; but thinking about issues like compensation for his employees, his own personal investments or the needs of his elderly parents creates anxiety. The role of the advisor is to help clients simplify these complexities by tackling them one at a time. What people really want is clarity in thinking through their own personal issues.

Sclafani: People often work with a number of trusted advisors who play important roles in their lives. Why do you think financial advisors are the ones who can address these very personal issues?

Sullivan: People want more control over their own destinies and future progress. When you really think about who can help people have greater control over their lives, the financial advisor is No. 1. No one else can provide the same level of assistance. If you consider lawyers, accountants, clergies, psychiatrists, doctors or any of the helpers in our society, the financial advisor is the only one who combines two fundamental dimensions, the financial and the emotional.

Financial advisors are very conversant in the numbers that are essential for people’s financial progress. They understand the math and the financial structure. In addition, many advisors have a tremendous psychological capability. They understand people. They understand their point of view and what they’re striving to achieve in their lives.

Sclafani: Over the past three decades, we’ve seen some dramatic changes in the role of the advisor. From stockbroker to wealth manager, the role of the financial advisor continues to evolve. What other changes do you see in the future?

Sullivan: I think that the most successful financial advisors will be paid for their wisdom, in addition to any compensation they receive for product sales or assets under management. This is a huge leap for many advisors to make because they’re not trained to think that way. However, I think we need a new compensation model.

I liken it to visiting your doctor. You go to your doctor because he has great wisdom and you value his advice and insights. The doctor charges you for his consultation, as well as for any medications or procedures he recommends. Indepen-dent advisors have the same opportunity to be paid for their wisdom, as well as any financial solutions they recommend.

Sclafani: How can advisors move toward this new compensation model?

Sullivan: In order to get paid for your wisdom, you need to have a distinct value proposition that you can articulate to current and future clients. I encourage advisors to develop a unique process, in which they help their clients think through the things that are important in their world. For example, advisors need to find out what things their clients are frightened of, what they’re excited about and what they feel confident about. Then they can create a game plan that is unique to each client and separate from any products they are selling. To get paid for their wisdom, advisors need to move their focus away from product sales and toward an integrated, consultative approach.

Sclafani: Why should advisors consider this new approach?

Sullivan: The moment that you start getting paid upfront for your wisdom, something magical happens: You find that you sell a lot more product, almost without trying. Advisors I work with who have adopted a unique process report that they sell about 250% more product per client when they don’t talk about products at all. Instead, they focus on their client’s lives. It’s a more satisfying conversation, a more satisfying approach. You feel that you’re doing genuine good in the world that you’re making a profound difference in the lives of your clients.

Sclafani: Do today’s advisors need a new definition of wealth and wealth management?

Sullivan: Income and assets are just two components to being wealthy. Wealth in the 21st century is about being human. It’s not about having a lot of money. Sure, there’s always money required. But suddenly people are saying, what more is there to wealth besides money? This is where issues of meaning, purpose, significance and influence come into play. And it requires a game plan. How are you going to manage all of the different aspects of wealth besides revenue?

Sclafani: What other skills do advisors need to plan for the future?

Sullivan: This may seem very strange, but I think advisors need to bring an artist or graphic designer on staff. The power of communication is not in words, but in pictures.

In order to cut through complexity, you have to present your clients with pictures that illustrate your approach. They don’t have to be fancy—just a few simple charts, diagrams and illustrations. Your goal is to show people where they’re at, where they’re going and how they can get there.

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 Financial Planning magazine, September 2007.