Stories are an essential part of life and business. The ability to connect with others via a story is powerful and can set the foundation for a great experience. But not all stories are good ones, as anyone who’s seen a bad movie sequel knows! So many sequels seem to fail to match the power of their predecessors. 

Many advisors use storytelling as a way to connect with clients. Mitch Anthony has made a living in financial services teaching the art of storytelling. Defining your personal story should be a major focus of your brand; after all, the client is buying YOU more than any product or service you offer. Clients want to make a connection with someone that they can relate to.

But recently I was at a conference and an old question kept popping up that got me thinking about storytelling. I kept hearing, “What is the story behind your product? … If you have a good story, I can sell it.”

Vendor after vendor “pitched” their product story to advisors. One vendor getting a lot of attention happened to have an amazing four-year track record: They missed the 2008 – 2009 equity downturn; they have a rate of return for the past four years that beat the S&P 500, etc.

Are you intrigued? It certainly got my attention.  

As I looked more closely, I realized that these “amazing” statistics are from a fixed income manager.   That got me thinking…How remarkable is it that a fixed income manager missed the equity bear market in 2008 – 2009?  Not at all.  Is it surprising that their returns beat the S&P 500 since 2008? Nope, not considering what happened in 2008 and 2009 with equities and the continual drop in interest rates that lead to higher and higher returns for fixed income.  

I wonder how many of the advisors who were overwhelmed with excitement figured this out. Think about it — what a story to tell clients: “Mr./Mrs. Client, I recommend we put your investments with manager XYZ because they do a great job of reducing risk. In 2008/2009 they avoided the equity bear market and their returns for the past four years have beaten the S&P 500 with very little downside risk…”

Blah, blah, blah.

With this story, only time will tell if the sequel is as good as the original. Let’s take a look at some research that may suggest the sequel is doomed from the start.

We looked at past high-performing funds (as determined by their Morningstar Star Rating) to determine if they have any predictive nature for future winners.  The data showed that the chances of doing very well or very poorly in subsequent years are almost identical whether you picked yesterday’s 5 star, 4 star, 3, star, 2 star, or even 1 star fund. This implies that yesterday’s track record (The Original Movie) is probably going to be better than the future (The Sequel) for that manager.

It can be very tempting to use the story of any great manager’s recent track record in hopes of landing a sale. However, the evidence is compelling that it will be difficult — if not impossible — for these managers to match their previous track records. The bottom line: The original movie (the manager’s track record) was great. But you might be wise to avoid paying for the sequel, because it will probably be a big disappointment.

The larger issue here is why put your reputation on the line for two things you can never hope to control:  markets and managers? And why tie your value to products in the first place? 

When I talk about storytelling with wealth advisors, I suggest they dig deep to craft their story. When your story is about why you do what you do, and how you provide comprehensive advice, you never need to worry about whether the sequel is as good as the original. YOU are the original and that’s what your clients value most.

Steve Atkinson, EVP and Head of Advisor Relations, Loring Ward


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