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It strikes me that the ‘my client’ mentality might just be the single biggest contributor to the problems of the financial advice profession. I’d suggest it’s time to move away from silo firms, each adviser looking after ‘their’ clients, and start building real businesses.
The Right To Market Your Services To Someone
For a start, even the expression ‘my client’ is revealing. I’ve always felt it to be a privilege and a compliment when someone asked me for my advice. If they paid me as well, doubly so. I have never felt, however, that it means I now own them, that they are my client.
Ownership brings with it a time element. I own something for a period of time until I no longer own it. If I want ‘my client’ to continue paying me money, I need to continue to deserve their patronage.
I’ve always been a little surprised by the arguments that occur when advisers leave and seek to take ‘their’ client bank with them. Aside from the fact they entered into a contract which states they are not allowed to do the very thing they are doing, there seems to me an arrogance from both parties that the client might be owned by either of them.
Such fights are really about the right to receive the ongoing income. If the strength of the relationship with the departing adviser was really that strong, the clients would find out where they’d gone and move of their own accord.
Who Owns The Kids?
Surely the ultimate test of the branding of a business is if an adviser were to break the terms of their contract and try and take ‘their’ clients with them. If a client feels their relationship is stronger with the individual than it is with the company, then an agreed move with the adviser is the best thing for everyone.
The challenge, therefore, is to build a practice which provides such a great service that the clients will want to stay rather than leave with a departing adviser.
My Clients Will Only Deal With Me
Over the years I’ve heard the following so many times: “My clients won’t deal with anyone else. They like to see me.”
In my experience this simply is not true. Aside from the very closest friends and family members, and often not even then, clients will see whoever is going to give them the best outcomes. The majority of our clients at Ovation joined because of me, and yet when I deauthorised some 2 years ago, not a single client commented.
Furthermore, the statement is a weakness in the business, not a strength. What value does a business have where the clients have only ever dealt with one person? It is a poor business model that results in the client/adviser relationship being stronger than the client/firm relationship.
Maximum Knowledge
The ‘my client’ mentality prevents clients from receiving advice and input from a variety of sources. Which adviser can truly say they know everything about financial advice?
A few years ago I was on a compliance supervisor course. One compliance officer from a firm with 40 or so advisers proudly told us about his spreadsheet. It listed all the advisers and the areas of training they had completed. No adviser was allowed to give advice on an area that didn’t have the box ticked.
I asked if any adviser had all boxes ticked. He said not. I then asked if clients dealt with more than one adviser. He again confirmed not.
I ventured the suggestion that not one of those advisers should therefore be allowed to see clients. Suppose a client dealt with only one adviser who happened to not have a tick in the pensions box. That meant they didn’t get advice on their pensions, and yet probably thought they were getting ‘holistic’ advice about their financial affairs. Either all advisers know everything, or clients deal with more than one adviser.
After a brief embarrassed silence, the course organiser thanked me for my contribution and quickly moved on to the next subject.
So What Are We To Do?
The ‘my client’ mentality emerges under certain circumstances. These tend to involve individuals working in silos, finding their own clients, probably self employed, their earnings linked directly to sales.
In order to get away from this, we need to build practices. Firms with a clear, identifiable sense of purpose, where people can go to work who share the core values; to attract clients who want to buy into that vision. Places where advisers don’t feel the need to guard ‘their’ clients, because the firm’s proposition delivers more than they could possibly deliver on their own.
Of course, the ‘roving client bank’ suits many advisers, and if it’s not necessarily the best way for clients to take advice, well, let the market decide. When there are enough meaningful practices out there, when there is real competition, clients will choose.
Get On With It!
I reckon it takes at least five years to move a business which is made up of a series of individual client banks to one that has a unified service proposition built around common values. The time to start the future is undoubtedly now!
Chris Budd is a diploma qualified business coach, and will publish a book on a new approach to ownership and succession planning later in the year.