Don’t Be Cheap or Lazy with Client Communications

As the old saying goes, “you only get one chance to make a first impression.” By the same token, you only get one chance to leave a lasting impression. At a time when four out five of high-net-worth individuals are considering leaving their advisors at any given time, can you afford to take a chance with your hard-won clients?

According to our recent Wealth Advisor Confidence Survey™ conducted in association with The Financial Awareness Foundation, webinars, and low-cost, low-effort social media channels such as Facebook, Twitter, Instagram and Snapchat are among the least most effective communication channels used by surveyed financial planners, wealth advisors, estate planners and CPAs.

% of Respondents Finding Channels “Very” or “Extremely” Valuable

CHANNEL	Advisors expecting to grow by double-digits in 2018	All other Advisors	Gap
Public speaking	75%	59%	+16%
Writing articles for publication	69%	48%	+21%
Writing books/eBooks	54%	48%	+6%
Being quoted in the press	54%	30%	+24%
Blogging	48%	29%	+19%
Producing videos	48%	17%	+31%
Hosting client events	44%	35%	+9%
Publishing on LinkedIn	32%	20%	+12%
Webinars	22%	23%	-1%
Tweeting	4%	13%	-9%
Facebook	7%	13%	-6%
Instragram, Pinterest, Snapchat	4%	6%	-2%

Source: HB Publishing & Marketing CO, LLC and The Financial Awareness Foundation,2017

Last week’s post has more about the most effective channels for advisors.

Further, advisors that expected to grow by double digits over the next 12 months were less likely to use these low-cost channels than their less confident peers

By contrast, advisors who expect to grow by double digits over the next year are MORE likely than other advisors to blog, write articles for publication, produce videos and publish on LinkedIn.

In other words, the channels that require the most time and thought are the ones that high-performing advisors are most likely to use….we didn’t say most expensive. We just said the ones requiring the most mental “heavy lifting.”

Sure, but won’t social media endear you to Millennial clients, prospects and workers? Not exactly. Turns out that advisors in their 30s and 40s are generally less likely than their older peers to find webinars and social media effective forms of client communication (see table below).

% of Respondents Finding Channels “Very” or “Extremely” Valuable

CHANNEL	Advisors age 30-39	Advisors age 40-49	Advisors age 50+	Under 50 vs over 50*
Webinars	0%	22%	29%	16% less likely
Tweeting	0%	11%	10%	1% more likely
Facebook	0%	0%	14%	14% less likely
Instagram, Pinterest, Snapchat	0%	0%	7%	7% less likely

Source: HB Publishing & Marketing CO, LLC and The Financial Awareness Foundation,2017
* Age 30-49 combined vs. Age 50-70+ combined

*** Is this what you’re finding among your own clients? Take the Wealth Advisor Confidence Survey™ and see how you stack up to your peers (5 minutes, rapid results).

Conclusion

As my grandfather always said, “you get what you pay for.” Don’t cut corners when it comes to communicating clients. Be timely and be relevant. But unless you’re the President, take the time to put some thought into what you are saying, before you post, Tweet or publish. Or, as they say in academic circles, “publish or perish!”

TAGS: Client communication, Wealth Advisor Confidence Survey 2017, best client communication tools

Why Can’t You Make Better Decisions? Ask Your Ego

As most of you probably know by now, University of Chicago professor, Richard Thaler won the Nobel prize in economics last week. Thaler is relatively young by Nobel laureate standards, and his primary field of study (behavioral finance), is somewhat controversial to many in numbers-driven financial advisory world. The idea that psychological research should even be part of economics has generated hostility for years.

So what is behavioral finance?

According to our client, Glenn Freed, Chief Investment Officer of Los Angeles-based LourdMurray, behavioral finance encompasses a body of theoretical and empirical academic research that seeks to explain why people, especially investors (both retail and institutional), do not act in a rational manner. “Think of the moniker ‘behavioral’ as describing how and why individuals behave the way they do.”

Another of our clients, Matt Topley of Fortis Wealth in Valley Forge, PA, said “investing is a psychology game, not an IQ game.” As the old saying goes, human decisions are made with 80 percent emotion and 20 percent logic. According to Topley, the ratio is even more skewed. “After over 20 years in this business, I would say that when it comes to financial decisions, it’s 90 percent emotion and only 10 percent logic.”

A perfect example of this, said Topley is something called the “disposition effect.” That’s the all-to-common situation in which portfolio managers hold onto their losers and sell their winners. “Having spent 18 years on a trading desk,” said Topley, “I can assure you this is the primary reason why portfolio managers underperform--they can pick winners pretty effectively, but they cannot sell their losers.” 

According to Topley, our egos are a big part of the problem. Our egos are what drive the emotional difficulty of parting with a stock that you spent so much time analyzing.  “How can I be so wrong?” you ask yourself. “Eventually my thesis will prove correct.”

Wrong! said Topley.

*** Is this what you’re finding among your own clients? Take the Wealth Advisor Confidence Survey™ and see how you stack up to your peers (5 minutes, rapid results).

According to Freed, an advisor’s job is to manage both the peaks and valleys of clients’ behavioral biases. “With the bull market we are experiencing, investors start to get short-term memory lapses. In particular, greed kicks in and investors become inclined to move all their assets into equities,” said Freed. “Advisors should work with clients to extract emotions from their investment decisions and mitigate unnecessary risk.”

“Why do we think we are so good at financial decision making when the odds are stacked against us?” asked Topley. “The simple answer can be traced to ego, but ego is the ultimate enemy especially for our investment decisions. Can people in the financial services industry even evaluate their own personal financial decisions?”

According to Ryan Holiday, media strategist and best-selling author of Ego Is the Enemy, the answer is most often NO.

“One might say that the ability to evaluate one’s own ability is the most important skill of all,” wrote Holiday. “Without it, improvement is impossible. And certainly ego makes it difficult every step of the way. It is certainly more pleasurable to focus on our talents and strengths, but where does that get us? Arrogance and self-absorption inhibit growth. So does fantasy and vision,” he added.

Topley said: “One would expect hubris to be very prevalent right now due to the market’s all-time highs; but again human biases are coming into play.  The 2008 crisis left us with the biggest investing hangover in modern market history. As a result, portfolio managers are scared to death about missing the next correction instead of the hyper-bullish you usually see around equities when markets are at record highs.” 

Freed agreed. “Clearly, greed has kicked in, but some investors still can’t shake the nightmare of 2008-09 from their memories. Looking at the question from a different angle, we should ask, ‘Is the index’s standard deviation higher today?’ The answer to that question is yes! This means that an advisor has to ask clients the right questions and take them down “memory lane.” That’s why Freed reminds advisors about the importance of obtaining high-quality information about clients in order to provide them with the appropriate advice. “Profiling the client investment psyche has become harder because of the recent extreme markets and geopolitical events that the media constantly reminds us about,” added Freed.

Conclusion

“As valuations continue to rise above the top quartile, fundamental analysts can’t get their arms around being long,” observed Topley. “The problem is that they are only measuring the ‘P’ in price to earnings--the ‘E’ essentially stands for emotion. Until the money stops flowing into equities, the market will continue to move higher.

*** Is this what you’re finding among your own clients? Take the Wealth Advisor Confidence Survey™ and see how you stack up to your peers (5 minutes, rapid results).

TAGS: Richard Thaler, Behavioral Finance, Glenn Freed, LourdMurray, Matt Topley, Fortis Wealth, Ryan Holiday, Ego is the Enemy

What High Performing Advisors do Differently Than Their Peers

As I mentioned in my last post, research shows that high-performing financial advisors communicate more frequently with clients than their less successful peers. They are also likely to find certain channels more effective for hitting home with their clients than their peers do.

Public speaking and writing books (including eBooks) are among the top three channels used by all advisors, but other channels have proven especially effective for high-performing advisors. According to our new Wealth Advisor Confidence Survey™ 2017, conducted in association with The Financial Awareness Foundation, advisors with double-digit growth expectations in 2018 are more likely than their less optimistic peers to place a high value on the following:

• Writing articles for publication
• Being quoted in the press
• Blogging
• Producing videos
• Publishing articles on LinkedIn
  
  

% of Respondents Finding Channels “Very” or “Extremely” Valuable

CHANNEL	Advisors expecting to grow by double-digits in 2018	All other Advisors	Gap
Writing articles for publication	69%	48%	+21%
Being quoted in the press	54%	30%	+24%
Blogging	48%	29%	+19%
Producing videos	48%	17%	+31%
Publishing on LinkedIn	32%	20%	+12%

Source: HB Publishing & Marketing CO, LLC and The Financial Awareness Foundation,2017

Still not convinced that frequent client contact is critical?

A CEG Worldwide study of more than 200 wealth advisors found that the highest earning financial advisors contact their top clients an average of 28 times a year (2.3 times per month). By contrast, the next most successful group—those earning $500,000 to $999,999 a year—contacted each client an average of just 13.2 times per year (1.1 times per month). The least successful financial advisors were even less likely to communicate with clients.

“The fact is, today’s clients greatly value regular outreach from their financial advisors—and will reward those who excel in this area,” concluded CEG researchers.

So step up your game when it comes to reaching out and touching clients—just don’t “carpet-bomb” them. Our research found that hosting webinars and social media posts (with the exception of LinkedIn), were considered among the LEAST effective clients communication channels.

And while you’re busy reaching out, don’t forget that October is National Estate Planning Awareness Month. As my survey co-author Val Sabuco points out, 120 million Americans (half the adults; rich to poor) don't have estate plans. THAT’S WAY TOO MANY. “Remember,” said Sabuco, “our goal is to touch the majority of the general public, high net worth individuals, financial service and nonprofit professionals and their organizations at least twice a year to get (and keep) their financial, estate, and gift plans in order.”  Let’s all do our part.

Conclusion

Q4 is under way. Let’s have a good week, month and quarter and finish 2017 strong.
*** Take the Wealth Advisor Confidence Survey and see how you stack up.