7 habits of successful advisors

“The more we have automated our practice in the way we serve clients,” Guilfoyle says, “the more successful we have become.”

Ever since Stephen R. Covey’s book, The 7 Habits of Highly Effective People, was published in 1989, the idea of changing habits to achieve goals has been a staple of the self-help realm. Covey’s book, which has sold more than 25 million copies, prescribes specific habits (“Be proactive”; “Begin with the end in mind”) to help readers achieve their life goals. The book’s principles also have been applied to business.

The Power of Habit, by Charles Duhigg, published this year, takes a different approach to habits. This book analyzes the way we develop habits and how they affect behaviour. Duhigg looks at habits on a personal – even neurological – level and explores the ways they can influence the culture and success of organizations and societies.

Guilfoyle’s use of habit is aligned with Duhigg’s approach, and Guilfoyle acknowledges that employing effective processes in a business is only the first step; making those acts a matter of habit rather than conscious effort and decision is the key to achieving continued success. Guilfoyle admits that making his firm’s processes for handling clients “automated,” as he calls it, has taken years. But now, the processes are so well crafted and consistent, clients can expect the same experience every time they request a particular service.

Duhigg believes employing habits the way advisors and assistants at Guilfoyle Financial do is crucially important, especially in a profession as dependent on trust as the financial advisory business is.

“Trust formation is largely guided by habits,” Duhigg says. “And it’s those habits that are critical to building client relationships and, thus, an advisory practice.”

Duhigg’s book cites a 2006 Duke University study that found that 40% of our daily actions are habit-driven and not consciously considered. So, making best practices a matter of habit can be the key to developing a more successful business.

How can you make success a habit? Below are seven habits that top advisors and consultants agree are key to driving the success of financial advisory businesses:

– HABIT 1: ACTIVE LISTENING

Being a good listener, especially during client meetings, is a key habit for building a successful advisory practice, Duhigg says. He cites a test in which participants were asked to rate interviewers who asked a series of simple questions about what the subject had done the previous day. Interviewers who repeated the answers back to participants scored higher than those who only wrote the answers.

“When you echo information [verbally],” Duhigg says, “it lets the client know you’ve taken in what they have had to say.”

Active listening has been a vital part of Keir Clark’s advisory practice for more than 30 years. When meeting with a client for the first time, Clark, a branch manager and senior wealth advisor with Scotia McLeod Inc. in Fredericton, asks many questions in order to understand the client’s needs.

“I am always taking notes,” Clark says. “And then, in a casual way, I repeat back to [clients] the details that they have shared with me.”

You also should absorb what you hear. Julie Littlechild, president of Advisor Impact Inc. in Toronto, has found that advisors who score highest on client-satisfaction surveys are able to rhyme off many details about their clients.

“They can recall the smallest of details without looking at their client files,” Littlechild says. “That shows that they are engaged.”

To make what Duhigg calls “listening obviously” a habit, he suggests finding a natural break in the conversation, such as when a client finishes answering a question: “You can echo what they’ve said and share something that helps to build common ground. This makes the listener feel like much more than a prospect, but someone you want to connect with.”

– HABIT 2: CONTACT CLIENTS FREQUENTLY

The more you contact your clients, whether by email, telephone or newsletters, Littlechild says, the more likely those clients will be engaged – that is, feeling positive about your relationship and more likely to provide a referral. According to Advisor Impact’s research, 25% of clients who met with their advisors five or more times a year reported being “engaged” in the relationship.

To determine an appropriate frequency of contact, Guilfoyle segments his client relationships into two categories: customers and clients. “Customers” are people who come in to buy one or two products. “Clients” are involved in a full-service relationship.

Guilfoyle generally meets with customers once a year and emails them quarterly newsletters and regular updates about the firm. He may meet with clients eight to 12 times a year, depending on the account and the client’s preference. These meetings are often informal and may include rounds of golf involving three or four clients. Clients aren’t always interested in talking about finances, Guilfoyle says: “They appreciate the networking aspect of these gatherings.”

To make client contact a habit, Joanne Ferguson, president of Advisor Pathways Inc. in Toronto, suggests putting a call-rotation schedule in place and assigning one team member to look after it. “You need to assign a team member to manage this,” Ferguson says, “or else there’s no way to ensure it’s getting done.”

Guilfoyle agrees: “I’ve heard of some advisors who say they can’t afford an assistant. But without an assistant, there is no way you can be as diligent about following up.”

Having an assistant whose job description includes managing client contact turns this task into a habit that will be performed daily.

– HABIT 3: TELL YOUR STORY – CONSTANTLY

Advisors with successful practices are always pitching prospects, whether at the movies, a cocktail party or the grocery store, says George Hartman, president of Market Logics Inc. in Toronto: “They have a compelling way of communicating their business story and describing what they do, without needing to apologize for it. It just rolls off their tongue.”

These advisors are able to weave their stories into any conversational topic, Hartman says. For example, if the cocktail-party conversation turns to technology, you can talk about the differences between your younger clients’ and older clients’ attitudes toward social media.

Learn to link your advisory business with various conversational topics, Hartman says. Watch especially for discussions of life stages, such as marriage, saving for retirement and asset de-accumulation.

“Try to weave illustrations of what you do,” Hartman says, “in a way that will lead a prospective client to ask for more information.”

For example, he says, if someone brings up aging parents, you could say something like: “I have a number of clients who are in the ‘sandwich generation,’ looking after aging parents while their children are still dependent on them.”

You then can talk about steps associated with that life stage, such as purchasing critical illness and long-term care insurance coverage.

You’re not trying to make a sale. Just make a habit of talking about what you do for your clients.

– HABIT 4: FOCUS ON IMPROVING YOUR BUSINESS

You should already have a formal business plan and have documented your goals, says Ferguson. Now, you can apply a habit that takes advantage of both.

“Monitor your business goals the same way you monitor your clients’ financial plans,” Ferguson says, “to ensure they are on target.”

Taking this a step further, Hartman says, you should automatically reject or outsource any task that takes you away from achieving your goals or improving your level of service to clients.

“Automatically delegate tasks – such as administration – that are unrelated to the client experience,” Hartman says. “This keeps you focused on maintaining client relationships for the long run.”

Littlechild says advisors with client satisfaction scores of 4 or higher out of 5 are always asking themselves: “How can I make my business better?”

Says Littlechild: “These advisors are never resting on their laurels. They are constantly in touch with clients, trying to find out how they can improve their service.”

“Improving service” means focusing on clients, not on administration. If you find yourself bogged down by mundane tasks, Guilfoyle says, hire an assistant: “Assistants take care of the day-to-day tasks, so you can focus solely on your clients.”

Having an assistant also forces you to map out your routines regarding client contact, Guilfoyle adds: “It forces you to automate certain processes because you have to outline the assistant’s tasks.”

Having an assistant also ensures that someone is there to keep up the day-to-day aspects of the business when you are absent.

– HABIT 5: SET EXPECTATIONS FOR CLIENTS

The most successful advisors always are reinforcing the type of service and performance standards a client should expect, Ferguson says: “The clients of these advisors are well aware of what the advisor can and cannot do for them.”

When a client complaint arises, Littlechild says, it’s often due to a mismatch between the service the client thinks he or she should be getting and what the advisor provides.

“If advisors understand what clients expect,” she says, “they can reinforce the value they provide.”

Setting expectations is one of the most important habits Clark has formed in his practice. After getting a full understanding of a new client’s situation, Clark ensures the client leaves the meeting with a clear understanding of what Clark can provide, especially in terms of investment performance.

“People come in with a misunderstanding of what an advisor does,” Clark says. “They think that because you have a lifetime in finance, you can produce investment returns that are superior to someone else’s.”

To address that misconception, Clark lets clients know up front that his value is not based on investment returns: “I explain that we are able to control exposure to risk but not [control] the market. No one can do that.”

Ferguson recommends providing clients with a service agreement, a document outlining your processes and what your client can expect from his or her relationship with you.

“The client and advisor both sign off on this form,” she says, “which ensures both parties have a clear understanding of where the relationship is headed.”

– HABIT 6: HAVE A REFERRAL STRATEGY

“Asking for referrals,” Hartman says, “is a way successful advisors ensure they always have prospects in the pipeline.”

Soliciting referrals doesn’t have to be a formal process; it can be done casually in conversation. But it should be a habit.

Clark often brings up the topic of referrals at the end of his client meetings, especially after a client has expressed satisfaction with Clark’s service.

“I let [clients] know that the best compliment is telling someone else about the services I have completed for them,” Clark says. “I ask them if they can think of anyone I can reach out to.”

Alternatively, Clark might say: “I am expanding my practice, so if you know anyone who might benefit from my services, please pass his or her name along.”

Guilfoyle, for his part, provides his clients with a client-feedback survey after every annual review. At the bottom of the questionnaire, clients are asked to list the names of two or three people who could benefit from having a financial advisor.

“If your clients are happy,” Clark adds, “they will tell people on their own.”

– HABIT 7: SHOW YOUR APPRECIATION

Showing clients you appreciate their business helps keep them committed and engaged with your practice, Hartman says: “This is part of ongoing relationship management.”

The form that appreciation takes is not as important as the fact that you made the effort. For example, if Guilfoyle and a client discuss a book at a meeting, Guilfoyle will often send that client a copy of the book. Says Guilfoyle: “It’s the personal gesture people appreciate.”

Special occasions provide opportunities to show appreciation to your clients. In October 2008, when many clients were worried that the markets might crash, Guilfoyle’s 100 largest clients received a pumpkin pie – hand-delivered to their doors.

The gift itself was out of the ordinary. But the level of service it demonstrated was simply a matter of habit.

© 2012 Investment Executive. All rights reserved.