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Written by: Matt Oechsli | The Oechsli Institute
Many so-called experts are giving their 2016 predictions. Brace yourself for volatility – be prepared for a downturn – and so on – all focused on the short-term. However two financial gurus, Larry Fink and Warren Buffett, are long-term thinkers (read the interview with BlackRock CEO Larry Fink in HBR November 2015). Fink is “on a crusade against short-term thinking” which he refers to as short-termism.
Kudos to Mr. Fink for providing HBR with an extremely insightful interview; which was the inspiration for this article. Using hockey great Wayne Gretzky’s alleged response when asked what made him great, “I skate to where the puck is going to be.” Not that we should put our heads in the sand regarding the short-term, but financial advisors would be well served by paying more attention to where the “financial advisory puck” is going to be long-term, or at least three to five years from now.
I’m not pretending to have a crystal ball, but we have a decade of research on affluent consumers and elite financial advisors. After thoroughly reviewing our findings, studying the trends, confusing myself - ha, and then finally breaking through to the fresh air of simplicity, I’ve broken this long-term approach into the three components, to borrow a geometric shape; vertices of an equilateral triangle.
I could add a fourth, embracing excellence – but excellence is a constant running through all three vertices.
3 Vertices for Advisors Skating to Where the Puck’s Going to Be
Point 1: Embracing Technology
The following are all being used very successfully by financial advisors with whom we’ve worked. Obviously it’s essential that every financial advisor keep their use of technology within their compliance guidelines.
> Video Portfolio Reviews – There’s a handful of financial advisors we’ve coached who are conducting portfolio reviews for time crunched clients through video.
> Social Media – This goes beyond LinkedIn, albeit LinkedIn is the most robust for professional use. A financial advisor’s brand is digital and it’s important to be capitalizing on all aspects of social media.
> Websites – Because your brand is digital and financial advisor Google searches are becoming commonplace, your website needs to be clean, current, and reflect your value proposition.
> Video Content – Today’s affluent don’t like being the target of marketing campaigns and don’t trust advertising. So what’s a financial advisor to do? Embrace content marketing. YouTube and Facebook have taken videos mainstream. 95% of Millennials think they can learn how to do anything on YouTube. We’ve helped a number of financial advisors get on the cutting edge of this by creating 2-3 minute helpful videos on topics like; 3 Things You Should Know When Creating a Financial Plan, and so on. As an aside, I was talking to my attorney last night and he said “At 61 years old I learned how to box – and I’ve gotten good! My instructor – YouTube.”
> Podcasts – Not popular with financial advisors yet, but an excellent medium for content marketing. A word of caution, these require a lot of work.
> Blogging – Another form of content marketing, somewhat similar to podcasts, without the structure. But again, these require work.
The objective with content marketing is being positioned as a thought leader, a knowledge based resource. The above list is far from complete and will always be fluid, technology is changing faster than I can write these words.
Point 2: Embracing the Entire Affluent Household
It’s no coincidence that the first client video review by one of our financial advisors included the entire household; husband, wife, daughter who was in graduate school and son who was an undergraduate student. The client specifically asked to schedule the video review when the children were going to be home. That video review led to opening accounts for both of this household’s next generation. As an aside, the financial advisor was convinced that the father wanted to show-off his new video technology to his kids. Ha!
Today’s affluent want their financial advisor to oversee every aspect of their family’s financial affairs. That includes the children. Whether it’s setting up college funds, educating them on investments, role-playing job interviews, or offering career guidance – affluent parents are starved for this kind of care and guidance. Yet, only 21% of financial advisors have ever expressed an interest in working with the children of their affluent clients. I’ve had advisors tell me “I don’t want them – they’ve got no money and are a hassle.” A sad example of Larry Fink’s short termism.
Point 3: Embracing Comprehensive Wealth Management
Financial advisors seem to have a disconnect between how they get paid and the services they provide. This is the mentality of the stockbroker of yesteryear. And they are today’s dinosaur. From the viewpoint of today’s affluent, it’s not how you get paid, it’s whether they are getting their money’s worth for the service their family needs. Elite advisors understand this and provide services that go far beyond the immediacy of compensation.
The idea is to provide real and comprehensive financial planning. Help your clients follow the plan, make adjustments when necessary – but don’t be like this financial advisor who checked the box on a form that indicated that he’d provided a financial plan for each of his affluent clients. This led to, on their statements, each client being informed that they had a financial plan and were on track. Not good. Clients were lost and negative affluent buzz (word-of-mouth influence) was activated within affluent COIs.
It’s important to be a forward thinker who takes the appropriate actions. Be it with technology, the next generation, seniors in need of assisted living, or the ongoing evolution of wealth management solutions – much like today, tomorrows affluent will want a financial advisor who is current, truly cares for his or her clients, and has incorporated excellence as the DNA of their practice.