Where the Dinosaurs Still Roam

By Ray Sclafani

October 1, 2006 – For millions of years, dinosaurs ruled the earth. But their reign ultimately came to an end, and there are various theories about their demise. Some scientists believe that a meteor hit the earth, causing a rapid climate change that killed these giant reptiles. Other experts blame volcanic activity and a shift in the tectonic plates, which disrupted the animals’ natural habitats. While no one knows quite how they died, most people believe that these great beasts are truly extinct–save for their modern-day relatives, such as birds and crocodiles.

It’s hard to imagine seeing a real dinosaur today, but they do exist aplenty–in the securities industry. Here are the telltale signs: A dinosaur might be an advisor who is highly transactional, focused more on selling products than building relationships. Or this moniker might describe a professional who focuses on speaking with as many people as possible in order to generate more commissions. How about an advisor who measures success in terms of production, rather than by the quality of client relationships and execution? I’ll bet there are even a few dinosaurs who continue to use mass mailings to generate new leads.

If you’re a financial advisor, chances are good that you know a competitor or a colleague who’s a dinosaur. You may have even talked to one this morning at the watercooler. I say this with good-natured humor, because even the best of us resort to dinosaur-like behavior from time to time. But this can’t continue. We need to stop living in the Jurassic era and catch up with the rapid climate change that’s affecting our industry.

There are powerful currents reshaping the way we do business today. As advisors, we’re being squeezed in every direction. The baby boomers want more for less. Fees are shrinking–not expanding. And there are more advisors competing for less business.

So what do these profound changes mean for us? The answer is that we have to evolve or become extinct. Evolution means changing the way we do business. Many of the old strategies for success will no longer be viable. We need a new paradigm.

Dawn of a New Age

To survive in today’s marketplace, a financial professional needs to be more than just a trusted advisor. We need to become facilitators–people who make our clients’ lives easier. From helping investors plan for retirement, to integrating tax- and estate-planning strategies into their portfolios, we need to take a 360-degree look at their lives and ask if we’re doing everything we can to simplify them. Building higher-quality relationships is a great way to start your transformation from dinosaur to facilitator.

When clients see you as a facilitator, you become the go-to person for all of their wealth management needs. This is important, because research shows that as people approach retirement, they tend to consolidate their different advisory relationships into a single one with the professional they value the most. When that time comes, you want to be that advisor. The oldest baby boomers just turned 60 this year. Every day for the next 20 years, 13,000 Americans will reach that age. That’s right–every day. That means there will be millions of boomers entering retirement as well, looking for that one advisor who can truly facilitate all of their wealth management needs.

To become a facilitator, you must change the way you spend your time. You’ll need to focus less on selecting investments and more on nurturing your client relationships. You’ll become your clients’ liaison to an extended team of professionals, which may include their tax advisors, attorneys, estate planners, insurance agents and credit specialists. And you’ve got to understand your clients’ values, concerns and goals–inside and out.

Survival of the Fittest

Dinosaurs focus on the quantity of their relationships. Facilitators focus on the quality. They look for clients who represent the financial elite. In return, they give their clients the best they have to offer. They measure the quality of every aspect of their business, from the attentiveness of their service to the consistency of their execution.

A quality client relationship begins with effective communication. Instead of waiting for clients to call with requests or concerns, a facilitator proactively calls clients with ideas, suggestions and market updates. If you’re a facilitator, you reach out to existing clients at least once per quarter to review their portfolios and investment strategies, as well as to find out what’s new with their families. You understand every dimension of your clients’ lives–personally, professionally and financially. As a facilitator, you’re focused as much on human dynamics as you are on market dynamics.

Finally, let’s return to the subject of consistency of execution. Facilitators focus on that rather than the occasional big win. They understand that their clients’ confidence must be earned in all market conditions, and so they seek to create all-weather portfolios based on clients’ specific concerns and objectives. By approaching client relationships in this manner, you can create a practice that is highly stable, productive and rewarding.

The Adaptive Advisor

Change can be scary, but it doesn’t have to be. The first step is to articulate your goals and create a game plan for achieving them. Depending on the types of changes you’re interested in making, you may want to consider tapping a coach or creating a network of supporters who can help you put your plan into action. The most successful advisors today are those who recognize the need for change and manage their practices accordingly.

So next time you’re at the American Museum of Natural History checking out the dinosaur exhibits, remember what we can learn from them. The dinosaurs enjoyed a rich life for millions of years but couldn’t adapt to sudden changes in their environment.

Financial advisors today are a facing a change no less radical. But unlike the dinosaurs, we can see it coming. By opening ourselves up to change and transforming our practices, we give ourselves the chance to thrive in this new market climate.

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.