Horsesmouth Editor’s Note: For the last 9 years, Horsesmouth has been bringing their readers the Top 10 most popular articles of the year during the holiday season. From more than 500 articles published in 2015, advisors rated this article as the #4 article of the year.
There comes a time in the career of every financial advisor when they must take a step back from working in their business to work on their business if they hope to progress to the next level. This is what I call the systematization point and it’s different for everyone. For some advisors this point may be at $300,000 in production, for others it may be $500,000. The truth is you can only “fly by the seat of your pants” for so long. Sooner or later you must address the infrastructure of your business if you are to reach your full potential as an advisor.
Quite some time ago, there was a TV commercial for motor oil that basically said you can pay me now or you can pay me later—meaning pay for good oil now or pay for a new engine later. The same is true of your business. You can only progress so far without clearly defined, repeatable systems for the important aspects of your business. You can build them now or you can wait for a crisis situation that forces you to build them later.
Having systems in place for the key components of your business gives you the power of leverage over your time and over your existing book. They not only increase the level of service you provide clients, save you massive amounts of time and increase your efficiency and professionalism but you feel more professional when they’re in place.
There are nine key areas where systems are essential for your growth and maturity as a financial advisor. The following components of your business are where a systematic approach will help you to leverage your existing book better for more assets, referrals and revenue.
Basic Daily Organization
1. Success Ritual: This can be as short as 15-30 minutes. Decide what actions you can take early to set you up for success each day. Rushing out the door with a bagel in your month does not usually facilitate a successful day
2. Daily To-Do List: This must be done before you leave the office for the next day or as part of your early morning success ritual. Do not wait until you get to the office to do it! If you have your to-do list prepared prior to arriving at the office, no matter what happens in the markets, with clients or in the office, you will be able to get right back on task with minimum down time.
1. Segment Your Book: The ability to leverage your existing book begins with knowing exactly who’s who in your book. When segmenting your book, consider not only assets and revenue but also intangibles you feel are important. Do a comprehensive segmentation of your book once a year to be sure new clients haven’t been overlooked and everyone is still in the correct tier.
2. Demographic Segmentation: Look for common denominators or anomalies to identify natural niches that may be buried in your book. Even two clients in the same neighborhood, working for the same company or with the same hobby can be the beginning of a natural niche you can develop.
1. Establish a Structured Client Contact Schedule: When establishing a structured client contact schedule, first examine what you currently do for each tier of client. Then determine what you’d like to do more of or less of for each client tier. Be sure to include extras. These are the touches that let a client know that you know, appreciate and think about them as a person An easy way of accomplishing this is to set Google alerts for your top clients’ interests, hobbies or companies. Google will send you an email when there’s news on any of these and you can forward it with an email note to your client. These are the things clients remember, in many cases better than their most recent performance figures.
1. Referral Detective Strategy©: Whenever you’re talking to anyone whether they are a client, friend, relative or someone you do business with, pay attention to anyone they mention in the conversation. Keep a small notebook with you to write these down or put them in the Notes app on your phone. Determine which entries you feel have the most potential based on the person you were talking to and your notes. Then circle back and ask for an introduction to that person. This strategy has proven far more effective than randomly asking people for referrals
2. Referral Conditioning Strategy: Most clients are not conditioned to think in terms of referrals. Once a year send a referral letter out to your clients, not because you expect to get a barrage of referrals but more as a conditioning device. A referral letter is non-threatening and regardless of whether they send you a referral or not, they get the idea that you want and expect referrals.
Start getting the referrals you want, need and expect with our FREE Step-by-Step Referral System Action Plan. Finally, start building a “repeatable” Referral System in your business that’s easy enough and comfortable enough (yes, I did say comfortable enough) that you will actually use it on a consistent basis.
1. The Power of the Conditioning Phrase: It’s important to not only have your clients begin to think in terms of referrals, but it’s also very important that they are saying the right things to potential referrals. Decide what you want your clients to remember most about you and communicate to others. Keep your conditioning phrase to just a few words and then use that phrase in everything you do. When your clients are talking with friends and the subject of investments come up, they will repeat your conditioning phrase without even thinking about it because that’s what they associate with you. Your brand is born!
1. Getting the Information You Need: One of the biggest challenges advisors face when doing a financial plan for a client is getting all the information they need to run the plan. You significantly increase the likelihood of getting more complete information the first time by sending an appointment confirmation letter which also lists everything they should bring with them to the meeting.
2. Presenting the Plan: Financial plan documents are often overwhelming to the client. Start with what clients are most interested in—how much they will need for the retirement they aspire to and their probability of achieving that goal within the timeframe they’ve established. Have an in depth discussion with them on this as well as any red flags you’ve identified.
3. Breaking the Plan into Bite-sized Modules: Make it clear to clients that there are other areas that you will be discussing with them in the future: Social Security, healthcare, a beneficiary review, an insurance review, retirement accounts review and any other areas you feel are important components of a comprehensive financial plan. Break these other areas into modules that you present to them over time. This allows you to add value on an ongoing basis in areas the client doesn’t expect and they see that you have a systematic process rather than a random or piecemeal approach to their investments. They see the process unfold over time and this reinforces that they do indeed, have a real plan.
The Investment Management Process
Just like building your success ritual was a very personal step, so too is building out your investment management process. Here are some general guidelines.
Build your Investment Matrix
- Pick two primary holdings in the primary style boxes—Large Cap, Mid Cap, Small cap—Value, Growth & Balanced in each
- Pick a backup holding in each primary style box
- Choose primary investments in the secondary style boxes—REITS, managed futures, alternatives
- Choose primary investments in satellite styles—sector funds, international
Build your Platform Model:
- Establish breakpoints for small, mid and large accounts
- Decide what platforms you will use for each tier of account
Build your Risk-Based Model Portfolios
- Create your asset allocation models for each risk profile
- Build your model portfolios by using the managers within your Investment Matrix to implement your asset allocation models
Build your Pricing Matrix
- Make it fair to the client and an accurate reflection of the value you bring to the client
- Develop conviction that you are worth every penny and be worth every penny
- Use your new business model with all new clients without exception
- For existing clients, begin with IRAs because they have no tax consequences to conside
LinkedIn is a whole coaching module by itself but I’ve outlined some basic steps you can follow to get started. Although building your profile is obviously the first step, I did not include it in my steps because advisor profiles are subject to stringent compliance restrictions.
1. Build your Connections: Do not build your network with other advisors. If you’re going to use your LinkedIn network as a prospecting tool, build it with clients, prospects and people you do business with.
2. Scan your Connections’ Connections Daily: Spend some time reviewing your second degree connections every day and target the people you’d like introductions to. Once a week, schedule a LinkedIn lunch with one of your connections. At the lunch, explain that you are on LinkedIn now and getting to know your way around. You were reviewing their connections and a few of them really jumped out as people you’d like to meet. Then, ask them about the people on your list. If they are people you still feel you’d like to meet, ask your lunch date if they would introduce you either in person or via LinkedIn. If they introduce you via LinkedIn and they become a connection, then you can drip on them through a combination of your update posts and direct messaging. Build rapport until you can ask them for a lunch or phone call.
It’s a simple fact that you can’t win the game if you don’t know the score on a daily, weekly and monthly basis. What advisors think they’re doing and what they are actually doing are often two completely different things which is why it’s so important to have a tracking system for tracking your results-oriented tasks.
1. Track Activities not Results: Be confident that if the proper activity level is present in the right activities, the results will surely follow. Another reason for tracking activity is because it’s something that you have complete and total control over.
2. Determine your Highest Results-Oriented Activities: Remember the old 80/20 rule. 80% of your results come from 20% of your activities. These are the activities to track.
3. Decide on your Preferred Method of Tracking: Decide on a vehicle for your tracking. It can be as simple as a form you develop, print out and complete throughout the day. It can be a spreadsheet or any other program you choose to use. The important thing is it must be in a form you will actually use daily.
This is a brief synopsis of the nine most important systems you must have in your business in order to break through plateaus and reach the next level. Start with the system that you feel would have the greatest impact on your business. Consider what would work for you and you could actually work on an ongoing basis. Outline what the system would look like and how it would work. Put the complete system in place before you begin the implementation phase. During implementation, allow for a period of adjustment and troubleshooting and make changes as necessary.
These systems will require time to build and diligence to implement. You can build them now or wait until a crisis hits and build them later. The ROI in terms of time spent building these system is exponential and worth every minute of effort. It’s the best thing you can do for your clients, your business and yourself.
As critical as it is to your success, we’ll be the first to admit it’s not the most exciting thing you’ll ever do. That’s why we wrote the book on systematizing your business and we wrote it as a business parable to keep it interesting. The story is one every advisor can relate to and the content is compiled into a simple step-by-step Chapter To-Do List at the end of every chapter.
“Plateau to Pinnacle will grab your attention, keep it, and teach you everything you need to know to take your business to the next level. A must-read for all financial advisors, regardless of production level.”
—Sean M. Bailey, Editor-in-Chief, Horsesmouth