Daily Archives: February 20, 2014

Principle 8: Navigate Change

Change is Hard

The first step in navigating change for anyone in any circumstance is disengagement. Before you will embrace the new idea, solution, color, neighborhood, or hairdo, you’ll have to let go of the old [insert whatever]. Before a prospective client, even one who is disgusted with his present situation and sought you out on his own, will embrace you, your investments, and your financial plan, he will first have to let go of his old advisor, investments, and financial plan. I learned this from my first controller and CPA, Catherine Carroll.

Disengagement is part of the financial planning process. If I can’t help my client disengage, I will not be able to help her engage. The proven method for initiating the disengagement process is exposing the problems in the client’s financial life, including inappropriate risk, unsuitable investments, lack of diversification, excessive taxes, too much cash, too little cash, outdated estate documents, whatever. Once the problems are laid bare, the next step is obvious: disengagement.

You Can’t Overdo This

But, it is not just a matter of merely exposing problems by simply bringing them to the client’s attention. The client must take ownership of the problems, or disengagement will not occur. We all procrastinate. We all fall into denial. You must exhaustively expose the problems in the client’s financial life until there is recognition, acceptance, and ownership. Don’t short change this process. And, don’t proceed in the relationship until this step is accomplished. Be patient. Be systematic. Be thorough. Be persistent. Like the doctor who must convince her patient that his illness is serious enough to warrant the surgery, you too must convince your clients that their problems are significant enough to warrant the change. Show them the blood work, the EKG report, and the x-rays. Give them the full diagnosis. Then, give them the prognosis. The diagnosis is what is wrong. The prognosis is where it will lead if nothing is done. If you don’t do this, and well, you won’t help many folks.

Principle 7: Clients Aren’t Clueless

When a prospective client comes in for her first visit, she usually has an idea of what she wants to accomplish – find a new advisor, get the portfolio in order, make a good return, retire. Something like that. Where she’s in the dark is in how to make good investment decisions, and she probably doesn’t know how she has been making them up till now.  If she had a handle on that, she wouldn’t be coming to see me.  She has likely spent her life investing in a career or caring for a family. In either case, she became an expert at something, just not investing. No shame here. I don’t know anything about music theory, or chiropracty, or engineering, or delivering babies, or whatever she devoted her life to. Since I am a reputable trained professional in my field, she has rightly decided to give me a test drive.

Her portfolio is often simply the result of several poor advisor relationships, some self-doctoring, a little neglect, and a whole lot of happenstance. My best chance of helping her lies in teaching her to become a more sophisticated investor and walking with her down a proven financial planning path. I can never let the cart get before the horse. There is a process.  Her natural inclination may be to unknowingly try to circumvent that process by misdirecting the relationship or asking for things out of order, because that’s how she’s done it in the past. I must break that cycle to really help her. I must stay the course. Step 1, step 2…etc. If I let her fly the plane, we may never get it landed.

Never Make a Proposal

Plenty of prospective clients come through the door looking for a proposal. They say things like, “Why don’t you work up some suggestions for me to consider?” Or, “Before I bring my accounts to you, I want to know what you are going to do with my money.” Honestly, I can’t blame them. They’ve lost money elsewhere, or they’ve been neglected, or they’ve been burned. In any case they’re cautious, and they should be. But, I don’t want to propose something that gets an up or down vote. I want to get hired. Products, proposals, and plans come and go, but I want to be their advisor 10 years from now.

When someone makes a proposal request, I have a standard reply. “The reallocation of your portfolio will be a collegial process that will take several meetings over the next few weeks. We will work together to put your accounts in order. I won’t pat you on the head and send you home while I make all the decisions. We’ll do it together. There will be material for you to review and many discussions that will need to take place concerning your specific goals, investment risks, and product features. I am your coach, but you will be the quarterback, making the final decisions on the field. At the end of this process, you will be pleased with the result.”

The point here is that clients can develop the skills to become good investors, and thereby, good clients. But, you must have a well thought out decision-making track and the willpower and self discipline to keep everyone on the track, the client and yourself.  Quality client relationships take time, invest it.

Principle 6: You Can Do More…

…Than You Think You Can

This is going to sound like boasting. Well, it is, I suppose. No way around it (as if this entire blog is not just one shameless self-promotion after another; makes me want to vomit just thinking about it). But, it’s for a good cause. I want to show you something. So, here goes. In addition to running a $100 million wealth management practice (which I built in 10 years with the Lord’s guidance and blessing), owning and managing a stand alone tax and accounting practice, which I am building through acquisitions, and maintaining a top 5 advisor production rank at my broker dealer (where I also serve on its investment committee and travel bi-monthly to its home office in San Diego for 2 days of meetings each time it convenes), I head coach elite level youth baseball two seasons per year (which includes 2 evening practices and 2 evening games each week night), write two blogs (one personal and one business), serve as Associate Director of World Hope Bible Institute (for which I travel internationally more than 60 days per year and keep office hours at its headquarters on Mondays), attend Biola University, a private Christian college in Los Angeles, as a full time student (taking 9-12 hours per semester) where I am about half way through an executive Master’s degree (not an online program, as I have to travel to Biola for lectures 4-5 times per year), homeschool my 9th grader, am an avid bird hunter with my sons and dogs, and am currently restoring two vintage cars, a ’65 Thunderbird and a ’69 Cutlass, both convertibles. Except for travel and baseball, I am home very night. I attend all my kids’ events when I am in town. I vacation with my family 3 or 4 weeks a year, and so on.

No Superman

I heard that Muhammad Ali once refused to fasten his seatbelt on a flight. When the flight attendant insisted he do so, he quipped, “Superman don’t need no seatbelt.” The flight attendant replied dryly, “Superman don’t need no airplane.” I’m no superman. I’m just organized and efficient. True, I hate being idle. But, the more I add to my plate, the less I am involved in trivia, like watching television, mowing the lawn, surfing the Internet, or daydreaming. I once was asked by the Gideon Society (those folks who put the Bibles in hotel rooms) to become a member. When I complained that I already had too much to do, they said that that was why they’d invited me. The man said, “Busy people get things done.” I instantly knew it was true and could not come up with a reasonable defense. I joined and served three years until I stepped down to enroll in seminary (ministers could not be members, and I wanted to be more involved in ministry). Just after our son was born (our daughter was 5 years old at the time), my wife became ill with a serious neurological disorder and was bedridden 24/7 for six years. During this time, I sold my first business (a regional annuity distributor with 200 advisors and staff and offices around Texas), enrolled in seminary where I completed my undergraduate studies (earning two degrees in theology while carrying a 3.8 GPA), planted and grew a community church (acquiring and renovating a small Bingo hall/beer joint for its use), started and built my present wealth management firm, cared for my wife, and raised our two kids. My in laws, and especially my mother-in-law, who lived nearby, were indispensable during this time, and I am very grateful for them. You can do more than you think you can. A lot more.