For All Advisor “Control Freaks”

Written by: Ken Haman

During my coaching sessions with advisors, they often sheepishly admit, “I’m a bit of a control freak.” I respond, “There is nothing wrong with wanting more control!” I explain that it’s normal and healthy to desire more control, especially when almost everything about managing an advisory practice is uncontrollable: the capital markets are fundamentally unpredictable; there are countless numbers of products; each client presents a unique and complex set of issues; and everyone can be emotionally unpredictable and irrational.

As author and management consultant Michael E. Gerber says in his 2010 book The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It “People are unmanageable. They’re inconsistent, unpredictable, unchangeable, unrepentant, irrepressible, and generally impossible.” Therefore, it’s not surprising that advisors crave more control in their lives.

First, the Bad News

No matter how hard you try or how much research you do, the future and the capital markets cannot be accurately predicted. And no matter how many books on behavioral finance you read, you can’t overcome the built-in vulnerabilities and decision-making shortcuts that clients use to make decisions.

So if you try to select investments that never go down or attempt to teach your clients not to get upset when their portfolios (inevitably) lose value, you will always feel out of control.

Now, the Good News

Fortunately, there is something that you can do to feel more in control. Author Omar Itani’s advice is to always focus on what’s within your control. For example, you can control the experiences that your clients have when they meet with you by teaching them to accept market fluctuations and to separate their emotional reactions from the work that you do for them.

Obviously, you want every client experience to be positive. Ideally, you want interactions to stand out as special or unique. Here is a simple schematic to help you decide what feeling you want clients to have during a meeting or phone call.

In their book Designing Experiences, researchers J. Robert Rossman and Mathew D. Duerden define different types of experiences, noting that those with positive impact tend to build stronger bonds.

Rossman and Duerden describe the least impactful, most common type of experience as “boring or prosaic.” These everyday occurrences are ordinary and unremarkable, like driving to work. Your client feels like he is wasting his time if you allow a meeting to be boring.

In contrast, an experience that conveys a positive impact activates emotions and stimulates the brain into awareness and effort; something interesting and engaging is happening. Only a handful of experiences each day rise to the level of “mindful,” but any meeting with a client should at least engage his attention.

At the next level, “memorable,” deeper emotions are activated. Memorable experiences are recalled as significant because of the feelings that accompany them. A savvy financial advisor should think about ways to create a memorable interaction whenever she has a conversation with a prospect, during discovery and fact-finding conversations, at a propose-and-close meeting, and during the annual review. To do so requires intentionality and a strategy, especially when markets are not cooperating or the client is distracted by life issues.

“Meaningful” experiences are even less common than memorable ones because they require the person to learn something new or surprising, like when the client discovers something about himself or the world. At these times, the advisor functions as a leader or teacher, and the client is surprised by the conversation.

Finally, the experience all clients seek is one that is “transformational.” This is when the client discovers something new and it leads to a behavior change. Think of the client who completes a new financial plan and then commits to a different level of savings to achieve his goals. Or think of older clients who complete a gifting capacity study and realize they can leave a legacy to their children and a meaningful gift to a charitable cause.

Not every meeting can be transformational, but you can strive to make every one memorable or meaningful. The key is to think about the type of experience you want the client to have and prepare accordingly. This allows you to focus on what is within your control.

Related: Financial Advisors need a CRM and a PRM to grow in 2022