Greensboro:As we enter into the days of summer, financial advisors continue searching for professional care and guidance. Clients are still in a desperate need of professional care and guidance. And sales managers remain charged with ensuring the aforementioned is attended to carefully and consistently.
These have been challenging times for everyone. Clients are scared about their lifestyle and retirement plans. Financial advisors are worried about losing clients and their own personal lifestyle and retirement plans. And managers are worried about almost everything; their role, their firm’s solvency, advisor retention, and client loyalty.
We are writing this issue of Management Insights for a dual audience; managers and financial advisors. In order to gain a better understanding on both fronts we conducted a general research project on sales managers, both inside and outside the financial services industry to compliment our ongoing research on financial professionals. We thought it might be helpful to share some of these findings as they relate to both managers and financial advisors.
What we discovered was a serious disconnect between what sales managers claimed to be important, the overall sales results, the needs and wants of financial advisors, and the care and guidance affluent clients have been receiving.
RESULTS
As the chart below clearly indicates, very few sales reps have achieved their goals. In 2008, 50% of reps did not reach even half of their annual goals.
From a sales perspective, it is obvious that financial advisors have suffered serious emotional damage as a result of this economic crisis. In many instances, advisors have lost confidence in their abilities more so than their clients have lost it in them. From a manager’s perspective, in the midst of turmoil a leader must provide some form of framework that can establish a degree of predictability. From a client’s perspective, they need a financial advisor who is able to provide a similar type of predictable framework.
Numerous studies have established the importance that the feeling of predictability plays in the human psyche. It has a direct correlation to how we perform. When uncertainty reigns, anxiety is heightened, and when it persists we find ourselves paralyzed. Much like the proverbial deer in the headlights, there is far too much of this going on.
For too many reasons to list, this paralysis has become pervasive. Managers who are uncertain about their own careers are unable to create a predicable framework that financial advisors can trust. With this lack of trust, financial advisors have struggled to create a predictable framework that is capable of instilling confidence into their clients. All of this paralysis trickles downhill; clients are afraid to make a move.
IMPORTANCE
Amidst the uncertainty and the need to improve sales performance, the chart below tells an interesting story about today’s managers. None of which comes as a surprise, knowing that only 25% of managers report being "very satisfied" with their role.
At a time when managers need to be stepping it up, our findings are very disappointing. Without even assessing how well managers are performing these activities when they are performed, it is obvious that many are not leading their troops in a time of crisis.
FINANCIAL ADVISOR PERFORMANCE
With the increasing emphasis on affluent client acquisition, coupled with the fact that eight out of ten affluent households are harboring enough dissatisfaction that they are considering changing advisors, one would assume that financial advisors are bringing in a lot of new clients. As the chart below indicates, the exact opposite is occurring.
**Note: 73% of advisors report that they are not comfortable with their ability to
generate referrals and introductions within affluent COI's
All of this highlights tremendous opportunity. A manager who can create a framework of predictability, communicate clearly, and is willing to demonstrate the “I care” aspect of leadership by spending quality time with advisors, as a group and individually, will be indispensable. Likewise, a financial advisor who can create a similar framework for clients, demonstrate a similar “I care” compassionate attitude and spend time with clients will be become indispensible to his clients. And a loyal client will allow his financial advisor to penetrate their centers-of-influence, if, and this is a big IF, the advisor’s sales skills are so well honed that they are seamless.
There is a lot of work to be done, but there is also monstrous opportunities on multiple fronts. Let’s work through the summer with an “I care” framework of predictability and take full advantage of these opportunities.
