By Daniel C. Finley
Change is nothing new in the financial services industry. Advisers are faced with constant change when it comes to market fluctuations, economic news, updated compliance issues and investor mentality. As a result, advisers may be uncertain as to what business practices work best in order to be successful in today's rapidly changing environment.
If this sounds familiar, rest assured you are not alone. Most advisers are finding that what had effectively worked for them in the past is not effectively working in the present.
During recent coaching sessions, I have noticed that today's most successful advisers are those who can readily adjust to change. This adaptation is what we refer to as the "new normal"-the best business practices to make better adviser-client connections in today's environment.
Use the following strategies to connect better with clients:
Adjust to the New Investor Mentality
Over the past two years, the market has been one of, if not the, wildest roller-coaster ride investors and advisers have ever experienced. Consider the Dow's peaks and valleys; after falling some 50 percent from its October 2007 highs, the Dow Jones Industrial Average had recovered more than 50 percent by fall 2009 since hitting bear market lows in early March 2008. This extreme volatility has had an interesting impact on investor mentality. It has created what I refer to as "the new investor mentality"-a more cautious view of investing based on recent extreme market volatility.
Adjusting to the new investor mentality is really about understanding your clients' fears and knowing what to do to alleviate them. Your clients have been through a lot. Is it any wonder that the same clients who were very concerned about losing money in March 2008 were just as concerned about another possible pullback when the Dow recovered to 10,000 in October 2009?
Often times, investors do not openly express their fears. Instead, when given recommendations, they passively avoid reality by giving excuses such as: "Let me think about it," "I don't have time to look at my investments" and "I think I'm going to just leave everything as is for right now."
The key to adjusting to the new investor mentality is to get your clients to express their fears. Questions such as, "What concerns you most about your portfolio, these recommendations, the market, our firm, myself?" are all great ways to get clients to open up. Once they do, alleviate their concerns by questioning their limiting belief systems. Here is an example:
Adviser: What concerns you most about these recommendations?
Client: I don't want to make changes and lose more money.
Adviser: Do you think it's possible to reduce the chances of losing more money if we diversify your portfolio further?
Client: Yeah, I guess so.
Adviser: So do I, and that is exactly why we should move forward with these recommendations, because they diversify the portfolio, which should reduce your risk.
Adjust to the New Adviser Mentality
Investors are not the only ones who have been mentally affected by a volatile market. Advisers are faced with the realization that since the Dow first hit 10,000 in March 1999, its peaks and valleys brought us back to 10,000 again by October 2009. More than 10 years have gone by, and essentially, we are back to the same spot.
What has this done to you? Has this shaken your confidence? Have you changed your stance on your buy/sell policies? Have the last two years changed your views on prospecting and client servicing? Have you questioned your purpose? Are your actions reflecting your limiting belief systems?
Many advisers feel lost in today's environment. They just do not know what to do to make a better connection with prospects and clients. However, some advisers have taken the time to understand how to navigate in the midst of change. Does this sound more like you? If so, this market volatility may have created what I call "the new adviser mentality"-a more conscious view of building and maintaining your business based on recently experiencing extreme market volatility.
Adjusting to the new adviser mentality is really about understanding or being aware of what you need to do to thrive in today's environment, taking action and being accountable for your own success.
In today's environment, you must invest in yourself to become the adviser that clients need you to be. You must know how to adjust to their fears as well as your own. And, you must adjust to the new practice management principles.
Adjust to the New Practice Management Principles
Once you understand what the new adviser mentality is, put this new mentality into practice. Do this by using the new practice management principles, a series of truths or rules of conduct that you can apply in your practice to succeed during extreme market volatility. They are:
Competency. Increase your level of knowledge regarding the market, prospecting, sales, relationship building, client servicing as well as product knowledge so that you can alleviate prospects' fears. Remember the new investor mentality; investors have concerns in today's environment. You can reduce those concerns by increasing your knowledge.
Confidence. Increasing your knowledge and applying that knowledge in real-world situations will help you gain more confidence. Clients and prospects alike need a confident adviser. However, do not mistake confidence with having a crystal ball.
Communication. Improve your communication process with clients by creating an effective client servicing system. Clients need you to communicate with them now more than ever so that you reduce their fears. Determine your client servicing levels and how often you will call, e-mail or mail your A, B or C clients. Communicate to them what those client servicing levels are so that they understand your value, then deliver on your promise to communicate effectively.
Change. Increase your openness to change. You cannot control change in general but you can control how you react to change. Embrace change and see the opportunity instead of the obstacle. Once you do this, you will not fear change, but accept it as a natural part of this business.
Adjusting to the new normal doesn't have to be difficult. It is merely a process of changing your mindset by better understanding your prospects, clients and yourself. Put the new practice management principles into place on a daily basis. Make sure that you have some type of accountability for accomplishing daily goals. Soon you will find that you are making a much better connection with prospects and clients in today's environment.
Daniel C. Finley is a former adviser and president of Advisor Solutions Inc., a business development consulting and coaching service for financial advisers. He is also the creator of The Advisor Solutions System, a 24-week group coaching program. Contact him at firstname.lastname@example.org.
Tools to Use
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