America’s top advisors share 6 key ways to reach the peak

America's Best Advisors

America’s top advisors gathered in Scottsdale, AZ on March 21 – 23 for the annual Barron’s Top Independent Advisors Summit. I held a roundtable discussion with three top advisors who attended the event and our goal was to pull out the key takeaways from America’s top advisors and deliver Actionable Intelligence to you.

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The roundtable participants were Jack Davis of Navigation Retirement Group, and Bill Keen and Matt Wilson of Keen Wealth Advisors.

This is part I of a two-part podcast. Click here to read/listen to part II.

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6 Key Takeaways From America’s Top Advisors

1. Diversify your human capital.

As an industry we need to do a better job diversifying our human capital along three lines: by gender, by generation, and by ethnicity. Ironically, the panel recommending this advice was made up of five middle-aged white men and that fact was not lost on the audience.

There’s no question that this type of diversity will pay dividends both in top and bottom-line growth.

In an earlier Between Now and Success podcast with CFP Board Consumer Advocate Eleanor Blayney, we discussed the importance of adding more women to your team and how to hire and train them.  Women make great advisors, they add a positive element to team dynamics, and many women clients like working with women advisors.

Eleanor Blayney on how to hire and train women financial advisors

From a generational standpoint, consider having Gen X, Gen Y, and Boomer advisors so you can better understand the needs of each generation and ensure your firm has ample choice for succession planning.

While it’s easy to paint each generation into a box and label them, the fact is there are differences within each generation. Not all Boomers were hippies in the 60s and not all millennials of today are hipsters. And remember, the hippies of the 60s grew up, got married, and became respectable members of society (most of them). Today’s millennials will definitely change society, too, but they still have the same human desires to develop close relationships, be self-sustaining, and do something meaningful.

Fidelity Investments put together an excellent program on strategies to cultivate the next generation of leaders. Click here to review their research and listen to the three podcasts I hosted for Fidelity where I interviewed three young leaders as they describe what worked and didn’t work on their journey in the business.

2. Focus on planning, that’s where you can really add alpha.

I’ve been saying for a long time now that advisors should ramp up their planning services and do everything they can to make planning a service that clients will pay dearly for. You can’t differentiate your business by generating money management alpha but you can through planning. Plus, firms such as Schwab are now giving away money management for free through Schwab Intelligent Portfolios while Vanguard is down to just 30bps for money management and a call center advisor.

See below for the podcast I did with Phil Cunningham, CEO of financial planning software company Advicent, where we talked in depth about the future of financial planning. Don’t miss this episode as we cover a broad range of topics that are pertinent to your future. You can download the full transcript here.

Traditional financial planning will become extinct and replaced by this

David Canter of Fidelity moderated this session on the evolution of the RIA model where the idea of focusing on planning came up. You can listen to an earlier podcast I did with Canter where we talked about how to become a marketing machine by clicking below.

David Canter on becoming a marketing machine

Jon Jones of Brighton Jones was on Canter’s panel at the conference and said his firm’s mission statement “is to help our clients, colleagues and community members live richer lives.” Jones said his firm takes this mission statement very seriously and, “It drives our business decisions as we challenge ourselves to live it more fully each day.”

Further, from his website, the firm says, “We have been finding more and more research that suggests many of the components of living a richer life, such as resilience, contentment, joy, gratefulness, kindness and compassion, are actually skills. As renowned neuroscientist Richie Davidson put it recently, ‘Well-being is fundamentally no different than learning to play the cello.’ We think this is an extraordinarily powerful proposition and it suggests to us there are ways to systematically learn and develop the skills that will help us to live richer lives and ultimately teach those skills to others.’”

Now think about what Jones is NOT saying here. He’s not talking about investing. Instead, he’s talking about all the non-investment related stuff that helps people live richer lives. Yes, they do manage money but it’s simply a tool to help clients live a richer life. Take a cue from Jones—focus on helping your clients live more satisfying and richer lives.

As you shift from managing money to managing lives, you also need to reimagine the client experience. See here for four areas in your business that are ripe for reimagining.

Steve Lockshin was also on the panel moderated by Canter and you can listen to my podcast with Lockshin where we discussed his amazing career and the lessons he learned along the way to becoming a serial entrepreneur and the #1 independent financial advisor in the U.S. in 2011. Steve’s new RIA, Advice Period, stands out from the crowd as he uses a robo advisor, charges AUM and flat fees, and for accounts over $10 million, simply charges based on the complexity of the case. In fact, Lockshin is on the record as saying, “Considered over multiple generations, the capital preserved through ‘estate tax alpha’ will almost undoubtedly dwarf long-term market gains.” In other words, focus on planning!

America’s top advisors are clearly focusing on planning.

#1 independent advisor Steve Lockshin on his unusual path to success

3. Systematize the discovery process and hold your first prospect meeting over the phone.

Now, this might not work for everybody but Jeff Belkora, a faculty member at UCSF School of Medicine, talked about how he took what he learned from the medical field and developed a discovery process for financial advisors. Instead of meeting in person for the first prospect meeting and spending 90 minutes, he suggests you conduct it over the phone—where it only takes about 45 minutes. One benefit of doing the phone discovery call is he structured it so the client is talking about 70% of the time while the advisor is only talking about 30% of the time. In a typical in-office meeting, he found advisors talk about 60% of the time and clients about 40%. The more the client talks, the more you can learn and the better job you can do serving them.

You can learn more about Belkora’s process in his book, DEAL! Discovery, Engagement, and Leverage for Professionals.

Belkora’s process is right in line with societal trends as the next generation of investors often times prefers to meet online or over the phone instead of always meeting in person.

4. Hire a C-level executive as your business grows to take pressure off you and allow your firm to grow even faster.

Shirl Penney, founder of Dynasty Financial Partners, moderated a panel and said advisors should consider hiring a chief of staff whom you can offload some of your duties to. Then as your company grows, this person can move into a higher-level executive role.

Charles Schwab did a survey to find out at what level did RIAs hire for certain specialized positions. Take a look at the chart below.

Firm size and specialized positions

The reality is, the sooner you hire C-level executives (only great ones, of course), the faster your business will grow. This will free you to work on the things that will move your company forward faster and help you become recognized as one of America’s best advisors. Where do you fall on the chart above?

Scott Hanson was also on the panel and he said you should develop an org chart for 5 to 10 years out showing each of the positions you will need and then start hiring them as you hit certain benchmarks. I had Hanson on my podcast and we discussed how he organically grew his RIA from $0 to $2 billion with no acquisitions. Listen to the show and read the show notes below.

Scott Hanson on how to organically grow a multi-billion $ RIA

And here’s another staffing tip. I always tell my coaching clients when you’re hiring someone to replace a person who left, ask yourself, “Is the person I’m thinking about hiring, are they a dramatic improvement from the person that they would be replacing?” If the answer is no, then boy, you need to move on because you always need to be continually upgrading the staff. There’s no question that America’s top advisors fill their teams with “A” players and don’t tolerate weak performers.

In a different session, Joe Duran said in every hiring interview he talks about 3 things and looks for 3 things. The three things he looks for are loyalty, humility, and responsibility. Each candidate is graded on a scale of 1 to 10 in each category and if they score below a 4 in any category, they simply won’t hire them.

Duran said when it comes to loyalty, they’re looking for people that aren’t all about themselves. Regarding humility, Duran’s firm—United Capital—is looking for people who are comfortable admitting when they’re wrong and sharing what they learned from it. Responsibility means no victims. The victim mentality is not appreciated there at United Capital.

Duran was on my podcast and you can listen to the fascinating interview here along with the show notes.

Joe Duran on raising billions in AUM, spotting trends, and the future of advice

5. Wear fewer hats.

Hollie Fagan of BlackRock moderated a powerful session with Ric Edelman and Joe Duran. Edelman said most advisors wear three hats. They wear the CEO hat, the marketing hat, and the advisor hat. This means the typical advisor is only spending about 30% of their time meeting with clients. It’s totally different at Edelman’s firm.

Edelman was on my podcast and he said each advisor at his firm routinely works with 400 to 500 clients. Further, “We’re able to provide each one of those clients a far better experience than they typically get from any other firm. Why? My advisors only do one thing. They advise. They aren’t spending any of their time on marketing. They’re not spending any of their time on operations or paperwork or trading or compliance or HR or IT. They’re not looking for office leases. They’re not doing any of the distracting things that punishes so many advisors.” How about in your office? How many hats are you wearing?

How Ric Edelman plans to grow to $150 billion in AUM, 300,000 clients, and 1,250 financial advisors in 10 years

Hollie Fagan was also on my podcast and you can listen to our discussion below about how elite RIA firms grow faster and more profitably than their peers.

How elite RIA firms grow faster and more profitably than their peers

6. Don’t let your margins get fat.

Joe Duran commented that the best time to reinvest back into your business is when your margins start to come back. His point was, if your profits start to go up, you need to reinvest back into the business and find ways to do an even better job for your clients. Why? Because if you don’t somebody else will. There’s no time to coast in your business and milk the profits because business is moving so fast that your competitors will pass you by.

Ric Edelman raised a few eyebrows in the room when he asked the audience, “Why aren’t you 10 times the size you are?” He answered his own question by saying, “There’s one reason. It’s because you’re not willing to go any further.” The point he was trying to make is in line with what Duran said above. Many advisors are not willing to reinvest back into the business. They think they can get to a certain level then just maintain. Unfortunately, business moves at the speed of light these days and you can’t “hang out” at a level. You’ll get left behind in no time flat. So like Duran said as soon as you start feeling flush, it’s time to reinvest back into the business.

Okay, we’re pushing 2,000 words in this post so we’ll stop here and save the rest for Part II of our conversation about America’s top advisors.

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Steve is the founder of Belay Advisor and a NYT bestselling author, podcast host, speaker, and financial advisor coach.

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