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5 things to consider when making promises to clients

Few advisers actually consider how they'll deliver

Feb 25, 2014 @ 1:22 pm

By Ray Sclafani

While on a recent flight from San Diego to Denver, I came across an article in Spirit Magazine about a website, The 28-year old founder, Alex Sheen, started this nonprofit in memory of his father, to inspire others to make (and keep!) promises that better humanity.

This got me thinking about what is frequently considered the greatest promise financial advisers make to clients: To be there for them forever. Whether stated or implied, I've heard advisers suggest they'll be there through every life stage and transition, helping their clients achieve financial security. The dirty little secret is that few advisers consider how they'll actually deliver on their promises, “because they said they would.” While most understand the importance of succession and continuity planning, few have built the infrastructure to truly serve clients consistently, should something happen to them.

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Too many advisers have clients who work with them because they were sold on the individual adviser alone. The “sell” should be based on the unique value provided by the adviser's business process, intellectual capital, and team. Otherwise, clients become connected to promises that many advisers are unprepared to keep, because they can't guarantee they'll be there “forever”.

Also: 3 succession planning scenarios advisers must consider

The latest ClientWise study showed that 51% of advisory teams have no succession plan for their business. Begin planning now! Develop a business model with intellectual property and a team structure that is geared toward retaining your current clients, attracting new ones, and catering to the disparate needs of both populations. To do this successfully, you need to attract, develop and retain the talent that can sustain this model regardless of your level of engagement. Here are five things to keep in mind when weighing the viability of your promises:

1. The industry is rapidly changing: With higher expenses, increasing compliance and a greater complexity of products and services, you are simultaneously catering to the needs of an aging investor marketplace and the very different needs of their heirs.

2. Reframe yourself and your team: Advisers who've modeled their practices around the baby boomer generation, whose capacity for growth is subsiding as they near retirement, need to expand their demographic, or consider the changing needs of their current target demographic.

3. Focus on Generation X and Millennials: According to Mark Tibergien's recent article "Client of the Future," investors between the ages of 18 and 50 will inherit more than $41 trillion by 2052, and 86 percent of these heirs will reportedly use someone other than their parents' advisers to manage this wealth.

4. Consider the depth and diversity of your team: The next generation of investors is not an easy target. In addition to being an unknown, they have greater access to technology and information that threatens to shift their perspective and allegiance within the industry. Gen X and Millennial advisers understand and relate to this demographic from a generational standpoint in the same way that older advisers relate to the baby boomer generation.

5. Your team is as great an asset as their leader: While you've poured everything into building this business, you need to be able to rely on your team members as much as you rely on yourself. Structure your team to ensure your clients will be served consistently in the short term as well as the long term, regardless of your personal future involvement in your business.

It's not about the business owner transferring the wealth of the business; it's about building the business today that meets the needs of your clients in the future. We can't wait for a lack of net new assets and net new asset growth to take action. The industry as we know it faces extinction if we don't change our thinking. Let the promises you've made to your clients today determine how to build your business and structure your team for the future.

Ray Sclafani is the founder and chief executive of ClientWise LLC, a business and executive coaching firm working exclusively with financial professionals and teams. ClientWise partners with financial advisers, wholesalers, managers, and executive leaders to optimize growth, maximize revenue and, ultimately, create self-sustaining businesses.


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