2022 started out on quite a high note when both the S&P 500 and the Dow Jones Industrial Average posted record highs on the first trading day. All the markets had ended 2021 with their biggest advances in three years. The nation began exhaling a collective breath that our world was coming back into alignment. That sentiment was short-lived.
War in Ukraine, rapidly rising food, energy and housing prices, supply shortages, historic inflation and the Federal Reserve’s response caused the markets to tumble over 20% in the first six months. Clients grew frantic as they opened each account statement. 2022’s market will be remembered as one of the worst performing in almost a century.
Few have a crystal ball to know when any of these factors will return to a less chaotic state. Recession still looms even in the face of encouraging factors. Advisors can craft financial plans and investment portfolios that are designed to increase wealth and meet life goals, but there is little that they can do about the actual market itself. Therefore, it is important for financial advisors to focus on doing certain basics exceedingly well.
The astute advisor will look to anchor in three focus areas in 2023:
— Looking beyond the numbers with clients.
— Working on activities that an advisor can actually control.
— Upgrading and acquiring new personal skills.
Looking Beyond the Numbers
Carla Williams, an independent advisor with Gateway Financial Partners in Tarrytown, New York, says, “The volatility of the market is like being at sea feeling the waves crashing against the boat. Thank clients for staying in the financial boat and take the time to assess if the boat is well-crafted or renovations/repairs can improve its sea-worthiness.”
Offering gratitude to your clients paves the way to have the in-depth conversations that clients need to make portfolio changes, implement delayed recommendations and sometimes to defeat pure inertia. Going beyond the numbers will often encourage clients to open up about their emotional response to their financial plans and investments.
Completing a review with your clients is an ideal way to initiate these conversations. The time invested will often lead to greater client satisfaction and fewer panicked phone calls for your team. This renewed confidence often brings other outside assets.
Seth Wasserman, at Three Points Insurance Design in Hartford, Connecticut, says, “This is also the time to get back to basics with a client’s protection portfolio review.” Assessing all their risk mitigation needs, including life, disability and long-term-care insurance, is important to reduce a client’s anxiety with regard to losses. With current interest rates, even annuities deserve discussion. Randy Rother at Oakmont Group in College Station, Texas, takes this a step further by “collaborating (with an insurance professional) on the customization and structure of insurance to make them extra tools in the toolbox. This can enhance risk mitigation and wealth-transfer purposes, as well as bring balance to both risk and returns.”
Working Controllable Activity
An advisor must grow and scale their practice constantly, even when the markets are chaotic. Without the proverbial fresh water, growth will stagnate, often at precisely the wrong time. Previously, market performance had been strong enough that advisors had grown complacent about organic growth, presuming that acquisition could resolve any gaps.
Many advisors believe that the only other option for new growth beyond acquisition comes from adding services, making elaborate plans for bringing in new lines of revenue. However, doing so often adds disproportionately to overhead expenses, especially in the early learning curve. An advisor can blunt this obstacle by instead choosing a niche market and by bringing in outside resources instead of adding them internally.
Niche markets allow an advisor to do more of what they do best and enjoy the most. When advisors try to offer services that are not in their wheelhouse, negative drag is created across the entire practice. Niche markets allow you to streamline your product offerings, marketing campaigns and even wholesaler meetings to only those which best showcase and support your expertise.
Niche marketing also makes it imperative to establish a 30-second elevator speech that eloquently conveys your expertise. You will use it whenever the age-old question “What do you do?” is spoken. People’s attention will fade quickly if you cannot express your differentiation quickly and effectively. An effective elevator speech can only convey one idea, which is why it works beautifully with niche marketing. This first impression will make you memorable.
Utilizing centers of influence, or COIs, allows you to bring in other professionals who also have created niche markets. The resulting Venn diagram puts your client squarely in the center of everybody’s best work, elevating the results that you are able to deliver to them. With the widespread acceptance of video meetings, you can locate these professionals all across the country. As both advisors and clients continually seek their ideal homes in new and sometimes remote locations, this network will also allow an advisor to retain relationships that might otherwise move away.
Upgrading and Acquiring New Skills
Few advisors appreciate continuing industry education beyond the obligatory regulatory requirements. However, continuing education as a life skill can help us keep abreast of the latest practice management skills needed to be at the top of our game.
The world has quickly evolved and our clients demand new proficiencies to keep communications fresh.
It can be cumbersome to implement major changes to your tech stack. However, it is often the smaller details that have a greater impact, such as a calendar scheduling service and text reminders for appointments. Some of these basic services are offered free. You can also automate marketing messages to regularly engage clients with your offerings, integrate staff and, in general, nurture new and long-standing relationships.
Video and podcasting are new skills that advisors need to master. Marguerita Cheng, with Blue Ocean Global Wealth in Washington, D.C., suggests that advisors commit to tuning up their online presentation skills by crafting short, personalized video messages. For example, she uses Loom to congratulate a client for setting up a retirement account, followed by another that explains how to access the account on the retirement plan provider’s website. Adding closed-captioning gives clients both a visual and auditory means of absorbing the information.
Advisors should consider their environment and lighting before undertaking screen time. Many programs allow backgrounds to be blurred and different filters to put one’s best image forward. Once you have the online bug, podcasts will be the next natural step.
Finally, challenge yourself to meet one new person a day. Social media is an excellent way to do so, especially professional sites such as LinkedIn or an online networking community. Be proactive and reach out; do not wait for others to come to you. Offer to help make connections and your new friends will reciprocate. Opportunities will come up naturally that will enable your practice to flourish.
2023 is upon us and may hold as much chaos as 2022 did. However, by focusing on these three essentials, advisors will be able to command their firms with ease.
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