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Posted by Purpose Investments on Apr 26th, 2020

The Top Questions Advisors Should Ask Themselves to Prepare for the New Pace of Change

Now is the perfect time for advisors to shift from crisis management to thinking about the long-term success of their staff, clients and businesses. The pace of business change is accelerated by a crisis, and the advisors that adapt fast and have a clear vision of where they want to go in the future will be best positioned to succeed.

As Jeff Gans, CEO, Purpose Advisor Solutions, tells Purpose Financial founder and CEO, Som Seif, “This is not a time for advisors to shy away from change. It’s actually the opposite; it’s a time for advisors to be more aggressive in evaluating their businesses and how they can make them ready for future evolution.”

Listen to their full conversation to learn more about:

  • Why a well-defined value proposition is more important now than ever
  • How to help staff and teams manage their own stress so they can take better care of your clients
  • The top questions advisors should be asking themselves now to prepare their businesses for the new pace of change
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Read the transcript:

Hi everyone. This is Som, founder and CEO of Purpose Financial and Purpose Investments. We’ve finished another week, and I was just reflecting that we’ve been in this stay at home order for more than 6 weeks now. To me, it feels like it’s been a lot shorter.

I don’t know about how you are feeling, but I am also feeling personally more confident these days because I have more clarity today than I have had at any point over the past few weeks.

The hardest part of this has been the uncertainty and the inability to make decisions. I feel like the variability of outcomes, even though it’s still quite wide, has started to shrink. Now we can start to more easily make longer-term or medium-term decisions in our business and in our lives. I feel a lot more confident and stronger.

The markets have been relatively strong in the past few weeks, they haven’t really seen a significant amount of downside since the rally in late-March and early-April. I know a lot of people are feeling much better, but I haven’t bought in quite yet.

I still feel the market has some significant challenges ahead. I don’t like the fact that PE ratios are now back to where they were pre-COVID 19. They were relatively expensive before and now since earnings have been reduced, and prices have come back, we’re seeing PE ratios quite expensive again. I think everyone needs to understand that there are still meaningful risks to be sorted out over the coming months and quarters, and to be cautious.

We could still see some meaningful downsides. I don’t think we’re going to hit the lows we saw in March unless something really falls out from beneath us, but I do feel the markets still have some volatility and downside ahead.

Let’s get to today’s chat. I’ve brought back my friend and colleague, Jeff Gans, CEO of Purpose Advisor Solutions. A few discussions back, I had Jeff join me and he gave us some great insights into the critical ways that advisors can help their clients feel calmer and think longer-term, even during this crisis. We got great feedback on his message and advice.

Right now, investment advisors have a huge opportunity to step up and make their clients feel secure and prepared. There’s a lot more to talk about when it comes to how advisors can keep their clients on track. The first time we talked about the direct advisor to client relationship, but today I want to ask Jeff to talk about how advisors can lead their own businesses and teams.

Jeff, thanks for taking the time to come back and share your thoughts with us again.

Thanks for having me, Som, it’s good to be on and I agree with your perspective. I think we’ve gotten out of the worst of the crisis phase. Advisors are starting to realize that there was a point early on where they had to act fast and address client issues, but that now it’s about thinking long-term about the changing implications in the marketplace. People are starting to realize this won’t be a few weeks or months, this is a longer-term crisis.

When you’re in a moment where it’s very difficult to make decisions, you always go back to the cause. Go back to your group’s mission and values, and ask your teams again “why do we do what we do?” It’s easy to use those as your anchor to make decisions.

Today, most advisors generally get solid training on practice management — how to manage teams, how to run their businesses, how to talk to clients. Very few of those practice management programs are structured around pandemics like what we’ve just seen, and moments where teams are separated.

As advisors manage through this time, what are you hearing about how they are managing their practices?

That’s a great question. I think for many it’s been a real adjustment: Changes to their service model, managing their teams remotely, and being remote themselves. The changes to pace and types of questions they’re getting from clients is very interesting.

For many advisors, this is reinforcing changes they were already going through in their practice with an increased focus on financial planning. Others are questioning if they even want to go through another round of change.

The swirl of news and volatility in the markets is putting pressures on their time and staff, and more than even, ensuring that business processes are well-defined and supported has become important.

Advisors are seeing that a move to broader client wellness, and not just a focus on financial performance, is and will be a key to their own success. The changes in the marketplace and client expectation that they were slowly starting to evolve to have accelerated even faster.

They’ve gone through a process of 4-6 weeks that were crisis, moving from the branch, getting set up at home, dealing with client changes during super-high volatility in the market. Now, it’s about starting to think about what their value proposition looks like going forward.

When you talk about the crisis and all the change in government policy, what are some of the things advisors are doing and how is this impacting them?

Needless to say being more remote has created challenges in communicating and meeting with clients. That’s the first thing, how do they think about their communication model? But to your point the pace of economic and financial strain is increasing for their clients, and the need for updates and contact with them is increasing.

They need to help clients manage the stress of the markets, as we’ve talked about before, but also the stress of the broader crisis. It’s really essential right now, more than ever, to keep them on track for long-term success. For example, clients in the medical profession are worried about their patients and infection; small businesses are worried about the long-term viability of their business and if they can pay staff as this continues.

Advisors have to help clients navigate that. The best advisors that I’ve talked to are focusing on core segments of their client base and delivering the information and support that they need. This where targeting a segment is a distinct advantage because they can tailor the message to that group and focus on the most important information for them.

Other top advisors are bringing in speakers to help their clients gain perspective. Maybe not just on the markets, but someone who can talk about navigating government programs or providing support for how we can think about parenting at home and helping clients think about their broader wellness. This is a really unique time for advisors to establish themselves as an expert and broader resource that can help their clients as they go through a challenge.

The advisors that really think about how they can help their clients with the totality of stress that they’re going through are the ones that can establish long-term relationships and build the long-term success of both their clients and their own businesses.

Last week I talked about how I’m managing my own stress, through meditation and focusing on getting a mental break. Everyone on our teams is dealing with stress, personally and professionally. What are some advisors can use to help guide their staff while also managing their own stress right now?

I think for advisors a lot of it is managing their own stress, but more than even they have to think about their teams. People have had their lives thrown in the air, they might have other things going on, financially and professionally, and also they might not have the tools and technology at hand to manage in the way they had before.

You’ve got an increase in stress, and now they’re out of the branch and they don’t have their traditional support models in place in the same way they did before. So now it becomes important for advisors to act as leaders. It’s a privilege to help their staff through this. They have to spend the time to talk to their staff to help them through this and understand what’s going on, and what’s working and what’s not.

Throughout the years I’ve asked advisors if they have formal one-on-ones where they sit down and focus on an individual staff member and their goals, and it’s not at the level most advisors would want it to be. That’s a bigger issue now, and so really making sure you carve out time to act as a leader in your business is important. Taking the time to listen and understand the issues with your staff, provide guidance, and help them prioritize.

Prioritization is a huge issue in practices right now, as you’ve got lots of clients calling and your staff needs help to get through that. Even things like helping them know how to work from home, how are they handling their kids, do they have parents or others that they need to take care of? All of these things are coming into play and having someone empathetic who they can talk through those issues with is really important.

That’s going to have a down-stream impact on your clients and the service that they get. If you’re helping your staff with their stress, they’re going to be more organized for your clients, and your clients are going to notice that.

Finally, the pandemic has really raised how advisors need to think about contingencies. We never really thought before about how we help if our staff gets sick and how we’d manage through that. How do we help and have our business in a place to deal with crises that happen, because even while we’ve gotten through the worst of this there remains a lot of uncertainty going forward. At least having thought through it will help put you in a place where you’re better positioned for the next time something like this happens.

One of the things I think you do really well as a leader is that you ask what questions you should be asking of yourself. What are the things that you think advisors should be asking themselves right now?

It’s important for advisors to ask themselves if they’re ready to adapt to change. We don’t know what those changes will be, but we know that businesses will evolve. That’s not just financial services — everyone is going through that. Every CEO and business leader is taking the time now to think about what all of this really means. Financial services or otherwise, people need to work through those challenges.

Advisors have to think about how they approach processes, technology and people-support. How can their teams adapt and succeed in a world that is only going to change more quickly? Volatility will only increase digitization, and so there’s a need for a more focused client value proposition. The current environment is illustrating how advisors have to manage client risk and decision making with a greater focus on emotional issues that wasn’t there even two or three years ago. It’s a fundamental shift in what clients are expecting.

I think that advisors should step back and ask themselves if their practice is ready for these trends and nimble enough to evolve as the markets evolve. I don’t mean that in terms of just financial markets, but broader competitive markets overall.

This starts with taking time to assess your value proposition and business model. Everyone should be carving out time to really think about how technology changes will affect them and if they can succeed through that. Winners and losers will become more distinct in tougher markets, and the advisors who have clear visions of where they want to go in the future will be best positioned to succeed.

Once you’ve really thought about what makes you different and defined why clients should want to work with you, then you can start to think about how to set up your business to enable that value proposition. What are the business processes, technology and staff you need to best do that? Those with defined and well-executed models will be the ones that can consolidate their positions, and over the coming years they’ll be set up to grow and acquire new clients in ways they haven’t before.

The biggest challenge for advisors looking to grow is going to be capacity and finding ways to improve your business processes so you can gain that capacity for growth. Whenever I talk to advisors it isn’t a lack of sales skills that keeps them from growing, it’s having the capacity to meet and serve new clients effectively.

Are you staff spending time with your most important clients? Is technology in place to help streamline your business or is it actually an impediment? Do policies and procedures create capacity or reduce it? These are things advisors should really spend time on. They want to look at their investment process, their client acquisition process, and really understand if it’s best positioned to drive success and let them go where they want to do.

This is not a time for advisors to shy away from change. It’s actually the opposite; it’s a time for advisors to be more aggressive in evaluating their business and how they can make it ready for future evolution.

It’s a question we’re asking ourselves everyday about our business and that we’re extremely eager to discuss with advisors. I think it’s incredibly interesting and worth the time and energy for advisors. The equity in their practice is so important, that’s where there’s huge opportunity and value, and so spending the time to think about how they’re positioned for the future is important.

I couldn’t agree with you more. I believe that any trend that is going on right now has also been going for years, it just accelerates in moments like this. Whether it’s in our industry or another, we all have to understand that now is the time to pay attention to these trends because coming out of this they’ll only be faster.