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Over 25 years working with advisors, I’ve learned that while you need to get the big things right, small issues are often much more important than they appear on the surface.
A September article outlined how a financial advisor’s failure to make a two-minute check-in call led to the loss of a client.
Last week I met with Jim, a 25-year industry veteran, who’d read that article and told me about another instance of a big price he paid for a seemingly minor oversight.
A winning strategy with business owners
As an advisor with a bank owned firm, Jim takes a total-solution approach with successful entrepreneurs, providing in-depth advice on the full range of his clients’ personal and business needs.
Much of his success stems from a strong partnership with other arms of his bank to meet the needs of his clients’ business operations. He works with commercial account managers to help secure the most favorable banking terms for clients’ companies and for those who operate internationally with the foreign exchange desk to help clients with currency hedging and forex issues. He makes introductions to his bank’s international operations in other countries where his clients do business. And he’s even had some small successes tapping into his bank’s capital markets operation to assist with financing for acquisitions and divestitures.
Jim also brings a tax background from his previous career as an accountant. Jim works with his clients’ professional advisors to set up legal entities in the countries where his clients do substantial business; he’s found that keeping corporate profits offshore rather than repatriating them can sometimes yield surprising dividends.
The benefits of a total-solution approach
This has paid off in three big ways.
First, his clients feel very well served. Every two years, Jim hires a researcher to conduct phone interviews with key clients, looking in particular for unmet needs and gaps in satisfaction. Clients are asked for permission to share the findings with Jim, but there is seldom much to report. The researcher has said that Jim’s clients rank among the happiest customers he’s seen.
Second, this approach has helped him obtain referrals from his clients and land new accounts. “Lots of advisors are very good at dealing with the financial issues that affluent families face,” Jim told me. “Not many bring real expertise to the finances of medium-sized businesses that clients own and can also provide an integrated balance sheet of clients’ personal and business investments.”
Finally, the introductions Jim’s made to other operations within the bank have led to referrals in return. “My philosophy is one of give in order to get,” Jim told me. “It took a while, but I’ve started seeing very substantial referrals in return. In fact I’ve been told that I get more referrals from our commercial banking unit than all the other advisors in my market area combined. “
“We have a problem”
This explains why Jim was surprised when his largest client started a phone call with the words, “Jim, I’m calling because we have a problem.”
Since Jim had been working with this client’s accountant and lawyer on the sale of one of his client’s businesses, he assumed that the problem lay there.
“That’s not the problem,” his client said. “The problem is your relationship with my wife.”
This came right out of the blue. While the bulk of his dealings had been with the husband, the wife had sat in on a number of meetings and Jim had always seen their relationship as amicable.
When Jim expressed his surprise that there was an issue, his client answered: “There wasn’t an issue until last week. I think you know that one of our grandchildren is quite severely disabled. Last week my wife was talking to another member of our golf club, who as it happens also has a disabled grandchild. This woman told my wife that they’d set up some kind of plan to take advantage of a government program to allow people to set aside funding for family members who are disabled.
Jim’s client continued: When I got home, my wife told me about this conversation and asked if you had ever mentioned this program. When I answered that you hadn’t, she said – ‘you know, I think Jim is really only interested in things that he makes money on.’”
“It’s my wife’s money too”
The client went on to explain that his wife had gotten the name of the financial advisor who had worked with the other golf club grandparent to establish the plan and told her husband that she wanted to set up a meeting with this advisor. With some reluctance, the previous day Jim’s client had accompanied his wife to a meeting with this advisor.
“This advisor presents well and I’m sure she’s competent, but I didn’t hear anything to persuade me to make a change,” his client went on. “But my wife is adamant that she wants to work with her … and it’s her money too. So we’ve decided to transfer $1 million to her from our portfolio and not make any other changes for now.”
Jim’s client concluded by saying: “I know this isn’t good news, but I hope you understand that I really have no choice on this. And Jim, one last thing –tell me, is there a reason you never mentioned this program before now?”
Damage control
Jim apologized for his oversight in not bringing the program to his client’s attention. He explained that given that other issues they were dealing with had much bigger financial ramifications, he hadn’t seen the program as a priority. And since there is no time limit on taking advantage of this program, he hadn’t felt any urgency about this.
Jim concluded by expressing his regret for this lapse on his part. He also asked his client for advice on whether he should contact his wife directly – and got the suggestion that he should not for now, but they should discuss this at an upcoming meeting that Jim had scheduled with his clients.
“I recognize that I’m now in full damage-control mode,” Jim said. “Now that another advisor has her foot in the door, there’s a real possibility that I could lose more assets. And I suspect that if my client got hit by a bus tomorrow, the whole account might move.
And the frustrating thing is that this whole episode was entirely unnecessary. I knew they were concerned about their grandchild and I had meant to raise the program, but the fact is that the $200,000 this program lets you set aside is chump change compared to their net worth. Their grandkid may have other issues to deal with, but there will be no concerns financially.
But I know that’s a rational response to an emotional issue. I should have known better than to ignore their worries about their grandkid and now I’m paying the price for that.”
Stemming from this issue, this advisor spent a Saturday morning reviewing each of his clients, looking for emotional hot buttons similar to this one that he might have missed or to which he had not paid enough attention.
As you think about your own clients, ask whether you’d benefit from a similar exercise. The time it takes is a small investment relative to the cost of replacing clients lost due to small oversights.
Dan Richards is a top-rated presenter at advisor conferences and an award winning instructor in the MBA program at the University of Toronto, as well as author of Getting Clients Keeping Clients: The Essential Guide for Tomorrow’s Financial Advisor. To learn more about his conference keynotes and workshops, email
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