Journal of Financial Planning: May 2016
We live in a world of uprisings.
We’ve seen them around the globe with increasing frequency and in all forms: peaceful, aggressive, violent, and sometimes disgusting. We’ve seen people occupy governments, city squares, parks, countries, and even Wall Street.
Underpinning all conflict—whether it is thoughtful, carefully debated, empathetic, or violent—is a single truth: all conflict is a call for change. And there are changes that need to happen at the planning table.
There has never been a time in human history where wealth holders have needed better advice, guidance, and discernment than now. Wealth, retirement, and estate decisions have never been as complicated, nor has there ever been as much opportunity to develop approaches and financial plans that can echo into the future. Those echoes, however, will reverberate with planning genius, or with the shrill tones of shortsightedness. The determining factor will be the decisions of the client, but the critical influence is the adviser.
A Call for Change
A call for change is emerging, and it’s time to “occupy” planning. Momentum has been quietly building for the last 20 years. It’s a shift from providing wealth holders with products (and sometimes answers), to guiding them toward the thoughtful exploration of what actually matters to them (and why), and then stewarding that vision into the future. It’s a much larger conversation that not all advisers want, or should deliver. But it is what wealth holders are increasingly demanding. It’s a denser conversation, a more powerful conversation, and frankly, a more productive one. But there’s a price tag to the adviser. It requires you to slow down, to exercise impulse control, and counteract some of your original problem-solving training. The results, however, are worth it.
What does this have to do with “occupying” anything? Simple: people are statistically unlikely to change. The odds of someone making a material change in their life or business is about one in nine (we won’t go into the research here, but rest assured that the odds are against you). This means that the only way change happens is in the presence of a powerful reason why. Without it, people flirt with change, experiment a little, and then revert to old behaviors when they’re fatigued or under pressure.
But when people become invested in something that matters to them—a cause, a movement, a powerful reason why—when they become part of something that will have a lasting impact and where their failure to act may mean that the “cause” could falter, people start making unprecedented changes. Wealth holders are asking for these changes, and it will be up to you to begin making a bigger difference than perhaps you ever thought possible.
The Call Is Not Isolated
Wealth holders aren’t the only ones asking for a more trusted relationship and a different advice experience. Advisers are calling for it, too. If you’re a fiduciary, you’ve already started speaking for this change, and acting on it. Other advisers will be joining you in this soon.
The U.S. Department of Labor has solidified its proposal to make changes that would afford wealth holders additional protection by progressively ensuring that financial professionals who give retirement advice take on fiduciary responsibilities. That will have several implications, and one of them will be that your world is about to get more crowded. Advisers who have not occupied a planning seat, or fiduciary seat, in the retirement space will begin to connect with the clients you work with and the prospects you’re engaging. You’re about to be a little less differentiated in a market that can barely tell a credentialed planner from a bank employee.
How Will You Differentiate?
The question of differentiation is common amongst advisers, and relevant, but misguided. It’s relevant because you are not the same as everyone else, and wealth holders need to be able to perceive those differences in order to make a wise selection of an adviser. It’s misguided, however, because it’s the wrong question. The question needs to be, “How can I create a difference in my client’s life?” not, “How can I be different?” One of those questions is focused on the client (what a fiduciary would ask), while the other is focused on your own needs.
Advisers can sound different, they can look different, and they can be different. If you’re to set yourself apart from the flood of retirement account advisers who will begin to take on the optics and language of a fiduciary, you must do it by being a fiduciary in the fullest expression of the concept. This starts long before you even meet a prospect or client.
If you can begin by putting your initial attention on how you can create a difference in your clients’ lives, and then design your entire process around that, you won’t have to worry about being different. Creating a difference makes you different.
How Can You Do It?
There are three initial shifts that will set you up to create a true, fiduciary experience.
Absolutely embody the fiduciary mindset. The needs of the client must come first. That sounds obvious, but there’s more to it than you might think. It means that you have to start by helping the client understand what they want. Most wealth holders cannot clearly articulate their goals or their vision for the future with precision and clarity. They often provide the “right answer” to your questions, rather than the “real answers.” They don’t do this deliberately or with ill intent; they simply can’t articulate it, but want to answer your questions. So, they give answers that they think might be right, rather than answers that are heartfelt, compelling, and accurate to their circumstance.
Traditional fact finding won’t give the client clarity. It will give you clarity about their numbers, but it won’t help wealth holders, and it’s typically a painful experience for them. That means the attention must move toward true discovery. Can you help wealth holders discover for themselves what their desired future looks like, and what goals will move them toward that future? Let us be clear, every good adviser talks with clients about their goals, but what we’re talking about is going well below the surface and discovering a completely different level of client clarity.
When you put those needs first, when the client’s vision is the superseding priority in all discussions, you transcend great customer service and move into a rarified fiduciary space that is invariably unoccupied. Occupy it.
Understand your role at the planning table. Your role is determined by the client, not by you. You may think otherwise, but in this regard, your thoughts are largely irrelevant. The client decides who you are to them. So, they may see you as their absolutely most trusted source of discernment, or as a source of advice, or as a source of product. When you try to occupy a role that the client doesn’t perceive you to have, it creates negative relationship tension that can distort the work you’re doing, the impact you can make, and ultimately the result the client will experience.
To address this, occupy your role well. If you’re the most trusted adviser, then steward their vision. If you provide advice or product, support the most trusted adviser and stay connected to serving the client’s picture for the future. If you don’t know what that is, find out and maintain your focus on it. Also, keep in mind that you can occupy more than one seat at the table, but only if the client can see you that way. Know who you are in their eyes, and fill the role superbly.
Bring a process to the table. It’s one thing to bring “smarts” and another to bring answers or products. But when you can show up with a step-by-step process, two things happen. First, it keeps you on track. It’s easy to be pulled around by opportunities, by shifting circumstances, and by client dynamics. Unfortunately, that can completely undermine your credibility or your ability to discern what the client actually wants. Use a process to keep the experience moving forward.
The other is that having a process communicates confidence and credibility to the wealth holder. When they know that you have this solved, that you have a process and method to identifying and addressing their vision, you are lifted out of the commodity mass and are seen in a new light.
Putting Others’ Needs First Will Address Your Needs
By fully occupying the fiduciary mindset, occupying your role at the planning table properly, and bringing a process to the table that ensures the wealth holder encounters a true, fiduciary experience, you can put a dramatic distance between your work and that of newcomers to the fiduciary conversation.
Wealth holders need more from their advisers. They need more from you, and they deserve it. So do you. The side effect of powerful planning that gets to the heart of a client’s vision for the future is that the scope of the solutions typically becomes much larger. By slowing down a bit at the beginning of the planning process, the results become markedly larger and more meaningful.
Chris Venn and Todd Fithian are two of the partners at The Legacy Companies, a Boston-based consulting and training firm that helps top financial advisers evolve their businesses by transforming how they engage with wealth holders.