Clients will seek out a new advisor if their current advisor does not meet their individual needs. One critical need that many people have is more knowledge about the relationship between their money and their lives. When we are in our 20s, 30s, and 40s, the knowledge that we need is most often associated with our investments, asset ac- cumulation, and long-term financial planning strategies. In fact, the financial services industry has invested itself over the past 20 years to meet those needs and to provide that education.
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Raising Your Value
in the Eyes of the Client
However, as we near the numerous critical transitions in our lives, our thirst for new knowledge tends to move in a different direction.
At some point, we start to realize that we are closer to retirement than we are to Woodstock; and that our parents are closer to the grave than our children are to the cradle. That changes our perspective on our lives and our money. It also changes the kind of help that we need from an advisor and the dynamics of the relationship that we have with them.
As we approach our retirement, we are struck by the fact that we had never really thought about what retirement would be like. We were always conditioned by the idea that retire- ment meant “never having to work again.” Following the ad- vice of our financial planner, we put our money aside so that we could afford to live without having to work, and we have done a good job meeting that goal. Probably the biggest sur- prise to us, though, is that now that we are here, we are start- ing to realize that our retirement isn’t just about the money.
Sure, we don’t have to work, but we are still young people.
The thought of sitting around in a rocking chair doesn’t have a lot of appeal.
—Jim and Glenda
Although retirement is just one of the significant transitions we can expect to face, it has been the transition that advisors pay the most attention to—almost monomaniacally. It will serve our purpose here to illustrate how our perspective on that particular transition must change to connect with the heart of today’s client. The time has come for retirement planning to evolve into something other than saving for a day when we can become bored on a full-time basis.
What’s the point of building a nest egg if we’re going to place it in a dying tree? Just as the definition of a meaningful and successful life varies from client to client, so does the definition of a meaningful and successful retirement. In fact, the ultimatum between the full- time working life and the fully retired is quickly dissolving.
There is not a template solution for retirement available into which we can squeeze each client’s assets. The advisor’s business must move toward the client’s vision for life—instead of framing a client’s assets around the advisor’s vision for retirement. This fundamental shift is the beginning of a new partnership between advisor and cli- ent. Today’s client is longing for this partnership with a financial life planner, and will not be satisfied with counterfeits.
Clients are reassessing their relationship with their financial ad- visor and the relevance of what an advisor provides. Even the best ad- visors are subject to this examination. The financial services industry has operated under the same assumptions for the past 20 years. Ad- visors have built their businesses based on:
• The need for clients to build up a retirement nest egg.
• Strong performance in equity markets that diverts both client and advisor attention from interpersonal interaction.
• Generalized solutions such as mutual funds and other pack- aged products in a “one size fits all” investment program.
• Marketing programs, advertising campaigns, and seminar top- ics that follow the same patterns as the competition.
• An emphasis on building very large books of affluent clients.
While strong market performance and accepting clients have made for successful advisor businesses in the past, there is now an un- dercurrent of change. As we enter the twenty-first century, two major changes have occurred exposing the fragile underpinnings of many financial advisor-client relationships.
First, a large segment of most advisors’ client base is getting older, and thus, needs and expectations are changing. The baby boomer bulge that has greatly influenced how the financial services industry has evolved is now moving on to the next phase.
Second, investment performance shows every sign that it is re- turning to normal—or reverting to the mean. The long bull market of the ’90s caused many investors (and many advisors!) to have false returns expectations for the long term. The inevitable downturn of the markets stunned investors and challenged the trust they held for the industry and their financial services providers. Craig Pickering, a registered rep in Hudson, Ohio, summed it up well in a Registered Rep- resentative article: “While research shows investment performance is not a primary factor in client defection, a volatile market can bring unresolved issues to a head. Unless you can justify that you’re a value- added component to the equation, clients will perceive you as a com- modity and may ultimately switch to brokers they believe will do more for them.” (Michelle Gabriel, “Why Clients Leave.” Registered Repre- sentative, February 1, 2001.)
It’s time to lay a new foundation for the relationship between ad- visor and client. As always, clients will dictate the products and ser- vices that they expect their advisor to provide. Their interaction with 8 / Raising Your Value in the Eyes of the Client 83
their advisor will reflect the needs that they have as they move to the next stages of their lives. A key to success for advisors in the future will be the quality of their relationships with their clients and their understanding of each client’s unique needs and circumstances and their life-directing priorities.