For example? I'm collecting feedback on a question that the profession has left unaddressed for far too long. No doubt you constantly read, in the pages of this magazine and elsewhere, great advice on how to take an advisory business from good to great. But I would estimate that 80% of all advisors are still struggling to reach the good level. By that I mean they aren't making a substantial living as financial planners or investment advisors, and they don't see a clear path on how to get over the hump.
FROM SURVIVAL TO SUCCESS
I'm still collecting answers on this question - how to get from the struggling stage to the success phase of your career - and would welcome your feedback. But I do have some preliminary thoughts that I haven't seen elsewhere. There seem to me to be three ingredients necessary to get over this crucial hurdle: Courage, confidence and commitment. (I promise it's only a coincidence that all three words begin with the same letter, but it does make them easier to remember.)
When I talk about courage, I mean exactly what the word implies: being willing to take risks that make you feel uncomfortable because the outcome is uncertain and potentially dangerous. The best and most relevant example is fees. Years ago, I hosted a coaching program for advisors, and the first thing I asked everybody was how much they were charging for their services. Then I invited them to try something: The next time you work with a client, I said, double the project-based financial planning fees before starting the asset management activities.
Of course, many advisors were giving away their planning work - which I believe is the most valuable part of their service. (Nobody in the room disagreed with me.) In that case, doubling didn't make sense, so we took the highest overall fee in the room, doubled that, and decided that was the fee they would each quote the next client who walked into their offices.
Almost before I had stopped talking, the push-back seemed on the verge of a riot. So I asked everybody to tell me how many clients ever objected to the magnitude of their fees. The unanimous answer, given proudly, was that nobody had ever objected.
So then, I asked, how do you know what the market will bear? In a rational, capitalist society, the price of a service seeks an optimal balance between cost and value, which is determined by trial and error in the marketplace. But nobody in my coaching audience had made any effort to do this trial and error test, and in my travels around the profession I've discovered this is common. Financial planners seem to be the only professionals in the world who negotiate down their own fees voluntarily in order to never experience client rejection.
Later, I discovered that management consultants have a rule of thumb about how this trial- and-error process should work. At least 20% of the people who are presented with your fees should object or squirm; ideally the percentage should be even higher. Otherwise, you aren't charging enough, and the planning profession as a whole is being cheapened because you're either giving away a service that others are trying to sell, or undervaluing it. If you can't bring yourself to be selfish enough to charge what you're worth, I told the coaching audience, then think about the long-term health of your profession.
Courage also means being willing to leverage yourself before you have the revenues to justify a new staff hire. Talk to anybody with a successful practice, and they'll remember the angst they felt when they brought on their first employee. In many cases, that person made more than they, the owner of the firm, did for at least the first year. But these successful advisors will also say their faith was rewarded many times over. When they finally were able to focus on bringing in new clients and delivering great service, the money started rolling in.
WAITING FOR A TOMORROW THAT NEVER COMES
We hear these stories and know them. But how many advisors are still waiting for the cart to move before the horse is hitched up? They continue to struggle and do the menial work themselves, waiting for the day when they have enough revenues to comfortably hire somebody to take that load off their desks - and that day never comes, because they don't have the free capacity to do what's necessary to get to that point.
