What Business Are You In?

Philadelphia: "I'm overwhelmed! I feel there is so much that needs to change, but I don't know where to start," said Jerry with a groan. He then proceeded to pose a classic question: "Do you have any suggestions?"

Philadelphia: "I'm overwhelmed! I feel there is so much that needs to change, but I don't know where to start," said Jerry with a groan. He then proceeded to pose a classic question: "Do you have any suggestions?"

Ha! Do I have any suggestions? First of all, people always tend to resist change. There are far too many reasons why to address in this format, but suffice it to say that human nature is hardwired by the personal habits one develops. These habits are both attitudinal and behavioral, and for many advisors, both are serving as the proverbial "ball and chain" that are holding them back from making the necessary changes.
It just so happens that I recently re-read one of Peter Drucker's many terrific books, Management Challenges for the 21st Century, as a follow-up to an article in the May 2009 edition of the Harvard Business Review by A.G. Lafley, the CEO of Proctor & Gamble. Lafley framed much of this article around a meeting he and several other CEOs had in 2004 with Peter Drucker. The focus of their meeting was the "role of the CEO", and one of the questions Drucker posed in these meetings was, "What business are you in?"

Before we get to Drucker's question, it might be useful to review his thoughts on change. "One cannot manage change. One can only be ahead of it." Obviously our friend Jerry, like many of his peers, isn't ahead of the radical change reshaping the world of financial services, and directly affecting the client-advisor relationship.

When I asked the entire workshop of which Jerry was a participant "What business are you in?" there was dead silence. It was as though I had asked a trick question. We had just role-played delivering a value proposition, so it wasn't like they had not been thinking about the value they were delivering to their clients. In order to liven things up a bit, I then asked them to turn to one of their peers, advisor to advisor, and succinctly explain to one another what business they were in.

So, here it goes...

What business are you in?

As the great management guru Peter Drucker knows, when approached thoughtfully, this is not an easy question to answer. When I kept pressing the advisors in my workshop for a succinct answer, the responses frequently revolved around "investments."

Suddenly, the real challenge facing many of today's advisors hit me square between the eyes. Despite the ways in which they have been marketed by their firms, regardless of what they say about themselves when they craft their value propositions, or how they might present their practice or team in personal brochures, their primary focus is on investments. After all, most financial advisors were formerly stockbrokers and came up through the ranks being trained to sell various investment products.

Our research on the affluent is quite clear, they are looking for more than somebody to simply provide investment advice. After all, look what investments have done to their portfolios of late. So, you might be asking yourself, "What do the affluent really want in these challenging times?"

They want a trustworthy knowledge worker, a professional who can act as a family advisor overseeing the many dimensions of their financial affairs. I recognize this is a mouthful, and that it's easier said than done, but this is precisely what today's affluent want in a financial advisor relationship.

All the cliches, practice management processes, value statements, elevator speeches, and marketing initiatives aside, I'm going to assume that you are the CEO of your business. In that spirit I'm going to share with you the four fundamental CEO tasks A.J. Lafley took away from his meeting with Drucker, but frame them to be more advisor-CEO friendly:

1. Understanding and interpreting the outside world: the affluent. What do they want in a financial relationship? What are their options? What is the perception of the affluent in the world of my company?

2. Answering two questions over and over again; What business am I in? and What business am I not in? It's interesting that Lafley emphasizes asking both questions over and over. This is all about focus.

3. Developing a balance between sufficient yield in the present and necessary investment in the future. You must be able to balance your time, energy and resources between serving existing clients and engaging in the necessary high-impact rainmaking activities that will generate new affluent clients.

4. Shaping the values and standards of your practice. Herein lie your client centric processes, the individual commitment of each team member, and your ability to consistently execute.

As Lafley states, "The simplicity and clarity of these tasks is their strength, but their simplicity is also deceptive, because the work is more demanding than an observer might suspect."

So, from one CEO to another, what business are you in?

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Once again, we want to thank all of you who have emailed comments and questions to us. We will continue to do our best to answer each one.

If you have any topic suggestions or special requests, please contact Rich Santos, publisher of Registered Rep. and Trust & Estates magazines, at [email protected].

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