Are You Lying To Yourself?

You get an email from a client who says they have a referral for you. You reach out to the referral and they agree to seeing a proposal for financial planning. It’s a great proposal but the prospect tells you that they want you to start by managing a fraction of their portfolio to “see how you do”. Do you say yes? What if a prospect tells you he/she isn’t interested in learning about your financial planning services at this point but would like to talk to you about an insurance policy? Should you say no? Saying yes would mean lying to yourself and to clients/prospective clients about your claim to be a financial planner, wealth manager or whatever nomenclature you choose.

I should know: I spent the first 6 years of my career lying to myself. It was the mid 90’s and I had built a very nice little business at a very young age.  Whatever business came my way, I took. If a client wanted to trade stocks, I gave them what they wanted. If a client wanted a fee based separately managed account, I took it.

I talked a good game but the reality was that I was nothing more than a salesman running on a treadmill that would never stop. The value I was adding to my client’s lives was, at best, limited and at worst, non-existent. I started to feel like a parasite, dependent on clients saying yes to a transaction in order to exist. The worst part was that my clients and I each accepted the lie that I was a “wealth manager” without question.

True wealth management does not allow us, as advisors, to be generalists who allow clients to piecemeal their business to us and other professionals – we must insist on being the ONLY financial planner that works for our clients.

How many of us have 100% of our client’s liquid assets under our purview? How many of us are the sole “quarterback” of our clients’ financial lives? If any of our clients work with other planners/financial advisors than we are not that client’s wealth manager. I believe that to be a true wealth manager we must turn down prospective clients who only want to give us a portion of their portfolio to “see how you do.”

A complete process must integrate trust and estate planning, tax planning, risk management, investment management, and any other areas of their lives that are directly and indirectly related to their finances.  We must say no to clients who disagree, no matter how much the opportunity will pay us.

Many of you reading this may think it borders on insanity but I am confident in the belief that to be a financial planner you must be your clients’ only financial planner, managing all of their assets, in order to create and implement a truly worthwhile plan for them.

After six years in the business I finally made the decision to stick to my guns and abide by these guidelines. My earnings dropped 75% in one year because I told every one of my clients that I would no longer work with them on a transactional basis and that to keep working with me I first required that they allow me to build a financial plan for them. If the plan made an impression on them, they would have to move the rest of their liquid assets to me.

Unsurprisingly, most said no, likely because they had already pigeon holed me into being a “stockbroker” and not a trusted advisor. A few said yes and they represented the beginning of what is now, 20 years later, a flourishing financial planning practice. Now, each of my clients fit a similar archetype. The work we do for them is virtually identical from one to the next, and our service process is rigidly defined with little variation, no matter the client.

By adopting this approach you can be more honest with yourself and your clients when you call yourself a wealth manager or financial planner. You also will ultimately make more money because your business becomes radically more scalable.

Recently I went to lunch at Shake Shack. They don’t have sushi or pasta or 50 varieties of cultural dishes. Instead, have a menu that is limited to the essential elements of their concept and each item can be made over and over again with limited variation in output from one item to the next.

The same idea can be applied to what we do as financial planners – if we do one thing over and over again and we do it with excellence, we can do it more efficiently and introduce specialists on our team who can repeat their specialized activities over and over again across all clients.

It took discipline and resolve to make the change. When I stopped lying to myself and made the transition to this “all in” business model, my earnings dropped 75% in the first year. It took three years to reach that same level of earnings. My team now has $300 million in AUM with over $2mm in revenues and everyone on my team has excellent work/life balance as we are off of the “transactional treadmill”.  More importantly, I believe 100% of our clients will tell you that their lives are better off with us– and we use the same process with each of them.  Stop lying to yourself – make the switch.  You can do it.

David Steele for AdvisorHub
May 20, 2016