Compelling Conversations
For Institutional Use Only | Not for Use with Retail Investors
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Because what we do as an industry is so complex and abstruse, what we say and how well we say it is often what differentiates us and our practices from the competition. In an increasingly virtual industry, how we frame our business model, express our value proposition and articulate our thoughts, insights and convictions, have become progressively more important over the last decade. We all sound the same and as a result the client/prospect assumes that we are. For the vast majority of financial advisors, when it comes to communication, whether in written or verbal form, we are a left-brain industry attempting to communicate with a right-brain client. We are far more comfortable speaking to the head with information, data, charts and graphs, than to the heart using analogy, metaphor and story. Like most of life this is not an either/or proposition. Recent neuroscience studies show that we most often make decisions based on emotion and then justify and execute them based on reason. So the former is the catalyst for action and the latter hopefully insures that your emotions don’t take you over a cliff.
everything you hope to accomplish...begins with a conversation.
RecuRRing conveRsations: a Key to youR success
We often have well over 100 conversations in the
span of an average week with both clients and
prospects, most of which are extemporaneous,
situational and very tactical. However, given the
nature of our profession, we have many “recur-
ring conversations,” where we say the same
thing over and over again to different
clients and/or prospects on the
same topic or situation. These conversations
are your “scripts,” which more often than not,
simply evolved over time. This guide will help you
begin to consciously architect those conversa-
tions which are designed to achieve the desired
outcome—a thriving practice and a satisfied
clientele. Feel free to modify these so they fit
you comfortably and stylistically, but be sure to
maintain the underlying theme and structure.
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compelling conveRsations
Your value proposition“What do you do?”
Eloquently and concisely describe what you do for your clients.
“My team and I spend pretty much all day, every
day, answering the two fundamental questions
that everyone has of our industry: ‘Will I make it,
and do I have any financial
blind spots?’ In answer to the
question, ‘Will I make it?’ I have
found the majority of people
I speak with, haven’t even
defined ‘it!’ So the first thing
our team does is to sit down
and help you define everything
you are trying to accomplish
with your wealth...with a high
degree of specificity. We then
take a look at everything you’re doing financially, to
determine if what you want to happen actually has
a chance to occur. We basically map your current
financial structure to your overall short-term and
long-term financial objectives. If those two things
align we pat you on the back and tell you congratu-
lations. If they don’t align, we point out your
specific challenges and give you detailed recom-
mendations to help get you back on track.
“Once we have addressed Question 1, we move to
Question 2: ‘Do I have any financial blind spots?’
At this stage, our team takes a 360° look at you
financially, to determine if there is anything you
might have overlooked that might do you, your
family or your business harm. Any risk exposure we
uncover will be brought to your attention and again
our team will provide a rational strategy designed
to help mitigate the risk.
“At the conclusion of this exhaustive process, you
not only have a comprehensive wealth manage-
ment strategy in place, but you have addressed
the only two questions that have ever kept you up
at night: ‘Will I make it, and do I have any financial
blind spots?’”
Your Customized approach“so hoW do you do it?”
Explain how you incorporate a “professional model” of leading with process, rather than a “sales model” leading with product, to help your clients achieve their unique and personal financial objectives.
“As I said on the phone Mrs. Jones, I’d like to
explain briefly how I work with my clients, my
philosophy and methodology…and if that makes
sense I’d like to find out a little bit about you and
what you’re trying to accomplish. If you don’t
mind I’ll start. Our industry has evolved in a very
strange way. If you have ever received a call
from someone in our industry it’s usually about
some hot product or idea, isn’t it Mrs. Jones? I
don’t know any other profession that leads with
product. I have never received a call from my
doctor because she was running a special on
appendectomies this week. I’ve never received a
call from my attorney because he was running a
special on divorces this week! Think about a call
like that, ‘Paul, this is John, I’m running a special,
50% off divorce proceedings this week, how are
you and Susan doing?’
‘Well, John, I appreciate you thinking of me, but
Susan and I are doing fine.’
‘Oh…well…that’s great, Paul, could I talk to Susan
for a second?’
It’s not just what you say...but how you say It’s not just what you say...but how you say it. Use metaphors, analogies and stories it. Use metaphors, analogies and stories to speak to both the clients’ head so they to speak to both the clients’ head so they understand, as well as their heart… so they understand, as well as their heart… so they are spurred to take action. Remember, are spurred to take action. Remember, none of this will likely “ring true” if you don’t none of this will likely “ring true” if you don’t run your practice guided by this architecrun your practice guided by this architec--tural and philosophical framework.tural and philosophical framework.
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compelling conveRsations
“All professionals start with process. They want
to find out what you’re trying to accomplish and
apply their services to effectively get you there.
I incorporate the same three-step process used
by the medical profession. When you go to see
a doctor for the first time you go through a three-
step process:
STEP 1 The Diagnostic Phase: where the doctor
reviews your past medical history, your current
symptoms (and if they’re really good), your future
objectives for your overall health.
STEP 2 The Prognosis Phase: where the doctor
takes all of that information, analyzes and/or
researches your case and comes back with…
STEP 3 The Treatment Phase: a specific and
appropriate form of treatment to address your
unique medical needs and objectives.
So does this overall structural approach
make sense?”
Your team rationale“so Why aRe you on a team?”
Explain the rationale, structure and value of your team in helping clients “pick the lock of complexity” in their financial lives.
“Mrs. Jones, I formed a team because of one
simple word: complexity. Never in human history
has life been this complex. Better in many ways,
but increasingly complex. There is demographic
complexity (people living longer and blended fami-
lies becoming the norm), geopolitical complexity
(economic and political changes continue to alter
this landscape), technological complexity (causing
the average person to reach “information overload”
shortly after breakfast each morning) and financial
complexity (the proliferation
of financial instruments and
strategies continue to grow
unabated). And ironically, the
more wealth you accumulate,
the greater the complexity. It
gets to a point where you need
the fully integrated capability
of three institutions—banking, brokerage and
insurance—to begin to deal with these complex
challenges. People spend their entire careers in one
of these industries and you need all three brought to
bear on your financial challenges.
ttaKe action aKe action applying this 3-step pRocessto youR pRactice
◆◆ First we go through a deep discovery process where we look at your past financial history, current financial structure and future financial objectives.
◆◆ In our second step, we do a thorough and in-depth analysis and return with a written prognosis and comprehensive plan of attack.
◆◆ Then, and only then can we offer specific treatment, i.e., written recommendations, necessary to help achieve your overall financial objectives.
You could have the most sophisticated and You could have the most sophisticated and elegant practice in your community, but elegant practice in your community, but if you sound like every other advisor, your if you sound like every other advisor, your prospect will never give you the opportunity prospect will never give you the opportunity to demonstrate how different you are.to demonstrate how different you are.
Equity securitesEquity securites
Fixed incomeFixed incomesecuritiessecurities
Insurance-basedInsurance-basedproductsproducts
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compelling conveRsations
“This is why we formed a team; to begin to apply
the collective insights and capabilities of those
three industries to solve the complex financial
needs of our clientele. We believe one individual is
simply incapable of knowing all that’s necessary to
address these challenges. So our team members
(both actual and virtual) have all subspecialized, to
bring our clientele the breadth of capability and the
depth of insight necessary to help address their
complex financial challenges.
We then wrap this capability in
a overarching strategic plan,
which we design shoulder to
shoulder with our clientele, to
ensure that everything works
seamlessly and harmoniously as clients seek to
achieve their goals and objectives.”
You can then go on from here to address the specific roles and responsibilities of your actual team (those that reside within your practice) and your virtual team (those individuals you call upon for highly technical expertise both within the firm and your local community).
the Boat analogyexplain youR Wealth management stRategy
Address complex financial needs utilizing three institutional capabilities—banking, brokerage and insurance.
“Mrs. Jones, I would like to take a couple of
minutes and explain the evolution of the financial
services industry and my position in that evolution
through the use of an analogy. No matter what
financial institution you might be talking to, they’re
all trying to accomplish basically the same thing for
you. They’re trying to construct a financial craft, put
you and your family in it, and ship you off to your
destination. For illustrative purposes, that meta-
phorical craft being built is a boat. So basically
what we’re trying to do is construct a financial craft
in the form of a boat and put you and your family in
that craft and ship you off to your destination.
“That boat is comprised of three elements: a sail,
a hull and a life preserver. Those are the three
component parts of the financial craft that we’re
trying to build for you. The sail represents equity
securities. These securities have the potential
to increase or decrease in value over time. For
example, Mrs. Jones, your home is an equity-
based security. It appreciates or depreciates in
value over time. Other examples include stocks,
gold and other commodities, as well as other
forms of real estate.
“The hull represents any kind of fixed income
security. That would include investments such as
CDs, treasuries and municipal bonds; all designed
primarily to throw off an income, versus appreciate
or depreciate in value.
“The third element of the financial craft that we’re
constructing is a life preserver. The life preserver
represents any insurance-based products that are
primarily designed to protect you and your family,
versus throw off an income stream or appreciate or
depreciate in value over time. Although it may have
some of those components, it is designed primarily
for protection.
Establishing a coherent and compelling Establishing a coherent and compelling rationale for your team can dramatically rationale for your team can dramatically expand both the perceived and actual value expand both the perceived and actual value you are capable of bringing to your clients.you are capable of bringing to your clients.
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compelling conveRsations
“Now, Mrs. Jones, let’s say you have $1 million to
invest. There are currently three institutions that
would be happy to build that financial craft for you.
Those three institutions are the banking, brokerage
and insurance industries.
“Let’s first go down to the local bank and say ‘Mr.
Banker, would you please build my financial craft
for me?’ The banker would be happy to do so.
‘Absolutely, I can do this as well, Mrs. Jones. Here
you go. Have a nice trip.’ You look at that craft
and say, ‘Well that’s very interesting Mr. Banker.
If the financial seas get really turbulent, at least
I’m stable. However, I was actually hoping to retire
sometime before I keel over (no pun intended),
and I’m not quite sure this tiny little sail is up to the
task. And that life preserver doesn’t really look like
it’s going to meet the needs for myself, my family,
or my business, if there’s any kind of unforeseen
catastrophe. This thing kind of reminds me of the
Titanic. I appreciate your help. Let me go see my
buddy the broker.’
“So you call your broker and his assistant says,
‘Paul should be getting back today from his third
trip to Vegas this month—how does 3:15 look?’
While you’re sitting in the reception area, your
broker comes flying through the door and says,
‘Man am I on a hot streak! You want a boat? I’ll
build you a boat. I’ll build you a boat that will blow
your socks off. Hey buddy, let’s rock and roll.’ You
look at that boat and say, ‘That’s pretty exciting,
Mr. Broker. With that sail, it looks like I could retire
in the next six months, and I could send my 6-year-
old to college next year. But what if the economic
seas get a little turbulent? With that tiny little hull,
at best I’m seasick and at worst I’m capsized. And
by the way, I can barely see that breath mint you’re
calling a life preserver. I appreciate your help. Let
me go see my buddy the insur-
ance guy.’
“By now you can see this one
coming, Mrs. Jones. You call
the insurance guy and he says,
‘You know it’s funny that you
should call. I had a vision last night and a voice
said, “build it, and she will come.’ And you end up
with this thing. I guess you stick the sail on the life
preserver and hope for the best.
“For over a century, that’s been the problem with
the financial services industry. Many had a very
narrow view of your portfolio and your financial
needs based on limited training and limited access
to products and services. It’s the old saying, Mrs.
Jones: If all you have is a hammer, everything
looks like a nail.
“Well, we work for a firm that’s basically a giant
financial warehouse, which allows me as your
advisor to go into that warehouse and pull out
whatever is necessary and appropriate for you to
build a proportional craft that is designed to help
take you safely and effectively to your destination
over the long haul. Does that make sense as a
methodology, Mrs. Jones?”
This boat analogy can crystallize the This boat analogy can crystallize the importance of a comprehensive wealth importance of a comprehensive wealth management approach to both your management approach to both your prospects and your clients.prospects and your clients.
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Faith versus Feardealing With emotional volatility
Emotional volatility can do far more damage than market volatility. The first step is to establish the philosophical context to address this challenge and then provide the historical framework to support it.
“I believe there are two ways to go through life:
faith or fear.1 I choose faith: faith in the long-term
viability of a free people, in an open society,
under the rule of law, with private property rights,
to improve their condition over the long-term.
Now this has only been true for 6,000 years of
recorded history. However, if it ever ceases to be
true, the last thing you and I
will be worried about is our
portfolio, because we will be
too busy trying to find a local
library to obtain a book on farming...because we
will have reverted to an agrarian society! I believe
it is this reasoned faith and historical perspective
that informs us and guides our long-term wealth
management strategy. We can therefore only work
with clients who make their financial and invest-
ment decisions with the same philosophical and
historical perspective. So Mr. and Mrs. Jones, how
do you make your decisions...faith or fear?”
“Now let me speak to the issue of faith for one
moment. There is a vast difference between faith
and credulity. Let me illustrate. When a pilot
gets into the cockpit they go through a
preflight checklist to minimize as many
knowable risks as possible. Once they
complete that checklist their final act is...
an act of faith. They start that engine with
the knowledge that there are risks that might
lay ahead, that could never be captured on that
checklist. Another pilot hops into the cockpit, takes
the preflight checklist and tosses it into the back
seat, then starts the engine and takes off! That is
an act of credulity...blind faith...and that is not what
we’re talking about here.
“Our checklist is composed of your unique risk
profile, time horizons, specific financial objectives,
current assets and contribution levels. This highly
personalized checklist is combined with historical
rates of return and a highly diversified portfolio,
which is designed to give you the best chance of
achieving all of your financial objectives.”
‘Heck no’pRotecting clients fRom themselves
Explain to clients that there will be times you might say not only “no” but “heck no” because you refuse to allow them to fall into financial ruin.
“Mr. and Mrs. Jones, one of the primary reasons
you are hiring me is to periodically over the next
20–30 years, protect you and your family...by
telling you no. Let me explain. At some point in the
future, the markets may go straight up for three
or four years and you might feel like you missed
out and be tempted to mortgage everything you
own, put your young children to work full-time,
take on an extra job and put all that extra capital
into the market. At that point, I will not only say
‘no,’ but ‘heck no!’ At another point in the future,
the markets may go straight down for two or three
years, and you will come to me and want to sell
compelling conveRsations
Always address the greatest challenge Always address the greatest challenge facing your clientele: emotional volatility.facing your clientele: emotional volatility.
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everything and invest it in tin
cans and a shovel...to help
you bury your assets in your
backyard...and again I will say
not only “no,” but “heck no!”
Because here is the agree-
ment we are making today: I won’t let you do
something I know will cause you to fall into financial
ruin on my watch. If you want to do something like
that, you will have to fire me and find someone else
to do it for you. Does that make sense?”
Over the years, I have had the opportunity to work with many physicians. What always impressed me was not just the deep knowledge and insight they possess, but also the philo-sophical framework of “First, do no harm.” If you wanted to pursue a medical strategy which contravenes your physician’s recommenda-tions, you were free to do so, but not with your physician. They would simply refer your case if you didn’t believe in their strategy.
social prospecting“BReaKing the dance”
We all know someone that we run into regularly at social events, whom we know would be a great client, but we have never “found the right opportunity” to broach the subject and/or you’re waiting for them to approach you (since they obviously know what you do and would say something if they had an interest). Your reluctance is all based on fear: your fear of coming across like a ‘pushy salesperson’ and their fear of being rejected by you. I know what you are thinking...’ Wait a minute, I understand the first one, but the second one...no way!’ (More on that later.) The next time you run into your “social relationship,” find the appropriate time to say the following:
“Mary, you know we run into each other all the time
at these social events and I just want you to know
something...if you ever have any financial or invest-
ment question, or need a second opinion, I would
be happy to make myself and my team available to
you. However, our friendship is far more important
to me than any business relationship we might ever
develop, so I will rely on you to reach out to me, if
and when that need arises. I just want you to know
that the door is always open to you. So with that in
mind, ‘How ‘bout them Cowboys?’”
Again, feel free to play around with the language,
however, just be sure to maintain the two key
concepts of “second opinion” and “the door is
always open to you.” Now back to the fear of being
rejected by you. You must understand how you are
perceived in your community. Many of you have
been extraordinarily successful in an industry that
is both fascinating and mysterious to those on the
outside looking in. People often see you (contrary
to the characterization in the popular press), as
a hybrid of Milton Friedman and Warren Buffett,
and assume you are given a stable of well-heeled,
white-gloved clients to work with.
Consider this true story from an advisor who
learned the hard way:
A number of years ago I was speaking on this very
issue to a group of around 150 financial advisors.
When I concluded, an individual in the back of
the room yelled out, “Where were you six months
ago?” To which I responded, “I don’t remember
what I had for lunch yesterday, so where I was six
months ago is a long-lost memory. Why?” He then
went on to tell the following story:
compelling conveRsations
Any client that consistently disregards your Any client that consistently disregards your advice should be asked to seek their counsel advice should be asked to seek their counsel elsewhere. Ironically, this level of conviction elsewhere. Ironically, this level of conviction often helps you retain that same client.often helps you retain that same client.
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“Six months ago I was playing golf with one of
my best friends from childhood, who was both
my college roommate and the best man at my
wedding. As we approach the first tee he says,
‘Since I’m now contributing to the financial health
of your firm...this round’s on you.’ I of course asked
what he was talking about. He said
that he became a client of my firm a
couple of weeks ago. I said...what?
He said there was an advisor whom
he was impressed with that worked
for my firm and had been talking to
him on and off for the last couple of years; and
that heck, if the firm was good enough for me to
work with over the last 15 years, it should be good
enough for him to help with his investments. After I
recovered from that punch in the gut, I asked him,
‘why hadn’t you approached me?’ he said that
he assumed I was ‘full’ and not taking on any new
clients. If I had this script six months ago I would
more than likely have my best friend (who was
quite wealthy I might add), as a client. I just didn’t
know how to frame the message in such a way that
it didn’t look totally self-serving and as though I
was trading on our friendship. I will never allow this
to happen again!
referral request #1the “ideal client” stRategy
Have this conversation during your annual review or over lunch with clients you wish to replicate.
“Mary, have I ever explained to you how we manage
our practice? Great, let me take a moment and
explain it because it impacts you as a client. At its
essence, every business in the United
States has two fundamental require-
ments if they’re going to survive:
to grow and to serve. Fail at either,
and over time the business will atrophy and die.
One of the greatest challenges is allocating time
and resources appropriately to those two critical
requirements. Many advisors spend 70% of their
time trying to grow and only about 30% of their time
actively engaged in serving their existing clien-
tele. We have reversed those percentages in our
practice, which is one of the many benefits of our
team structure. We spend 70% of our time working
with our existing clientele and only about 30% trying
to grow our practice. I assume that, as a client, you
would like us to continue to work that way? Great!
The only way we have been able to accomplish this
is with the help of our best clients. Those clients
consistently introduce our team to individuals and
families that they believe can benefit from our
services. Now before you give me any names, let
me describe the kind of people that we are best
designed to serve. And frankly Mary, this is the easy
part. If we had 100 clients just like you, not only
would we be one of the most productive practices in
Dallas, we would be one of the happiest; because
our friendship transcends a purely business rela-
tionship. So Mary, I’d like you to think of two or three
people that when you look at them, you feel like
you’re looking into a mirror. Now when I said that...
who just popped into your mind?”
Now, the key to this referral request is that it only works for those clients that you wish to clone. If this is not true, it will be blatantly disingenuous and therefore fail miserably. However, for the right client, whose relationship with you truly transcends a purely business relationship, this can work beautifully for the following reasons:
◆ It’s genuinely flattering
◆ It engages one of the most powerful human instincts, enlightened self-interest. “It is in my interest to keep you off the streets and in front of my portfolio”
◆ The request is specific (when you look at them...) rather than general (who do you know...), which of course brings specific and prequalified people to mind
compelling conveRsations
Remember two key points for Remember two key points for opening the door to a social prospect opening the door to a social prospect without coming across like a without coming across like a desperate salesperson.desperate salesperson.
Change the focus from “Help me, help Change the focus from “Help me, help me” to “Help me, help you.”me” to “Help me, help you.”
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referral request #2niche maRKet stRategy
Evaluate your clientele for possible centers of influence.
One day I was analyzing my practice and noticed
that I was beginning to build a fairly significant
presence in the local medical community, among
doctors generally, and surgeons specifically.
I then asked what turned out to be two very impor-
tant questions about my practice: what is it about
the medical profession in general and surgeons
in particular that is so attractive to me, and how
can I more effectively grow my practice within
this particular niche market? The result of this
thought process resulted in the following script,
which I tried out on a physician that was not only a
good client but a great friend. I scheduled a lunch
meeting the following week under the premise of
wanting to pick his brain regarding the direction
I wanted to take my practice. We met for lunch the
following week and after a few pleasantries I said
the following...
“Hey Bill, as I said on the phone, I stumbled upon
something as I was analyzing my practice which I
need your insight on. I really appreciate your taking
the time to allow me to pick your brain. I noticed
that over 30% of my clientele are physicians, with a
fairly large percentage being surgeons. I knew
I worked with a number of doctors but this number
surprised me. As I thought about why this was
occurring I came up with a couple of interesting
insights. I think the first catalyst was my mom, who
like many mothers hoped her little boy would grow
up one day to be a doctor. To plant that seed she
bought me a book entitled, “The Making of the
Surgeon.” (At this point Bill stopped me and said
that was his favorite book about his profession
and that he too had read it as a young boy, about
a young doctor going through his internship and
residency at the famed Bellevue Hospital in New
York. Dr. Nolan’s journey was so captivating that
I decided that I too would become a surgeon.)
“I later ran up against my lack of affinity for math
and science...but as you know Bill, I never lost my
fascination with and respect for your profession.
My second discovery was how much I enjoyed
working with surgeons temperamentally.
I have discovered over the years I work
best with individuals that are extremely
decisive. People who continually
vacillate and equivocate drive
me to distraction. Surgeons are
temperamentally wired to make
tough decisions, with the best infor-
mation available, and continually move
forward towards the best result. Being wired
that way myself makes us a great fit.
“So with my affinity for both the profession and the
practitioner, I decided that I wanted to consciously
grow my practice much more in this arena. And, as
I thought about the best way to do that, I realized
something: I could never know as much about your
profession as you do Bill. So here’s my question.
If you were me (and you know me and my busi-
ness model as well as anyone), how would you
more consciously and systematically attract more
surgeons into your practice? What would you do?”
compelling conveRsations
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At this point...say nothing...and
let your client talk.
And here’s how the story
ended. My client thought for a
moment, smiled and said, “Well
the first thing I would do is take
me to lunch on Wednesdays.”
I responded somewhat quizzi-
cally, “You know I always enjoy
lunch with you Bill...but why?” He said, “Well, every
Wednesday a number of my colleagues and I meet
for lunch down here. On any given week there could
be anywhere from five to 15 of us sitting around just
shooting the breeze, telling war stories, complaining
about the bureaucracy...basically we’ve become an
informal support group.
“These are exactly the kind of men and women that
fit your profile. So here’s what we should do: the
next Wednesday you find yourself in the neighbor-
hood, give me a heads up and you can join us for
lunch. I’ll simply tell everyone that I was meeting
with my financial advisor and asked you to join us
for lunch. The rest is up to you.” I of course said,
“How does next Wednesday look?” He laughed,
and said that would be great. It went off just as
anticipated. He introduced me and because I was
the new kid on the block, I was both the center of
attention and conversation. At the conclusion of
the first lunch, I was not only invited back, “any time
you’re in the neighborhood,” but to stop by to chat
with a couple of the surgeons at the table on my
next visit.
The bottom line is I never would have consid-ered this approach without the direct insight and guidance of my client.
our investment strategypoint a to point B
People don’t invest their assets to beat an arbitrary index but to go on a journey with specific goals, objectives and critical demarcation points. Help them on this journey and they will beat a path to your door.
“Historically, our investment context has been
subjective: ‘My investment portfolio is better than
their investment portfolio.’
“Because each client has a different starting point
(point A) and different goals and objectives
(point B), our investment philosophy is very
simple: to craft a comprehensive and balanced
investment portfolio designed to take each client
from point A to point B with the greatest degree of
certainty and the least amount of risk necessary
to get them there.
“The simple postage stamp illustrates the one
constant threat we always take into consideration.
In 1974 that postage stamp cost a dime and today
it costs 46 cents, a 460% increase. This is the
greatest threat to reaching your point B. This risk—
inflation—is one of the greatest threats, and we
design your portfolio to combat it.”
compelling conveRsations
Leverage centers of influence. Evaluate your existing practice and determine what are the 3–5 key niche markets that you have cultivated thus far and ask yourself two questions:
◆◆ What is it about that particular industry and/or profession that you find interesting?
◆◆ What is it about the people within that industry and/or profession that you find attractive?
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compelling conveRsations
Historical market Contextexpanding youR client’s peRspective
Without historical context and market history, your client’s north star will be the most recent news broadcast.
How many times in the past few years have you
heard this one? This always happens after a
significant downturn, as the client continues to
navigate the future with a rearview mirror. (This is
a concept borrowed from Nick Murray, one of the
financial industry’s premier speakers, and simply
made visual.)
You should all have a laminated copy of the current
Ibbotson chart showing the markets over the last
century or so. Here’s how to utilize that chart.
You point to it and ask, “Mrs. Jones, has anyone
ever given you the English translation of the
famous Ibbotson chart?” Of course the answer will
be no.
“Historically, all of the downs are temporary,
and historically all of the ups are permanent. We
design a long-term investment strategy for each
of our clients to help them on their unique financial
journey. We do not make draconian investment
decisions each time the market goes up or down.
“Does that make sense as an investment meth-
odology?” It’s important to remind your clients
and prospects that past performance does not
guarantee future results.
market psychologytaKing advantage of fiRe sales
Your greatest challenge as an advisor is not managing your client’s assets but managing their emotions.
“Mrs. Jones, let me take a moment and explain
in simple terms the single greatest challenge
people face when dealing with the stock market.
When there’s a significant markdown in prices at
Nordstrom’s, people are very happy and run into
the store.
“Ironically, when there’s a significant markdown
in prices in the stock market, people are very
unhappy and run out of the store!
“One of my many jobs is to remind you of this
periodically.”
our insurance strategypRepaRing foR tuesday
Our industry historically chases relative performance as if it’s the Holy Grail and too often leaves our client’s entire financial life teetering on the edge of disaster because “we don’t do insurance.”
“Our insurance strategy is very simple. We protect
against the three major contingencies that can
devastate you financially:
“You can die too soon. You can live too long.
Or you could break down on the journey.
12
“Unlike any other investment decision you
make, this one is always on the clock because
everyone has a Monday and Tuesday in their lives
... on Monday you’re insurable and on Tuesday
you’re not. We always make sure to pack our life
preservers before we take your financial craft out
to sea.
“When death or disability occurs and expenses
and/or taxes are demanded there are only
three options:
“You can sell assets (often at fire sale prices)
getting pennies on the dollar.
“You can try to take out a loan (often at the time
you are least credit worthy).
“Or you can settle your liabilities with insurance.
“Only insurance provides liquid capital, on
demand, for pennies on the dollar.”
estate planning 101sell some milK to save the coW
Accumulating a large estate is only half the battle. Preserving it is the other half.
“Let me take a moment and make a very complex
subject easy to understand. Let’s assume for a
moment that you have one cow and a bucket of
milk. Someone comes along and demands that
you give up one of the two. Which would you
relinquish, the cow or the bucket of milk? Right,
obviously you would give up the milk, because with
the cow you can get more milk. You now under-
stand estate planning better than most lawyers.
Let me explain.
“Your estate today is comprised of all of your
assets both tangible and intangible.
“Now what can those assets generate? Right.
Income and capital gains.
“We’re now going to convert (metaphorically) all of
your assets into a giant herd of cattle.
“When you die, let’s say one of the first people to
come and visit your family is an IRS agent. The
agent then tells your family that with your death,
they will have to give up 50 percent of your herd.
“However, you had the foresight to take a little
bit of the milk produced each month, and you
bought a life insurance policy for pennies on the
dollar to satisfy the IRS when the time came. So
you preserved the herd for your children and your
children’s children.”
Disability DiscussionpReseRving the money machine
For most people, a significant loss of income is a terminal loss of lifestyle and legacy.
“Mr. and Mrs. Jones, if you had a machine in your
attic that generated $200,000 of income every
year like clockwork, what would you insure that
machine for in case it broke down or blew a fuse?
Nine out of 10 clients will say, ‘Well I would prob-
ably insure it for $200,000 or whatever it would
take to replace the income.’
“At this point I’d say, ‘I would agree with you. And
what’s ironic, I’m actually talking to that machine
right now! Bob, you currently generate $200,000
a year in income, year after year just like clock-
work. What happens if you break down and that
income ceases?’”
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CA1000.015.0813 October 4, 2013
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Complexity: An explosion of new investment prod-
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evolving client demographics.
Commoditization: With advisors across firm affiliations
using similar approaches, techniques and technologies,
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CEO Advisor Institute will show you how to approach
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Greater collaboration with your clientele and improved
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