A recent conversation about investing an inheritance highlighted how seemingly trivial decisions by financial advisors can make a huge difference.<\/p>\n
The story begins last autumn. One of my students in the MBA program at the University of Toronto – let’s call her Marci – asked me for some advice. Marci, who is in her early 30s, explained that her mother recently had passed away unexpectedly. Marci’s father had been a senior executive with a large public company and had passed away some years ago. As Marci is an only child, she found herself inheriting a large house as well as an estate approaching $5 million.<\/p>\n
“I really want to get some professional advice,” Marci said. “The private banker whom my dad used and who my mother was dealing with has been after me to meet with him and the broker managing the account. But my preference is to look for someone who’s closer to my age.”<\/p>\n
I suggested that Marci interview two or three other advisors. As a starting point, Marci could talk to the private banker her mother had dealt with about an introduction to a younger advisor, as well as to the mother’s accountant and lawyer about referrals to advisors who might meet Marci’s needs. To make these conversations productive, I urged her to be very clear about what she was looking for.<\/p>\n
– Setting the stage<\/em><\/p>\n In January, I got an update from Marci. She had selected an advisor and was working with him on a financial plan, but it had been a difficult decision.<\/p>\n “After we met, I called my mother’s private banker and her accountant and lawyer,” she said. “The private banker was really resistant to giving me an introduction to another advisor and kept insisting that I sit down with my parents’ broker, even though I told him that I didn’t want to work with someone in his 60s. So, eliminating that option was easy.<\/p>\n “The decision got harder from there,” Marci continued. “My parents’ accountant and lawyer each sent an email to a contact at a local firm that they knew well. The referral from the accountant led to a call from an advisor named Philip, and we set up a time to meet.<\/p>\n “The referral from my mother’s lawyer invited me for lunch the following Monday so that he could make the best introduction for my situation,” Marci added. “We had a really pleasant conversation and he spent quite a bit of time digging into what I was looking for. At the end of the lunch, he said that there was a woman in his firm named Karen who would be a great fit.<\/p>\n “So, I ended up with two appointments. When I looked at their websites, both advisors’ firms were established and professional – and both were obviously keen for my business. However, I was impressed by the way the second firm had gone the extra mile in inviting me to lunch before making a recommendation; so, if anything, I was leaning in their direction.”<\/p>\n – Initial interactions<\/em><\/p>\n In talking to Marci, I found that the initial meetings with the two advisors had striking similarities:<\/p>\n “When I first met them, I was impressed by both Philip and Karen,” Marci said. “They were both in their 40s, had loads of experience and came across as being interested in my situation. When I arrived for the meeting with Karen, the senior partner whom I’d had lunch with met me in the lobby and took me into the meeting room to introduce us – so, again, they showed that little bit of extra interest.<\/p>\n “Neither Philip nor Karen put any pressure on me to make a decision,” Marci added. “We spent about an hour each talking about my situation and my goals, and they both described their experiences with investors in situations similar to mine who had gotten significant inheritances. In both cases, I was clear that I was talking to another advisor, and they were fine with that. And we set up a second meeting to get into further details of the approach they would take. I told them both that I didn’t want to waste their time and would make a decision after those meetings.”<\/p>\n – Small differences<\/em><\/p>\n Marci hesitated before concluding her story: “Both followup meetings were much like the first ones – professional, low-pressure conversations about how they could meet my needs and the process to manage my investments. I walked away really torn, as I felt that they would both do a good job for me. But, over dinner, my boyfriend asked the key question: ‘What does your gut tell you?’<\/p>\n “As I thought about it, the answer became clear,” Marci continued. “I was looking for someone I could really connect with, not just professionally but on a personal level. Given that we’re both women and that I’d had lunch with [Karen’s] senior partner, Karen should have had the advantage. But she didn’t. I felt more comfortable with Philip. And there were a couple of reasons for that.<\/p>\n “For my meetings with Karen, we used a meeting room with a great view over the city – and that was fine. But in my meetings with Philip, we met at a round table that he had in his office. He had pictures on the walls of his family and also of some charities he’s involved with. During the very first meeting, he went to get us a coffee and invited me to look around, saying that as a point of policy no one in his firm kept any confidential papers on their desks. We ended up spending a few minutes talking about his family situation as a result, something that I never did with Karen. In fact, I don’t even know if she has children.<\/p>\n “And, at the second meeting, Philip asked if it was OK to have a couple of his support staff sit in, one who would be responsible for developing my financial plan and another who would deal with administrative issues and the transfer of the account should I decide to move forward. Philip had them introduce themselves and said that he’d asked them to sit in so that I could get direct answers to any questions.<\/p>\n “I liked both of these women and also that I would have direct access to the team behind Philip.<\/p>\n “When I called Karen with my decision, she was obviously disappointed but said that the door was always open. She also said that she’d like to put me on the mailing list for her firm’s newsletter and on the invitation list for firm events.”<\/p>\n Then, Marci paused again: “Frankly, Karen’s firm did everything right. Ultimately, it just came down to Philip making me feel just a tiny bit more comfortable.”<\/p>\n – Key lesson for your business<\/em><\/p>\n This conversation is a sharp reminder of how things at the margins can shape decisions. Karen was a bit unlucky here. Her firm got off to a great start; but, given today’s competitive environment, you need to do everything possible to tilt the odds in your favour. Having the right credentials, presenting in a professional fashion and showing interest are standard table stakes. Increasingly, it’s the little things that set advisors apart. Consider whether there are some lessons here that you can learn from:<\/p>\n – Allow your clients to get a sense of your background, personally as well as professionally. This isn’t important to all clients, but it matters to more than you might think. Let your clients determine how much time they want to spend talking about your personal background. Interest in this area varies greatly among clients.<\/p>\n – Philip’s strategy for introducing his personal situation was brilliant. Many advisors could learn from his invitation to glance at the pictures in his office while he gets coffee and assuring Marci that all confidential documents had been put away.<\/p>\n – Consider meeting with existing and prospective clients around a table in your office. To the extent that your goal is to make people feel comfortable and reduce the barriers to an open conversation, the greater informality that comes from meeting around a table in your office can help to make that happen.<\/p>\n – Introduce your team before asking a prospect to make a decision. Doing so won’t always make a difference, but will matter more than you might expect. The only caveat is that some clients want to work with only the senior advisor and are concerned about being pushed off to someone junior. So, you need to be careful that you position the members of your team as supporting your role as the central contact.<\/p>\n