2021. It’s a new year. Working from home for almost a year, it’s tempting to think the rules of the game have changed. Achieving success as an advisor has moved away from the old model. Not that much.
- It’s about ringing the cash register. You provide your clients with good service. That’s a given. The firm measures your success by revenue produced. (That’s why it’s called production.) New accounts opened and growth in net new assets.
- Don’t obsess over paperwork. It’s easy to throttle back on activities you don’t like because you have paperwork. Your sales support has not materialized at your home office. Revenue is very important. If you are great at bringing in business and bad at paperwork, the firm will find a solution. If you are great at paperwork and bad at bringing in business, the firm will fire you.
- It’s good to be on the revenue side. Firms periodically go through reorganizations. People in the home office are generally on the expense side. Advisors in the field are on the revenue side. The firm needs to keep the revenue producers happy.
- You always need to be prospecting, Your book is like a bathtub. Water comes in from the faucets (new accounts) and it leaves through the drain. (clients who leave, pass away) The water must be coming in faster than the drain is losing it.
- It’s easier to keep a client vs. finding a new one. It’s easy to take quiet clients for granted. They are “low maintenance.” In the background, they might be thinking you aren’t paying attention. They wonder why they are paying all those fees. They see ads on TV. They leave.
- Your best clients are someone’s best prospects. Let’s assume everyone with money has an advisory relationship unless they have chosen to invest on their own. You need to keep in close contact with current clients. Someone else is asking them: “When was the last time you heard from your advisor?”
- Fee pressure isn’t new. In the mind 1970’s Wall Street deregulated. Commissions were no longer standardized. In that same decade, no load mutual funds appeared. Competitors have been seeking to undercut traditional firms for almost 50 years. The relationship is about the value the advisor brings to the table. Think about MasterCard’s “Priceless” ad campaign that’s been running since the 1990’s.
- Success means being on the right lists. The firm introduces new products and services. They reward advisors who produce lots of revenue. You want to be one of these people, not someone who is fighting an uphill battle with Compliance about how they want to do business.
- Tell clients about new products. We have comfort zones. We don’t want to rock the boat with clients. “They have no interest, because they never asked.” Your firm probably brings out new products because they figured out your client is buying something similar elsewhere.
- Clients read their statements. It’s tempting not to call clients during volatile markets. It’s rationalized by “They are fine. They know markets are volatile.” Clients have been increasingly aware of performance. They get anxious when Statement values fall. Handholding really does have value, although no one would ever call it that.
- Comp plans will change. As the firm segments it’s client base and introduce new programs, they modify the compensation plan. Generally speaking, it rewards good producers and people who transition their business in the direction the firm wants. The comp plan encourages advisors to redirect smaller accounts to a different channel better able to serve the client. Householding usually allows advisors to keep smaller accounts connected to a bigger relationship.
- Everyone wants to be an important client. Like dating and marriage, lots of effort often goes into securing the relationship. It’s easy for both parties to fall into routines, not paying as much attention afterwards. It’s a reason charitable donors like being continuously cultivated. Much as you tell your partner or spouse you love them, it’s important to let your client know they are an important client.
We think the business has changed. In some aspects it has, but the basic rules are still relevant.