…and THERE is a fabulous opportunity for today’s professional adviser.

If the majority of small business owners are struggling to make a decent living, and perhaps a third of those businesses are effectively at the point where they should be making hard decisions about whether to stay in business or not, then there is a significant opportunity for professional advisers to make a significant difference in clients lives.

How valuable would it be for these small business owners to get great advice in managing cash-flow better?  Or identifying and managing risks adequately?  Or handling tax planning effectively?

Generally only about 25% of small business owners are making a good living.

Financial advisers usually concentrate on helping individuals or families manage all of these issues, and generally do it well when they are covering the full financial planning spectrum for their clients.  Those same advisers are also business owners themselves dealing with the very issues that undermine their business clients ability to grow.  The combination of practical business management experience, technical expertise in financial planning, and superb coaching or facilitation skills provides the astute financial adviser with an exceptional ability to assist business owners to grow.

But most advisers don’t try to.

Of all the advisers that I know personally I can count on one hand the number who have realised that this opportunity exists, and are pursuing it.  The best example is one well qualified planner who does all of the things that every other financial planner does for individual clients, but in addition to that offers a business planning and mentoring service.

This involves the planner meeting with the clients monthly just to work on their business management skills and knowledge, and to provide accountability.  In many respects this could be viewed as a “consultancy” role, or perhaps an “advisory board” role, although the unique aspect is that this adviser is helping the client achieve their life goals through good financial planning as well as assisting the business to achieve its potential.  It is no bad thing that as the business does better and presents better income and equity growth for the client the planner himself has a growing personal client.

He handles about 6-8 business clients per year in this business advisory function, with the clients typically paying about $1,500 per month for the ongoing mentoring and advice.  That generates about another $120-140,000 in fee income for the planner each year on top of the usual financial planning work for personal clients.  That is also another half dozen extremely loyal clients created each year who have better businesses, more money and less stress.

That is a win for everyone involved.

The business opportunity for financial advisers is not specialising in a product area, or getting the longest list of qualifications possible, or anything similar. It is being a good business adviser.  Of course you do need to be a good business person yourself, and have the coaching skills and the technical competency to realise this opportunity, but shouldn’t all advisers have them anyway?

www.financialadvisercoach.com

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Can a professional be both competent and incompetent simultaneously?

A strange question to ask perhaps, but can a professional be both competent and incompetent simultaneously?

Of course they can.

As new regulatory standards are embedded everywhere for professional services a word which frequently springs up as measure of professionalism is “competence”. Advisers everywhere grasp the broad concept of competence, and accept the logic of needing to BE competent in their area of expertise.  However, there is ongoing confusion for many about whether they are actually competent enough to be classed as competent by a regulator.

The are 5 levels of competence that you could use to describe the different levels of professional knowledge and skill:

1.  Ignorance  (I know nothing and cannot advise)

2.  Awareness (I am aware of issues associated with it, but not how to fix them)

3.  Knowledgeable (I understand the issues and many of the solutions, but not all)

4.  Competent (I have excellent working knowledge of issues & solutions and can help)

5.  Expertise (I am an authority with deep technical understanding and will find the optimal solution)

It is entirely possible – in fact it is highly probable – that any professional will have ALL of these levels of expertise (including “ignorance”) in some area of their industry.

The key for professionals is to understand what level of competence they have in any particular area.  For example, on my most optimistic self assessment I could not rate myself as anything better than having a level of “awareness” when it comes to currency trading/forex.  Frankly, it would be downright dangerous to give me your Yen and ask me to begin trading in international currencies on your behalf….it will end in tears for everyone.

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Know your competencies.

A strange question to ask perhaps, but can a professional be both competent and incompetent simultaneously?

Of course they can.

As new regulatory standards are embedded everywhere for professional services a word which frequently springs up as measure of professionalism is “competence”. Advisers everywhere grasp the broad concept of competence, and accept the logic of needing to BE competent in their area of expertise.  However, there is ongoing confusion for many about whether they are actually competent enough to be classed as competent by a regulator.

The are 5 levels of competence that you could use to describe the different levels of professional knowledge and skill

1.  Ignorance  (I know nothing and cannot advise)

2.  Awareness (I am aware of issues associated with it, but not how to fix them)

3.  Knowledgeable (I understand the issues and many of the solutions, but not all)

4.  Competent (I have excellent working knowledge of issues & solutions and can help)

5.  Expertise (I am an authority with deep technical understanding and will find the optimal solution)

It is entirely possible – in fact it is highly probable – that any professional will have ALL of these levels of expertise (including “ignorance”) in some area of their industry.

The key for professionals is to understand what level of competence they have in any particular area.  For example, on my most optimistic self assessment I could not rate myself as anything better than having a level of “awareness” when it comes to currency trading/forex.  Frankly, it would be downright dangerous to give me your Yen and ask me to begin trading in international currencies on your behalf….it will end in tears for everyone.

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The zone of maximum potential value for a services firm though is elevated service levels over and above the competitors as well as doing different things in different ways to your competitors.

The typical practice does things the same way as the majority of their competitors, and with the service level also being essentially similar to competitors the perception of service is relatively low. Relatively….because that has become the lowest common professional denominator.  So average service is actually low service in real terms.

If a firms’ strategy is to compete on service, then the standard must be exceptionally high in order to break away from the mainstream and differentiate.

If however a firms strategy is founded upon innovation – doing new and different things to the competition – they are utterly dependent on the strength of the product or service offer, which is a dangerous place to be.  If however that innovation is couple with higher than average service delivery, then you’ve hit the sweet spot where you are completely separated from the average competitor.

That is the zone of maximum potential value: Value to clients….value in revenue terms….value in growth and capitalisation terms.

The real money for professional services firms long term is in utilising twin strategies of exceptional service together with a differentiated service offering.

http://financialadvisercoach.com/

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What is the purpose that drives all the business building activity?

Businesses that experience superb growth typically have an owner, or owners, who have clarity of purpose and that purpose sits at the heart of everything they do.

I have written before about the 6P’s of Peak Performance as being that systematic approach to doing the key elements of building a successful business and evening out the revenue or production performance (see The 6 P’s of Sustained peak Performance ), however during a recent workshop the question arose as to where these actions fitted with Purpose.

An excellent adviser and friend, Keith Kerr, was present and he hit the nail on the head when he said “Purpose sits in the middle of the process and the Purpose guides the decisions in each area”.

Having clarity of purpose is is being able to answer the question “why are we doing this at all?“

It is akin to “vision” or understanding what the end game is for your business…what you are trying to achieve. But Purpose brings in another dimension beyond having clear vision of what the business aims to achieve.  Having clarity of purpose brings in the personal dimension: what is actually important to you?  Does your business activity reflect, or sit comfortably, with your own values and personal goals?  Will it help you achieve your personal goals and lifestyle objectives?

Identifying that clear purpose for you personally will help shape the systematic approach to building a business that gives you what you are aiming for as it will help guide decisions and actions in such a way that they feel right as well as energise.

Once you can identify what the point of all this business building activity is,  then getting out and promoting, producing, pitching, processing, perfecting and planning becomes substantially easier – and worthwhile.

http://financialadvisercoach.com/

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Handing over the keys takes good timing and good planning.

Unless you plan to work to the grave all practice owners need to be thinking “succession” at some point – preferably as early as possible.

Succession planning is simply about working out how to exit the business at your preferred time, in your preferred way, and hopefully at your preferred price. Doing that successfully is quite a journey, and will involve significant thought and planning, and detailed execution.  There are 6 distinct phases to an ideal business succession plan, and this article covers the first three in some detail. The 6 steps of a full succession plan are: 1.  Establish the Owners Objectives 2. Understanding Where The Value Is 3.  Building & Maintaining Practice Value 4.  Creating the Sale 5.  Completing the Sale 6.  Personal Planning & Legacy Issues

Establishing the Owners Objectives

At the very beginning of any succession planning you have to answer the essential questions of “what, when, who and how” as they establish the framework of what is trying to be achieved.

• What is it you are going to be selling?  Is it just assets (such as a client base), or a “going concern” that includes potential liabilities, is it partial ownership of an entity or structure that caries limitations for incoming owners?
• When do you want to sell it (ideally)?  Is the timing driven by your needs and personal plans, or others?  Have you considered how much impact timing can have upon price?  If timing can have a large impact upon valuation (e.g. if selling a multiple of trail commission on a funds under management book where value can move with market performance and confidence) are you able to prepare the business for rapid sale at a time of premium values?
• Who are you most likely to sell it to? Who would it be most attractive to….an internal successor or an external party? Do you have, or are you building, the type of business which is more attractive to somebody looking to build upon their own sweat equity and create their own income stream for the future, or are you building something which carries potential synergies and leverage for external investors?  Are those systems and key IP you might be building of interest only to investors from within the same industry, or are you thinking of a turnkey operation that opens up the possibility of being appealing to external investors that are not looking to work in the business itself?
• How…at this stage is really “how much makes it worthwhile?”  What is the price range that makes a future sale worth doing – for you.  How much are you wanting, needing, or hoping to get from it that can become a key driver of the investment you will make in positioning the business for optimal succession value, and also trigger the succession process?

Understanding Where The Value Is

One of the key questions at the outset was understanding what it is you are selling – a business, an interest in a business, just an asset sale?  It follows that once you have worked out what it is you are selling you need to understand what components add or create value within that.  Considerations will include:

• balance sheet, P&L’s and other standard financial measures and reporting.  In particular, what areas contribute the greatest value from an investors perspective?  What areas might be open to serious negotiation given widely different interpretation (e.g. goodwill, intellectual property values, brand value)?
• current value, and valuation methodology.  Apart from what the business is worth now, is this value tested in a range of methodologies such as discounted cash-flow analysis, EBIT, future maintainable earnings x industry multiples, any comparable sales data?
• business structure, and any limitations this may introduce (such as minority shareholders, shareholder agreements, preferred agency arrangements, etc) or additional opportunities it may create (strategic alliances, preferential access arrangements, absolute control or incoming owner, etc).  The governing documents of the business (constitutions, resolutions, licensing restrictions or authorizations) can add to, or detract from, the value of the business depending on whether they create certainty and control for investors, or whether they introduce restrictions and limitations.
• governance of the business.  Is there a robust decision making framework with a strategic focus and a level of external thinking and/or skills that are adding value to the business?

Building and Maintaining Practice Value

Having established a clear picture of what it is you are hoping to achieve, and how others would consider where value might lie within the business, it becomes somewhat easier to then focus upon the areas that can add the most to practice value, and therefore enhance the return from your succession planning.  These might include: For pure “asset sales”:

• persistency levels
• commission, trail, contracted fee agreement growth rates
• client demographics and regional breakdowns
• policy or investment types, and mix of types. if there are multiple lines of business, does each carry the same valuation multiple?
• quality measures (e.g. client satisfaction surveys; book attrition rate, client complaints history)
• taxation impact (e.g selling with or without GST or sales taxes – can that make a difference?)

For entire “entity sales”:

• marketing and prospecting systems that are replicable and repeatable
• quality staff & management, and supporting policies and procedures
• financial controls and management information systems
• business plans and budgets
• positive and growing cash flows
• client data management systems
• shareholder and stakeholder communications and relationships

The first three steps of succession planning are arguably the most difficult, in that they are focussed on understanding the objectives, the levers that drive value, and then building a strategy (or plan) around how to achieve the optimal value. And that is only half of the battle! In the next post I will work through the other 3 steps that are needed to create a complete succession plan for professional practices.

Click here to read part 2.

www.financialadvisercoach.com

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For reasons that are not entirely clear to me yet it was decided that we must have a bread maker.  A bread-making machine was duly bought, which incidentally yielded  little more than a gooey mess of uncooked dough on the first attempt to use the machine.  We probably should have read the instructions.  Nevertheless, I digress…

Instead of reading the instructions I read the Breville company’s story, which was fascinating.  The second generation owner took over the business in 1951 from his father, and began a simple procedure that became the their “secret to successful innovation”.  In their words:

“Each working day, until his passing in 2003 at age 88, John read every one of the customer feedback cards.  “It’s the most important thing I do,” he said.  Customer feedback is still read daily by our Design, Innovation and Marketing teams.  Customer feedback is, and will continue to be, the key to our success.”

Such a simple concept, yet one requiring ongoing discipline – and the courage to act upon the market feedback.

The real key however to using customer feedback to innovate products or services, or indeed an entire culture of a business, is to create a customer feedback system in the first place.  Certainly a place to begin is informally, with built in reminders and links to confidential feedback forms that can be hosted on your website.  The feedback reminders can be incorporated into every piece of standard correspondence produced by your practice, and placed prominently in any published material (e.g. newsletters, email template wrappers, website, etc).

To drive higher engagement levels from customers in providing feedback though a more structured process should be created to lift feedback levels.  Ongoing surveys and encouragement for suggestions, focus groups, competitions to generate new ideas….all can provide valuable market intelligence that can be the catalyst for innovation in the practice.  The concept is straightforward, regardless of how the feedback is generated:

To generate new ideas, lift service levels and create deeper client relationships where they feel your firm is listening and responding to THEIR needs, take a lesson from Breville.  Create feedback systems, and actively use them to canvass opinion – good & bad – from your customers.  Then read every one of them, look for patterns and ideas, apply your own knowledge and systems to using those ideas, plan & execute the suggestions wherever possible.

Then let the customers know how you are acting upon the feedback, and create a positive spiral of further customer engagement and further feedback.

Therein lies the key to innovating products and services that customers actually value.

www.financialadvisercoach.com

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Get your marketing plans in order.

It would be fair to say that the majority of people in professional services are not marketing specialists. Usually great technicians and specialist advisers, often great at selling and relationship management at an individual level.  Not so great at getting the marketing going though….

Whenever I talk at workshops or conferences about marketing, client engagement and building the professional services brand the question that invariably arises is “what do I need to have in my marketing mix?”

That could potentially be a very very long list, but here are the Marketing Kitbag Essentials:

1.   A defined target market and client profile
2.   A succinct Value Proposition & a Positioning Statement
3.   Consistent brand imagery and logo’s
4.   Your own name domain (e.g. billsmith.com) – even if you aren’t sure where you will use it yet
5.   Professional Business Card
6.   Professional letterhead stationery
7.   A professional headshot photo (or series of photo’s)
8.   Your Professional Bio with particular focus on expertise & credibility areas
9.   A complete LinkedIn profile (with particular focus on Headline; contact details, & summary sections)
10.   Branded company profile brochure or collateral
11.   Branded email template, with content links
12.   A content rich, customer focussed, website
13.   Branded newsletter/ezine
14.   Branded Powerpoint and/or Prezi templates
15.   A Centre-Of-Influence plan and approach
16.   Referral Marketing plan
17.   Welcome/Introductory Video
18.   An “about you” video (some will refer to it as a “why” video)
19.   Key social media accounts set up for your brand (even if you are not using them yet)
20.   A blog

This is potentially quite a daunting list for many professionals today, yet it is just the essentials for a practice or adviser wanting to establish a credible presence with their target market customers.

Whether you intend to use digital marketing methods or not the reality is most customers will expect you to have an online presence, so it is critical to establishing credibility as a modern professional.  Equally, it is critical that your physical marketing material is polished, well branded, and consistently positioned.

Of course, way back at the top of the list are those fundamentals which are so often missed in professional services marketing…being clear about who you are trying to attract, positioning for them, and being totally clear about what value you provide to them.

www.financialadvisercoach.com

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Going the extra mile is great for business.

Everyone has heard some story about how a business did well from going the extra mile for a customer…but rarely do you hear about a professional services business that has a standing process for going the extra mile because it continually improves sales results and profitability.

One practice I deal with does precisely that, and converts 70% of the “uninsurable” cases that would not ordinarily get started. The usual situation for most financial advisers dealing with insurance placement is that there will be a percentage of submitted cases that are declined, deferred or loaded heavily by the insurers, resulting in proposals that simply do not proceed. For the advisory firm this is a serious amount of time and effort that is usually written off…there is a substantial cost involved for the practice in “not proceeding” insurance business.

That sunk cost that the majority of firms write off has been turned around however by one boutique insurance practice. It assumes responsibility on behalf of the client and the insurer to manage the placement of the business proactively.

On any occasion where a client is declined, deferred or has an exceptional loading the adviser initiates discussion with a medical professional to find out more about the condition that has caused the problem. Note that the adviser is not having a conversation with the client’s doctor about the client’s personal case, they are finding out about the medical condition itself from another practitioner. They summarise what they have found out about it, including what has been revealed from a bit of google searching as well. As a standing procedure, alternative medicine and therapy methods are looked into and summarised, and a suggested action plan to manage the health issue is put together for the client.

In contrast to the standard insurance proposal situation when a client is considered a bad risk and simply declined or priced out of the market, resulting in the adviser raising their hands in surrender and saying “sorry, I can’t help you”, this particular business rolls its sleeves up and goes to work for the client quite proactively.

Typically there is a period of 3-6 months of managing the client’s necessary changes to diet, exercise, medication and so forth. The result? Healthier, happier, satisfied clients. Not a bad outcome so far.

During this period of course there is significant dialogue and relationship building with the client as well – and that is priceless. The adviser is no longer someone trying to sell a solution, they have become someone who is taking an active interest in their client living well.

When the necessary change has been managed to the point where it is worthwhile for the client to try again on the insurance, the adviser pays 50% of the specialist or medical reports to put the case for reconsideration to the insurer. But the client has to pay the other 50%….they have to put some “skin in the game” and show that they are serious about getting the plan put in place. There is no doubt however that at this point in time the adviser and the client are in partnership….they are working together to get the client the result they want, which is incredibly powerful positioning.

In over 70% of the cases the adviser is able to get the client acceptable coverage and terms within about 6 months.

Often there is additional premium in the form of loadings, but just as often there is not. The average proposal size is larger however in these cases, and with a 70% conversion rate on otherwise lost business, it is proof that there is money along the extra mile. It would be fair to say that this boutique practice welcomes difficult cases – they are good business and typically generate extremely good clients who value the advice and the relationship.

Which brings us to that final lovely little benefit that arises from this proactive approach: clients are inevitably moved rapidly up the loyalty ladder, and usually become excellent sources of referrals.

www.financialadvisercoach.com

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Why torture your clients?

Compliance has a lot to answer for.

One of the truly negative consequences of evolving best practice advice standards is the trend to torture clients.

Now torture is a rather harsh word, and I am sure that globally there is no particular agenda on the part of regulators or professional advisers or service providers to deliberately torture consumers.

We tell them “this won’t hurt – much“…and wonder why they approach the financial advice process with distinct trepidation?

I am referring especially to that part of the professional advice process that  is focused on uncovering the facts and dreams and ambitions and goals of clients.

It is called the Discovery Process.  Or Data Gathering. Or Fact-Finding.  We call it many things around the globe to make it sound nicer than it actually is.

The concept of determining what matters to the customer, and ensuring that you have all the appropriate information to be able to provide good objective and sound advice is totally valid.  It is a necessity if good advice is to be provided that can actually be valuable to a customer, and be valued by them.

The problem is how we, as an industry, approach the task.

An adviser and potential client are happily discussing the way ahead, and the client consents to engaging in the advice process.  Out comes the 30 page discovery document…with oodles of boxes to be filled in…many of them with dollar signs waiting with bated breath….and lots more boxes requiring precise data covering pretty much everything from knowing the zodiac planetary alignment for each dependent through to the complete medical history of your grandmother.

Most of us aren’t even entirely sure what our grandmother’s maiden name was…so guess what the client is thinking when they see this process coming at them?
Generally they don’t feel any better about it if we pull out an Ipad instead….they can still see the boxes on the screen…they know what’s coming….

…and so begins the process of disengagement by the consumer.  So why do we torture them?

The problem is not the data-gathering process as such. Nor is the problem that we do actually require quite a lot of information to do the job well.  The problem – the torture – is how advisers generally tend to approach it.

It really is rather like the surgeon calling you into theatre and showing you all the tools she has and may call upon to make holes in you, and then patting you nicely and saying “don’t worry about it, you won’t feel a thing”.  At best you feel trepidation – at worst; blind panic.

Clients don’t need to see the tools before the operation – it is not helpful for most of them.

The solution is incredibly simple.  Instead of showing them all the amazingly painful tools, get out a blank sheet of paper.

You did read that right.…I love gadgets, technology, and cool apps as much as the next person…and agree that we need to get a lot of information to be able to do the job professionally and completely.  So I suggest a blank piece of paper is the way to go.

You see, when you sit in front of a client with a blank sheet of paper you are subliminally suggesting a number of positive things to them:

1. this process is about them, not you.

2. there are no preconceived or preset paths to be taken.

3.  you are entirely focused on them, and paying attention to what they are saying.

4.  you know your stuff – you know what you need to do; you know what you have to get; you know where you are going with this process.

5.  you are actually really listening to them.

If you want to break down the barriers in your business and get higher levels of engagement and participation by clients consider going old school for some parts of your process.  A blank sheet of paper is still compliant – if you have done your work properly and gathered the required information.  It isn’t the tool that does the job, it is you.  A tool is just a tool – an inanimate object that does nothing valuable until it is used properly by an artisan.

Remember that the ultimate sophistication is simplicity.

Some simple things have stood the test of time because they were the best ways of doing things.  And the least painful ways.

To read more, go to http://financialadvisercoach.com

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