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Kitces & Carl Ep 12: Communicating With Clients To Bring Them Under The Cone Of Trust

July 18, 2019 07:03 am 3 Comments CATEGORY: Client Trust & Communication Kitces & Carl Podcast

Although “real” (i.e., holistic and comprehensive) financial planning encompasses far more than “just” investments, for better or worse, clients look to their financial advisors as people who are (at least) more knowledgeable than your average bear in regard to “the market.” Because, while providing advice on a client’s portfolio is just one part of the ongoing financial planning process, it’s natural for clients to worry about their investments (or more generally, their assets) and look to their advisors for reassurance that their life savings is being looked after… especially when the financial media consistently bombards them with clickbaity doom-and-gloom headlines. Which, in turn, leads to the question: should advisors send their clients market commentary to demonstrate the advisor’s expertise and try to soothe their nerves… or does doing so just risk making them focus even more on investment issues?

For our 12th episode of Kitces & Carl, Michael Kitces and financial advisor communication expert Carl Richards sit down to discuss if sending market commentary to clients actually helps solve any problems (or if it’s just a relic of a product-centric industry), what sorts of clients benefit the most from proactive communication (and why), and ultimately, why sending investment market commentary to clients may be a good thing to do… even if the majority of your clients never even read it!

As a starting point, though, it’s important identify the problem that advisors are really trying to solve by sending market commentary to clients, and which types of clients need such a solution. Because the reality is that, no matter what advisors send, those clients who are true delegators (and hired an advisor in the first place so they didn’t have to be bothered with keeping track of their investments) won’t be interested. However, many clients – even those who delegated their portoflios – do feel like they need to “check in,” at least from time to time, to be reassured that they made the right decision when they hired the advisor to tend to their life savings. Which often manifests itself by the client asking about current market affairs… not because they really care, but because they want to know that their advisor is really “on top of things.” And not only is it a good idea to make sure the advisor can answer their questions, but regularly sending out commentary is a good way to proactively address whatever the topic du jour may be once (rather than fielding potentially dozens of identical phone calls on the same investment concern).

Meanwhile, as client relationships mature over time, meetings naturally become less frequent (as trust levels have developed, and most of the early planning heavy lifting has already been done), so simply staying in touch even by sending out bulk emails with the advisor’s “commentary” can help prevent the dreaded transfer paperwork from landing in the inbox. As no matter how much we’d like to think we’ve “trained” our clients to stay focused on the big picture and ignore short-term market fluctuations, the reality is that sudden spikes in volatility will cause clients’ loss aversion instincts to perk up.

Ultimately, though, the key point is simply to realize communicating with clients outside of their regular meeting rotation matters, and sending them some form of investment commentary (whether it be from a third party or written in-house) is a great way of providing reassurance that you are versed in whatever may be going on in the market at any given time. Even if you always wind up with the same conclusion, which is that your clients are properly allocated and are served best by sticking with the plan you’ve developed with them.

Kitces & Carl Ep 11: What Do You Call Yourself? Planner, Advisor, Industry, Profession

July 4, 2019 07:05 am 4 Comments CATEGORY: Kitces & Carl Podcast Planning Profession

Outside of telling someone that you sell used cars, there aren’t many ways nowadays to shut down a conversation faster saying that you’re a financial advisor. Because, after years of being constantly bombarded by headline after headline about the plethora of misdeeds committed by so-called financial advisors, combined with so many personal experiences with high-pressure sales tactics of unscrupulous salespeople, the public’s trust levels are understandably low.

And while other professions have specific education and ethical requirements (e.g., doctors, lawyers, and accountants), sadly, there are no rules around whether or not someone can call themselves a financial advisor (or any derivation thereof). Which only makes it that much more challenging for “real” financial advisors, who not only have to differentiate themselves from all the other advisors that claim to offer comprehensive financial planning, but also have to separate themselves from literally every other person who wants to call themselves a financial/investment/wealth advisor/consultant/planner… whether or not those jobs have anything to do with the actual delivery of financial advice. Which, in turn, leads to the question: what should financial advisors call themselves… without having to start making excuses immediately afterward?

In our eleventh episode of “Kitces & Carl”, Michael Kitces and financial advisor communication expert Carl Richards sit down to discuss the roots of various industry titles, why you might want to break the mold and call yourself something completely different (or not), and why the choice ultimately boils down to whether or not what you call yourself resonates with your target clientele.

From a historical perspective, the title of financial advisor originated when the industry was still very product-focused, as a way to differentiate from ‘just’ salespeople with a more consultative approach, as comprehensive financial plans themselves were originally a vehicle through which advisors could recommend (and then sell) their products. As the industry evolved, however, titles such as “wealth manager”, “investment consultant”, and “financial planner” came into the mix, as more advisors and their firms sought out new titles to differentiate and stand out from the crowd, and to sound more “high end” as advisory firms themselves have moved further up-market.

Understandably, then, many professionals in the industry would prefer stricter regulation around who can and can not call themselves any number of titles that imply that they’re providing financial advice (until/unless they’re actually in the business of advice and not product sales). Except that efforts to do just that have simply fallen flat given the vast resources and lobbying might of an industry still dominated by companies that manufacture and distribute financial products.

In the absence of any successful title reform, some advisors have decided to go with whatever standard title that most closely describes what they actually do and own it the best they can. Meanwhile, in an effort to break the proverbial mold, some advisors, particularly those with well-defined niches, have taken it a step further and adopted more creative titles that help them connect with the target audience that they want to reach (think “financial architect” or “financial physician”).

Ultimately, the key point is to make sure that your title accurately reflects the services that you provide, doesn’t get you into any regulatory trouble, and resonates with your target market. Because, in the end, what matters most isn’t what you call yourself, it’s that you’re comfortable and confident when you say it… and if you can invite people into the conversation along the way, then all the better!

Kitces & Carl Ep 10: Transitioning Long-Standing Clients To Create Room To Grow

June 20, 2019 07:07 am 4 Comments CATEGORY: Client Trust & Communication Kitces & Carl Podcast

The perennial problem facing financial advisors throughout their careers (and especially at the beginning) is simply getting in front of prospective clients… and then convincing them to actually hire you and pay for your great advice. However, for those advisors who eventually reach the point where their business is sustainable, and have clients who understand the value that a “real” financial advisor brings to the table, the problem can easily morph from not having enough clients to keep the lights on… to having too many clients to be able to serve effectively (and no remaining capacity to add more and grow further).

Because the reality is that we can only do so much before our calendars (and our brains) reach their limits. It’s at that point where the most obvious answer is to start hiring some team members to help. But that solution can create all sorts of new challenges, and there are plenty of advisors aren’t interested in all the other stuff that comes along with hiring and managing employees… and find that they’re stuck as a result. They don’t have room for more clients, and they’re not interested in hiring and managing employees to create more capacity. And so the question then becomes: how can you, as a financial advisor, create room in your practice to be able to start growing again, especially if you do not want to increase your staff headcount (and management responsibilities) in the process?

In our tenth episode of “Kitces & Carl”, Michael Kitces and financial advisor communication expert Carl Richards sit down to discuss some reasons you may need to start transitioning long-standing clients (some of whom may have given you a shot early on when no one else would, but consequently pay you far less than what it takes to service them) to make room so you can help others, some practical steps for communicating such a transition to those clients, and why arguably it’s your duty to do so… in order to ensure that all of your clients are getting the level of service they deserve.

As a starting point, it’s important to recognize that creating more capacity in your firm by transitioning away some long-standing clients isn’t about just booting those clients to the curb for the sole purpose of finding other, more profitable clients. But the reality is that the clients who you’ve “outgrown” would probably be better served somewhere else anyway. Or put more simply, your “C” clients are almost always someone else’s “A” clients. Which means transitioning them can be win-win-win for you (creating capacity), for the client (receiving better service as an A client), and for the other advisor (who may be thrilled to grow with the clients that aren’t a good fit for you anyway now!).

That still doesn’t solve the problem, though, of communicating this to your clients, some of whom might well have their feelings hurt by your decision. Practical ways of effecting this transition include: raising your minimum fees (in order to serve your clients well, and do all the things you do for them through the year) and letting the client decide for themselves if they value your (higher-fee) advice enough to continue on as your client, sitting down and simply telling them that you’re changing the direction of the firm and (with their blessing) would like to facilitate their transition to another advisor who’ll be a great fit for them, or simply telling them that you’ve been examining all of the relationships in your practice and feel that you’re simply not a good fit for them at this point in their lives.

Because at the end of the day, you are running an advisory business, and that’s nothing to be ashamed of. Taking on the responsibility of advising clients on the best way for them to manage, grow, and use their life savings is the very mission of that business, and ultimately you have to ensure that the direction of your practice is aligned with what your clients need… and if it’s not, it’s your job to tell them.

Kitces & Carl Ep 9: How Do You Optimize Your Practice To Maximize Your Happiness As A Financial Advisor?

June 6, 2019 08:03 am 6 Comments CATEGORY: Kitces & Carl Podcast Personal/Career Development

Generally speaking, there are two types of unhappy financial advisors. One is the advisor who is having trouble just making it in the business in the first place, who is struggling to find enough clients to make ends meet. The other type is the advisor who might have all the outward markers of success (clients, revenue, profits) but has reached a point in their career where they are supremely unhappy… and often end out feeling trapped, too.

Because, as is often the case for advisors practicing under the recurring revenue AUM model, clients tend to stick around. And while that is undoubtedly a great thing, it can also end out being a double-edged sword, and lead to “practice creep”... where, after a certain number of years of building a book of business, an independent advisor with an otherwise solid lifestyle practice may grow past their personal capacity and find that they have accumulated more clients than they can service by themselves. Which then forces the advisor to hire some staff to help. And (again) while that’s not a bad thing, the advisor can ultimately reach a point where they’re the CEO of a small advisory firm and are spending most of their time managing employees rather than doing what they set out to do in the first place, which was to serve their clients! Which ultimately leads to the question: How can advisors avoid this “accidental business owner” trap, and instead build a business that is optimized to maximize your own happiness?

In our ninth episode of “Kitces & Carl”, Michael Kitces and financial advisor communication guru Carl Richards sit down to discuss why some advisors wind up being unhappy in an otherwise “successful” practice, how some advisors have maximized their happiness by being intentional about building their business the way they want - or even “right-sizing” the advisory practice if necessary – and a few actionable ideas for advisors to do the same.

One strategy that has worked well for advisors is to figure out what outcome you’re trying to reach in the first place (whether that be a certain level of income, or amount of time you have to spend with the people you care most about) and make that the primary thing that you measure in the business. After all, our natural tendency is to direct our efforts to improve whatever we see measured and look at on a daily basis… so it a good idea to make sure that we’re measuring the things that really mean the most to us. Whether that’s the number of clients or amount of revenue in the business… or the number of hours we work, the number of hours we don’t work, or the vacation days we take.

And for those advisors who have already reached the point where they’re feeling unhappy with their current business structure and need to figure out how to get off the proverbial rollercoaster, it’s essential to understand that, although we have a duty to our clients, we also have a duty to ourselves as well. Because if we are absolutely miserable with whatever situation that we are in, we will eventually (and inevitably) experience a negative impact not only for ourselves, but for our clients as well. Which means it’s our responsibility and even our obligation to try to fix it.

So, if you’ve gotten to the point where you’re feeling squeezed by practice creep – unhappy with the business despite it being outwardly financially successful – or if you simply want to avoid that in the first place, then remember that it’s perfectly okay to give yourself permission to build your business in a way that actually makes you happy. And measure and optimize for whatever really matters most to you!

Kitces & Carl Ep 8: What Would You Do With Your Time If You COULD Be More Productive As A Financial Advisor?

May 23, 2019 07:03 am 4 Comments CATEGORY: Kitces & Carl Podcast Personal/Career Development

Last fall, Kitces Research published its first study measuring how financial advisors actually spend their time. The analysis revealed that advisors in the aggregate work an average of about 43 hours per week… yet when we asked about the time they spend on all the various task that they have to accomplish during the week, the total came out to a whopping 52 hours, suggesting that perhaps we’re far more buried in our work than we realize. Yet that shouldn’t be terribly surprising, since humans tend to be notoriously bad about making aggregate estimates, like the amount of time we spend looking at our phones or the number of calories we take in on any given day.

In our eighth episode of “Kitces & Carl”, Michael Kitces and financial advisor communication guru Carl Richards sit down to discuss how financial advisors are spending their time, strategies that can help advisors focus more on what they’re best at… and what might be accomplished by increasing your business (and personal) efficiency in the first place.

For instance, despite being a business that’s all about serving clients, a deep dive into the data reveals that advisors actually only spend about 20% of the time meeting with clients. Which could mean that, despite all the great technology that’s come online in recent years, it hasn’t accomplished its most important task: to actually reduce the time we spend on all the other things that we do when we aren’t sitting across the desk from our clients. As in practice, beyond the 20%-time in client meetings, advisors still spend significant time on such activities as meeting prep and follow-up (30%), business development (20%), and investment management (11%)… with the remaining time being spent on operations, professional development, and various administrative duties.

Of course, there are some challenges around spending more than 20% of your time with clients (since we tend to reach our mental capacity once we’re serving somewhere between 100-150 clients in the first place, and clients will only meet “so many” times per year), there’s still an opportunity to get better at spending more time at the things that only we can do, and handing off the remaining responsibilities for those tasks that don’t need our unique expertise, to begin with. Because the reality is that the chances that we’re really good at all those “other” things that take up the majority of our time as advisors are about zero anyway! In fact, the data shows that when advisors have someone they can delegate tasks to (e.g., a paraplanner or associate advisor), they have (on average) 64% more clients and have 80% more take-home pay than advisors that don’t… simply due to the fact that they end out using the extra time to spend with more clients!

Ultimately, though, we do still need to ask ourselves, “to what end?” Do we really want to become so efficient and have so many clients that we can’t even remember who they are when we meet with them? Or instead, is perhaps the point of greater efficiency less about doing more stuff, and more about spending time on things that are important to us instead? In other words, we spend so much energy and time helping our clients find their “why” and focus on what matters most to them… so maybe we should do the same for ourselves, too.

And so, the question becomes: if you’re spending 20% of your time as an advisor serving your clients, what would you do if you could free up more of the other 80%?

Kitces & Carl Ep 07: Authenticity Vs. Professional Credibility And Admitting Your Own Financial Sins

May 16, 2019 07:03 am 1 Comment CATEGORY: Kitces & Carl Podcast Personal/Career Development

As a financial advisor, credibility is crucial to the advisor-client relationship; after all, if clients don’t believe the advisor’s advice is credible, then they’re not likely to follow through on it (and/or may not be willing to hire the advisor in the first place). Which, similar to professionals in other knowledge-based fields, often results in feeling the pressure to always have all the answers, and always have your own financial house in order… out of fear that a client may not trust and find credible the advice of an advisor who has made poor financial decisions themselves and hasn’t followed their own advice. Except the reality is that financial advisors are human beings too, we can all make mistakes, and in practice, it’s often our prior negative financial experiences as advisors that actually lead us to want to help others with their money in the first place. Which can actually make the financial advisor more authentic and relatable to clients who are experiencing similar challenges themselves!

In our seventh episode of “Kitces & Carl”, Michael Kitces and financial advisor communication guru Carl Richards sit down to debunk some long-standing myths around what it really means to be a “credible” financial advisor, why authentically owning up to your personal financial mistakes actually helps build trust and credibility (and might even end up helping you gain new clients), and why being relatable as a human being (who makes mistakes from time to time) may be one of the more important traits you can bring to the table as a financial advisor.

As a professional (whose fruits of that profession literally keep the lights powered on), one of the hardest things to do show your own vulnerability by admitting that you’ve made poor financial decisions yourself in the past, and/or don’t have all the answers to every question or problem. But the reality is that, if we can own up to our own poor financial decisions and mistakes that we’ve made along the way, both to ourselves and to our clients, it puts us in a much better position to meet our clients with empathy. Which in turn allows us to be less judgmental (and for clients themselves to feel less judged), and in a much better position to not only help them with the technical aspects of implementing the sound financial advice we give them, but to support their financial wellness as well (which is our ultimate goal in the end).

Because to achieve that goal and get clients to be honest with us, and themselves, about what they really value so that we can help them apply their capital towards what’s most important to them, it’s crucial to make sure that clients can relate to us as advisors. Which often means trying to bring yourself off the “advisor pedestal”, and meeting your clients where they are. Getting clients to talk openly about the financial mistakes they’ve made isn’t easy, but if you are open to sharing your own story, then you can help make them feel more comfortable by making it clear that you aren’t sitting there judging them (because you’ve “been there”, too).

And while there is such a thing as “over-sharing”, the key point is that authentically and openly admitting that you don’t know everything, and don’t always make optimal financial decisions, can ultimately help the people that you want to serve, and by extension, strengthen you own credibility as a professional in the process. Because all that fear that you have about feeling judged if you own up to your mistakes is the exact fear that every client who comes into your office has about being judged themselves by someone who they (wrongly) think has all the answers.

Kitces & Carl Ep 06: Building Resiliency For The Stress Of Being A Financial Advisor

April 25, 2019 10:41 am 7 Comments CATEGORY: Kitces & Carl Podcast Personal/Career Development

A big part of a financial advisor’s job is to be a release valve for their clients’ financial anxieties… it’s an essential aspect of how we add value in helping them manage their “behavior gap” and avoid making poor financial decisions for themselves. Because unfortunately, no matter how well we prepare our clients conceptually about the importance of keeping an even keel during the inevitable bouts of market volatility (or worse), the concept of “market risk” (and how clients will react to it) often feels purely theoretical until it actually happens… or as Mike Tyson so eloquently put it, “Everyone has a plan until they get punched in the mouth.”

And when market turmoil happens, it creates a huge amount of stress for clients, who oftentimes will then turn towards their advisors as they look for someone to blame. But while that can serve as the foundation for memorable “war stories” that advisors can bond over at industry events, the dynamic that isn’t discussed nearly as much is mental and emotional toll we as advisors face ourselves in serving our clients during severe market corrections or even deep bear markets. In fact, in the aftermath of the financial crisis, one study found that advisors ended out experiencing symptoms also associated with post-traumatic stress disorder! Which, in turn, raises the question: How can advisors prepare themselves mentally and emotionally to help not only their clients, but also themselves, cope with the stresses inherent in serving clients through their own times of stress?

In our sixth episode of “Kitces & Carl”, Michael Kitces and financial advisor communication guru Carl Richards sit down to discuss proactive steps advisors can take to prepare themselves to deal with and manage the stresses inherent in being a financial planning professional, some common but less-well-known sources of advisor stress, and how a subtle shift in mindset can help advisors make self-care a priority.

As a starting point, the best way to put yourself in a place where you’re able to deal effectively with the inevitability of stress is self-care, which only gets more important as we age and includes (among other things) diet, exercise, and rest (both physical and mental). Meanwhile, as an “accountability partner” who’s there to support and guide clients towards reaching their goals, you also need to have a support system that you can reach out to when things get tough, including family, colleagues, a mentor, and other industry peers. Because, just as your clients need someone they can vent to when it seems like everything is falling apart around them, you also need to have a group of folks you can turn to when you need to express your frustrations and anxiety. It also may mean allocating a part of your personal budget towards hiring your own “accountability partners” to help you stay (get?) fit, eat right, and establish a healthy work-life balance… which will almost certainly end out providing a positive ROI for you both personally and professionally.

Ultimately, the key point is simply to realize that as a skilled financial advisor, you are still no good to your family, friends, and colleagues if you’re stressed and unhealthy yourself, and you certainly won’t be able to provide the level of service that your clients expect… and deserve. And in order to do that, perhaps a smart approach might be to stop treating things like rest and recreation as a “reward” for working hard, and instead start thinking about those things as a prerequisite (that needs to be actively scheduled for on your calendar) for doing good work in the first place!

Kitces & Carl Ep 05: Do Clients Really Value Getting Help Managing Their Behavior Gap

April 11, 2019 07:03 am 4 Comments CATEGORY: Client Trust & Communication Kitces & Carl Podcast

One persistent struggle for financial advisors has been to find ways to communicate the value that they bring to the table. Fortunately, several recent studies have tried to quantify that value - down to a specific number of basis points annually – and have generally shown that financial advisors can more than cover their advisory fees with a wide range of value-added benefits… most significantly, by helping clients overcome the dreaded “behavior gap” that exists between the returns of the market, and the (lesser) returns that investors would otherwise realize on their own due to their behavioral biases.

Unfortunately, however, a recent Morningstar survey of almost 700 individual investors found that the advisor’s ability to help “control their emotions” is perceived as the least valuable service an advisor can provide from the consumer’s perspective… even as it’s the most valuable benefit from financial advisors according to the advisor research! Yet this ironic gap in the value of getting help with the behavior gap actually makes sense, since investors themselves often don’t see that their behaviors are a problem in the first place.

Nonetheless, this gap between what the research suggests is a benefit of working with a financial advisor, and what consumers state they actually value, raises the question: Does the real gap lie between market and investor returns, or between what investors actually value and what advisors think they value?

In our fifth episode of “Kitces & Carl”, Michael Kitces and financial advisor communication guru Carl Richards sit down to discuss the question of whether advisors should even bother trying to communicate the value they provide when helping clients manage their “behavior gap”, why attempting to convince prospects that you can help them manage their behaviors is perhaps an uphill battle, and how maybe the best way to overcome the behavior gap (and the perceived value of getting help with the behavior gap) is by shifting a client’s perspective altogether.

The starting point is to realize that most clients don’t initially seek an advisor’s help because they suddenly decide they need help clarifying their life goals or making better decisions at key junctures; they come to an advisor first and foremost because they have an acute pain point they need help with. And while for some new clients, that pain point may be due to devastating decisions in the depths bear market - which then prompts them seek out an advisor because they (or more often their spouse) realize that they do need guidance when it matters most – for many consumers, the pain point that drives them to a financial advisor is about some other non-portfolio issue in the first place.

Furthermore, even if many people do undermine themselves by making poorly timed decisions, it’s nearly impossible to “sell it” as a benefit of entering into an advisory relationship, since a client will first have to admit to themselves that they are so bad at making financial decisions that they have no other choice than to hand the task off to someone else! And denial about our own failings – even if it’s true – can be quite powerful. Which is why, in general, trying to position yourself as someone who can help clients “control their emotions” or change their “bad” behaviors is challenging at best. Which is not to say that managing those clients’ behaviors isn’t beneficial… it simply means that people who are in most need of that help will likely have a hard time admitting it.

Ultimately, the bottom line is that advisors do truly add value for their clients by managing the “behavior gap”… but selling that as a key feature of the relationship probably isn’t going to get most advisors very far. Instead, the best way to help clients close that gap is by connecting their use of their capital with what they say is important to them in the first place. And the only way to help a client down that path is to absorb with empathy where they are presently, and then gradually help them understand continuing to make them same decisions that they’ve made in the past won’t get them different results. Which creates the real opportunity for financial advisors to demonstrate their value!

Kitces & Carl Ep 04: Does Social Media Really Matter For Financial Advisors

March 28, 2019 07:07 am 0 Comments CATEGORY: Kitces & Carl Podcast Marketing

Despite the recent public scrutiny of various social media platforms, the number of active users on mediums like Twitter, Facebook, LinkedIn, and Instagram continues to grow exponentially, making social media an increasingly attractive channel for financial advisors to not only reach prospective clients and centers of influence, but to nurture relationships with existing clients as well. Yet, it’s also incredibly easy to spend a lot of time (and potentially money) on social media, only to find that your efforts have been for naught, leading many to wonder if social media really matters for financial advisors at all.

In our fourth episode of “Kitces & Carl”, Michael Kitces and financial advisor communication guru Carl Richards sit down to discuss the question of the extent to which financial advisors should or “have to” participate in social media (or not), why it might be a worthwhile endeavor if done correctly, some ideas that advisors can use immediately to get more out of their social media efforts, and why, ultimately, using social media successfully is ultimately about a series of “micro interactions” to better connect with other individuals.

The first question to consider is whether or not it’s absolutely essential for financial advisors to build a social media presence to begin with. As while there are numerous stories of advisors landing multi-million-dollar clients solely through social media, the reality is that the only non-negotiable virtual presence that every advisor must have is a modern, professional-looking website (not a social media account). Because, in a world where consumers are far savvier and more informed than they’ve ever been, the one thing you can count on is that a prospective client will have done their due diligence on you before they decide to book that first meeting, and there’s no better way to throw ice water on a warm prospect than an outdated website… or one that prominently features a sailboat, lighthouse, or long, winding road tapering off towards the horizon, that doesn’t really connect with prospects today.

Beyond that, though, for financial advisors, the task of getting in front of prospective clients has always been primarily a social endeavor, and at its core, social media is an avenue for humans to communicate and interact with each other. Which means that social media can not only augment and amplify how you present yourself to the public, but it can be a particularly effective means of connecting with others… especially if you have yet to crack the code of networking events or other organized social activities. In other words, whether face-to-face or through “the interwebs”, authentic communication is the best pathway for developing relationships, and social media is simply one of many channels to do so.

And when it comes to social media, a side benefit is that even those you’re not interacting with can see how you communicate with others, and can form their own opinions about you and decide whether or not they want to learn more about you and your services. Because one of the most powerful aspects of developing a social media presence is that it allows you to reach a much larger audience than would be possible by concentrating solely on in-person events. Moreover, social media can also open avenues of access to centers of influence and other people in your target market that you might not have access to otherwise.

Ultimately, though, the key point is to recognize that developing a quality social media presence takes time. There are no overnight successes, and you won’t miraculously have a line of people who want to hire you banging on your door because you sent out a tweet or few, but (as is the case when helping clients build their own solid financial foundations) small actions taken repeatedly can still lead to massive changes. Or stated more simply: repeated authentic interactions compound over time, whether in-person or via social media. In other words, regardless of the way in which you make it happen, in the end, communicating authentically with others is the most reliable and effective way for any financial advisor to build a successful practice. Social media just happens to be a particularly efficient channel to do so. At least for some advisors.

Kitces & Carl Ep 03: The Importance Of Likability As A Financial Advisor

February 28, 2019 10:51 am 0 Comments CATEGORY: Kitces & Carl Podcast Personal/Career Development

In a world where it can take as few as 50 great clients to build a successful advisory practice, many seasoned advisors have been able to build a business around a small group of clients who they like to work with (and who like them in return). Yet advisors who are at an earlier stage of their careers don’t typically have the luxury of being so selective in picking and choosing the clients who they want to work with and like, while instead there’s even more pressure on the advisor to be “likeable” in the first place; as the common aphorism goes, a client has to first “like you” before they’ll decide to trust you and hire you. Accordingly, then question then becomes, to what extent does likeability really matter in bringing on new clients and building relationships with existing clients, and conversely, how far should you go to come across as “likeable” to clients (even if it requires doing something that isn’t otherwise natural), and how common is it for clients to fire their advisors because they are “unlikable”?

In our third episode of “Kitces & Carl”, Michael Kitces and financial advisor communication guru Carl Richards sit down to discuss the question of how important it is to be “likeable” as a financial advisor, why being your “authentic self” when it comes to communicating and interacting with clients might matter more, and why it’s important for newer advisors to avoid sending mixed signals to clients when trying to differentiate themselves.

Foregoing the (remarkably intriguing) possibility of developing a practice around the “curmudgeon” niche, the reality is that those who self-select into a career of financial advice often do so out of a desire to make a difference in people’s lives, which necessitates having some level of competency in interacting with others. Though beyond just being “likeable,” being able to connect with others is also about your style, behavior, and even your appearance… all of which might be adjusted in order to be more appealing to potential clients.

Because the reality is that it is important to tailor the way you communicate with and present information to various clients, as not all clients have the same preferences in how they want to receive advice in the first place (i.e., some clients might “only” want a big-picture summary, while others love to delve into all the gritty details).

Still, though, that doesn’t necessarily mean advisors should try to be something they’re not… and in fact, the more you try to be something you’re not, the easier it is to come off as inauthentic, instead. Rather, the key to finding people who like you and want to do business with you is by being your “authentic self,” and recognizing that, while not everyone may respond well to you, some will… and those are the people who you ultimately want to work with anyway!

On the other hand, “being your true self” doesn’t mean it’s a good idea to totally throw social conventions to the wind. Be aware that, particularly when clients come in, they expect certain things of a “professional”, and if you stray too far in an effort to try to stand out from other advisors (or just be your authentic self), then you can easily create uncertainty in the client’s mind as to whether or not you have the professionalism and competency to help them solve whatever problem it is that brought them to you in the first place.

Ultimately, the key point is that likability is important, to the extent that you need to provide great service to your clients in a way that works well for them. But, especially for newer advisors, it’s equally important to not create more barriers for yourself being inauthentic, or by trying to differentiate yourself in a way that is off-putting to clients. Because the differentiator that matters the most resides not in how you present yourself (whether by manner or dress), but in the questions you ask and the experience you create for clients… effectively differentiating on the value delivered to clients themselves, and not just by the advisor’s own style and likeability!

Kitces & Carl Ep 12: Communicating With Clients To Bring Them Under The Cone Of Trust

Kitces & Carl Ep 11: What Do You Call Yourself? Planner, Advisor, Industry, Profession

Kitces & Carl Ep 10: Transitioning Long-Standing Clients To Create Room To Grow

Kitces & Carl Ep 9: How Do You Optimize Your Practice To Maximize Your Happiness As A Financial Advisor?

Kitces & Carl Ep 8: What Would You Do With Your Time If You COULD Be More Productive As A Financial Advisor?

Kitces & Carl Ep 07: Authenticity Vs. Professional Credibility And Admitting Your Own Financial Sins

Kitces & Carl Ep 06: Building Resiliency For The Stress Of Being A Financial Advisor

Kitces & Carl Ep 05: Do Clients Really Value Getting Help Managing Their Behavior Gap

Kitces & Carl Ep 04: Does Social Media Really Matter For Financial Advisors

Kitces & Carl Ep 03: The Importance Of Likability As A Financial Advisor

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