Annuities

Value Does Not Equal Price


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This blog post originally appeared on the High Performing Practice website. If you want to choose to improve your financial services practice, visit their blog for more ideas.

 

Last week I introduced the idea of providing value as the one thing to focus on for growth, and I broke down five different areas to study to determine if you are providing value. And in past weeks, I’ve talked about how value is measured.

Although returns against a benchmark are one indicator, value includes so much more than price. Price is a commodity; value is not. And it’s up to us to make sure our clients understand the difference.

Build Value By Changing Perception

To grow, even when the market isn’t doing as well as we’d like, you need to pay attention to how to build value in your business. This will allow you to retain clients, recruit new clients and to remain relevant in the greatest shift from the workforce to retirement that we’ve seen in the United States.

The first hurdle is to change client perception. This can be tricky, but it’s an essential part of driving value. First, we need to help them understand the difference between price and value. Price is how much your clients pay for a financial plan. Price is measured by how much greater return your client receives versus what they paid. That value is the relative worth of your overall relationship.

Defining Excellence

Of the five components of value we will be looking at, the first one to discuss is excellence. So, how do you define excellence? I believe it’s the art of paying attention to the client. Of making it a priority to understand the client’s entire need—their goal for their financial future. It’s not just asset management or insurance. It is the entire breadth of a relationship. Excellence means a willingness to collaborate with others on areas that aren’t your expertise. It’s taking the time to look under every rock, leaving no stone unturned.

Driving Consistency

I’d also like to discuss the second component that drives value, and that’s consistency. As a student basketball manager at Indiana, I was around Coach Knight for four years. His game preparation was legendary. And his game preparation was consistent. Just as Coach Knight followed the same process for each game, you need to follow the same process for each of your clients.

Consistency is important not only from a regulatory standpoint but, most importantly, it’s important from a referral standpoint. If your clients understand what their referral will experience, they’re more likely to refer you to people who they know, like and trust. It allows them to set the expectation for their friend or family member.

Consistency gives your client confidence. It gives your staff confidence. And it increases your chances of success while decreasing the chances that anything important will be overlooked.

When our clients are confident in our ability to drive value, they will find it easier to make the decision to stick with you.


Transformational Tactic

Develop a repeatable process focused on excellence and consistency.

What to Focus on for Growth


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You want to grow your business, but you’re not sure where to start. For many, it can be hard to focus in on a course of action. And, once an action has been set in motion, even harder to have the endurance to see it through.

Does any of this sound familiar? You have clear ideas of what you want to achieve. And you have not-so-clear ideas of how to get there. So you try one marketing plan for a couple of months, second guess yourself, switch gears and start something new. And then repeat. Before you know, time has passed with no real growth to show for it.

The real question to ask yourself is: What’s the one thing that can really be meaningful to clients and that they can grasp onto?

When trying to answer that question, there’s a temptation to make a list. But there’s really just one simple thing that you need to focus in on to grow your business, and it’s not a magic wand. It’s also not something that’s easily measured, so I don’t have a lot of analytics to share. The answer? Focus on adding value.

With a strong focus on providing value, it is possible to grow your business, attract quality people and remain relevant in the greatest shift from the workforce to retirement that we’ve ever seen.

According to Bob Burg and John David Man’s book The Go-Giver, value is defined by making sure that you give more value than you take payment. And it doesn’t matter how that value is delivered. It can be delivered virtually, face-to-face
or through written communication.

Delivering value makes a difference at any time, but even more so now, while we are challenged with a global pandemic.

You might be wondering about measuring value. How do you quantify it? Use these five areas to determine if you are providing value:

  1. Do you have excellence in your process?
  2. Is your process repeatable and consistent?
  3. Can you pay attention to certain areas of that process?
  4. Are you delivering empathy? And then,
  5. Are you going above and beyond and showing appreciation to your clients?

By focusing on those five things, the fifth one in particular, you can develop significant metrics to determine your success. And stay with us. Over the next few weeks, we’ll provide an in-depth look at each of these five areas.

But you don’t have to wait. If you’d like more information about how we can help you grow your business, click below to schedule a transformational call. We’ll help you learn how to remain relevant in this great shift from the workforce to retirement.

Successful Marketing During a Pandemic


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As stay-at-home orders continue and conditions remain uncertain, you should be thinking about reevaluating your marketing strategy. After all, the information your clients are searching for is probably different from just a few weeks ago. Think about what you’re focused on now. Is it the same as it was before the pandemic hit?

I’ve been reading a lot of industry articles and talking with a lot of advisors. One of the first things advisors tell me is that they are thinking about discontinuing marketing to avoid laying off support staff. If that’s your thinking, I commend you. But as an alternative to cutting marketing altogether, maybe the answer is to determine if you’re spending too much. If the marketing budget is the first thing to go, it may be too large to begin with. So, how much can you cut? Let’s start with what we’re trying to accomplish.

High Performing Practice has three main goals:

  1. Grow your business
  2. Create a sustainable pipeline of prospects coming into your business
  3. Remain relevant in the greatest shift from the workforce to retirement that we’ve ever seen

 

Today, more than 51% of American retirees retired before the age of 65. Early retirement is usually caused by job layoffs or a health crisis that forces them into retirement. Today we are facing a looming recession and more jobs lost than ever before and soaring unemployment claims. It’s likely that many clients between the ages of 55 and 62 will opt-in to premature retirement and sustain themselves for a longer period of time with fewer assets. Certainly, a bad market situation gives us an opportunity to help and to capture more business. Of course, we need to market ourselves if we are going to make a difference.

Let’s keep it simple and effective. There are three main items you should focus your marketing on over the next couple of weeks:

1. Consider developing transitional call-to-actions. Post downloadable one-page fliers on your website on topics that are relevant right now. Ideas include:

  • Five different steps to recovery
  • Lessons learned from the financial crisis that apply to the pandemic
  • An overview of your practice philosophy

All pieces should be basic and easy-to-read and understand. These are topics audiences are searching for now and will hit search engine optimization. Capture email addresses from downloads and use them for proactive marketing

2. Focus on emotion. As you also rearrange your digital assets and determine how you want to communicate, make sure that you speak to the three levels of emotion: the external, the internal and the philosophical.

You can’t listen to the news without hearing about market losses of 20% or more, a fact that creates fear and anxiety. Instead of focusing on the market, help fill a prospective client’s larger concern — finding an advisor that aligns with their philosophical beliefs. We believe that everyone should have a secure retirement and free of worrying, not to run out of money. Convey that message to your clients. You can’t help if they don’t trust you.

3. Create a clear and defined path. Many clients have been exhausted by a relationship with the previous financial planner, or they have exhausted themselves trying to plan their financial futures alone. Most clients are looking for a solution that requires the least amount of time, effort and energy. But they still need your advice. Cut through their fears with a clear and simple strategy.

Although we are experiencing challenges we didn’t anticipate, clients are ready to focus. They need your help now more than ever. And with a clear message, you can provide a valuable service, for a smaller budget, even in the midst of a pandemic.

More – Longer – Less


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In my talks around the country, I frequently speak on retirement income and trying to make the income stream more efficient. Often this means having to discuss taxation and overall income disbursement. There are a lot of major hurdles that today’s advisors will encounter while helping clients plan for retirement income.

  • Low Savings Rates: Comparatively, the United States savings rate is painfully low. With the exceptions of high inflationary periods or market corrections, our personal savings rates have been on a steady decline in the last four decades. The end result is the average baby boomer born in the 1960s only has $131,900 saved for retirement1.
  • Misuse of Social Security: Less than 5 percent of Americans choose to defer their Social Security benefits until they are 702. The benefits of the primary wage earner waiting until then typically outweigh taking income early. The spousal and inflation protection gained with this strategy relieves pressure from many portfolios. 
  • Defined Benefit Plan Changes: Older generations used to look to guaranteed income as a staple in their retirement plans. Today, more accountability is placed in the employee’s hands, but they are given little information about how to convert those assets into income. The default distribution is usually a simple, systematic withdrawal plan that does not account for longevity.
  • Longevity: People are living longer than ever before. It’s more difficult to plan for an unknown ending as the date moves further away from us each year. Extended life expectancies mean we need to plan for more income – and income disbursements – when we need more care.

 

The end result is this: advisors are going to have to work out how to generate more income, for longer periods of time, with less assets than ever before.

This generation of advisors has more challenges to face than have been seen in the financial industry for the last twenty years. This means we have to think, act, and plan differently. Our world is changing, and we must adapt to the new world – or lose the client’s confidence.

 

Winning Strategy: Understand the new rules of retirement income planning. Think and act differently than you have previously in order to adapt to the new world of income planning. 

 

About the Author

Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. His latest book, “Free Throw for Financial Professionals,” is available now – learn more at www.freethrowsforpros.com.

 

1 LIMRA FactBook

2. SSA.gov

 

There’s Only One Way Up


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We have hit rock bottom.

The financial industry is experiencing the lowest level of trust it’s seen. Actually, we have been there for several years. Even after the scores rose somewhat in 2014, the industry is still facing a deep lack of trust – worse than any other industry. In a survey conducted by Edelman, participants in the top 25 percent of household income have spoken – our largest target market does not trust us.

So what do we do? We can’t ignore the stats anymore. We can’t keep shifting blame onto financial crises from a decade ago. In Free Throws for Financial Professionals, I talk about a few things for planners to keep in mind:

 

Integrity

During his tenure as coach for IU Basketball, Coach Knight won 902 games, three national championships, multiple conference titles, a National Invitational tournament, and an Olympic gold medal – and 98 percent of his players graduated. Coach didn’t just want good players – he knew basketball would be a temporary part of these kid’s lives, and they’d need a plan for afterwards.

What would our clients’ lives look like if we focused on them as much as Coach focused on the holistic outcome? Too often, we are looking to capture assets under management or make a sale. We need to get back to basics and focus on the outcome – getting the client to their goal of a sustainable income during retirement.

 

Self-Awareness

In the 1987 national championships, Daryl Thomas could have been made immortal: he could have made the winning shot. But he would have had to make a jump shot against good blockers to do it. As a freshman, he may have forced up a shot. But, with experience he knew what his strengths were. Instead, he did the smart thing. He passed to Keith Smart, who got the winning score.

As we witness the largest shift in the workforce in American history, we have to take stock of our own weaknesses and biases toward products that mitigate longevity. Or, we have to surround ourselves with other professionals who can view the income portfolio with a different set of eyes. Either way, we must increase our knowledge base of longevity-related risks as the population continues to age and needs income for longer periods of time. 

 

Prepare to Win

“Everyone has a will to win; few have a will to prepare to win.”  - Coach Knight

Coach took copious notes during each practice. Managers filmed every moment and took down stats regarding each specific offensive set we ran. We’d look at the numbers and ask “why?” It took looking at the film to see why we were having success against one defense versus another.

In our business, we must ask why more often. There’s a lot of talk about being a fiduciary and setting standards. We can meet those standards by asking simple questions focused on the client, then shift the current standards to focus on the client. Not practices. Not disclosures, fees or conflict of interest. The client. We must understand our clients as well as Coach understood his players – their strengths, their weaknesses and other team’s qualities.

If we don’t change, we’ll continue to be at the bottom. So how do we improve trust? It doesn’t come down to simple regulation. Instead, it’s about changing our behaviors toward clients and our techniques that demonstrate a total focus on the client. Think about how you can work with integrity, play to your strengths and maintain curiosity on how we improve the client’s situation. That will build trust faster than any regulation.

 

Winning Strategy: Build trust with a focus on the other person. Do what is best for them and our industry will gain respect.

 


About the Author

Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. His latest book, “Free Throw for Financial Professionals,” is available now – learn more at www.freethrowsforpros.com.