Short and useful book on the financial advisory business inside Merrill Lynch: how it grew totally out of control during the late 1990s tech boom, and how a few dedicated insiders turned it around using 80/20 concepts.
The reader can ingest this book on a few levels. The first-order/literal level explains how to transform an overworked financial advisory practice--with way too many clients to service properly--into an efficient, high-touch, high-value practice. The idea is as simple as it is ruthless: let go of all but your 100 best clients. This frees up bandwidth to properly serve the biggest "whales," it increases profitability, and, unexpectedly, it makes the day-to-day experience of running the business easier.
Imagine cutting your book down some 80%, generating more income, having more satisfied clients... and working less.
[A quick affiliate link to Amazon for those readers who would like to support my work here: if you purchase your Amazon products via any affiliate link from this site, or from my sister site Casual Kitchen, I will receive a small affiliate commission at no extra cost to you. Thank you!]
Now on to a second-order reading of this book: consider this from the standpoint of a potential client of a financial advisor--any financial advisor, at Merrill/BofA or anywhere else. Think about the incentives, the compensation structure and most importantly the client load of the FA you're considering. Will you get good service from this guy, or not--and how might you know in advance? The answer comes from knowing whether you'll be one of his whales, or one of his pikers! Reading the book this way ought to help you avoid most of the typical principal/agent problems that always seem to crop up whenever you hire someone else to run your money.
A further reading, likewise on the second order, would be to interpret this book from a business process standpoint, applying these ideas to your own business, or even to your own day-to-day life. How do you spend your time in your various life domains? Which obligations and low-value activities can you, and should you, cut out? Can you do less, do it better, and by doing so, paradoxically do more? To assist readers interested in operating their lives in lean/efficient mode, I offer a list of four extremely helpful books to go along with this one. See below.
One final thought, a sad and bitter irony about Merrill Lynch (although one that doesn't detract from this book's insights). The reader can't help but notice right away that this book came out in 2008, right around when Merrill Lynch ceased to exist as a company, acquired by the limping Bank of America in the depths of the great financial crisis. Yes, you might be able to turn around your division, but you might be a part of a much larger institution that cannot.
Pair With:
The 4-Hour Workweek by Tim Ferriss
The 80/20 Principle by Richard Koch
Margin by Richard Swenson
[Readers, the notes below are here to help me order my thinking and better remember what I read. The bolded parts might be worth skimming.]
Notes:
Forward:
ixff Fluff introduction from Larry Wilson ("Widely considered one of the foremost thinkers, speakers, and doers in the business world today.") I don't know who he is but he's written several books on sales and personal growth.
xi The reader grimaces right away at the discussion of Merrill Lynch: one can't help but look at the book's publication year and make a Marge Simpson noise thinking about the implications. You can try to reform the Merrill culture, you can ride Rob Knapp's "Supernova," you can take people across the "invisible bridge"... but the invisible bridge to what? A division of a broken bank soon to be acquired by a nearly-as-broken Bank of America! What these guys did was impressive, but it simply reveals one of the worst ironies of the corporate world: you can achieve incredible things, but then your entire group is still at the mercy of a larger entity, and you can still all get fired, acquired, sold off to private equity, whatever.
Acknowledgments:
xvff Discussion here of the various people involved in the Supernova program, many who are/were executives at Merrill Lynch. Also: "Mentoring me now and throughout my career have been Richard Weylman, Larry Wilson, and Jim Lowery. [Perhaps there are works by these guys worth digging up and reading.]
Introduction: Stepping onto the Invisible Bridge
xixff On a leap of faith you'll be asked to take in this book; on the idea of servicing your ideal clients better, but that ideal being obscured by constant pressure to build your book and grow your client list; you're told to fatten your book of business, but in reality you want to be thinking about the 80/20 rule where 80% of your production will come from 20% of your clients.
xxiff On how the 1990s bull market brought in so much money and new clients to Merrill Lynch that employees couldn't keep up with servicing the business. [This is a fascinating problem in the sense that there is a lack of scale at some point at advisor-based asset management companies; this is worth thinking about with Morgan Stanley, perhaps this business doesn't scale the way say an asset manager like T. Rowe Price scales or like a broker/dealer like Coinbase (possibly) scales.] The company didn't want to hire more junior "client associate" employees; the clients were increasingly disappointed with the level of service they got, they were only getting calls when the advisor had something to sell; clients began leaving; some of the clients needed a level of service that Merrill wasn't delivering or couldn't deliver; clients were looking for a more holistic and more personalized service than anything Merrill offered, something they could get maybe with an independent financial advisor that would offer genuine financial planning; clients would say "we need more than a broker now."
xxiii "Advisors don't become planners just because they stop charging commissions and start charging fees. And knocking out a few financial plan binders, no matter how impressively fat, was not real planning." [Takeaways here for individual investors! A fancy looking pitch deck ≠ financial planning!] Also: "The company that owns the plan owns the client."
xxiiiff Discussion here of the idea of "scheduled contact": the author here talks about meaningful consultative scheduled contact which will be discussed in chapters 2 and 5. "When clients have regular, non-pressured, meaningful contact, they will rank their satisfaction higher."
xxviff On the irony that the Supernova program was rolled out right at the same time as the tech crash and 9/11, it turned out this differentiated Merrill's platform even more according to the author.
xxviiff The author mentions three other business books that explore aspects of a revolution in American business occurring around the same time Merrill was executing this transformation [these books are also included in the reading list at the end of this post]:
Leading Quietly by Joseph Badaracco
Tempered Radicals by Debra Meyerson
Megatrends 2010 by Patricia Aburdene
xxx "This book is about seeking the ultimate client experience and creating a rewarding new way to work by providing exceptional financial advice and service."
Chapter 1: The Trouble with Success: The Tyranny of the 80/20 Rule
3 see photo for the five Supernova principles:
5ff On financial advisors at Merrill who literally lost control of their business; bringing in way too many clients, being unable to say no to all but the right clients ("the clients were managing us"), and so they were stuck dealing with the urgent but not important.
6ff Backgrounder on the 80/20 Rule, on Vilfredo Pareto [note that his work talked about permanent imbalances in wealth distribution in England, it's worth thinking about the implications of this in today's modern neofeudal environment] also Harvard professor George Zipf who called the rule The Principle of Least Effort; Zipf's rule had more to do with inputs and outputs of a system: people, time, skills, etc. See also Joseph Moses Juran who called the 80/20 Rule the Pareto Principle or the Rule of the Vital Few, his ideas were put to work by Japanese automobile manufacturers.
7ff "Even when one suspects there is an imbalance affecting results, the actual numbers tend to exceed our estimation, if not shock us outright... Acting on the imbalance means making radical changes..." Note also one of the issues at Merrill was that the money kept coming in (in spite of the underlying problems) because it was a tremendous bull market in the 1990s; note also the structural problem at corporate in that the parent company rewarded "customer accumulation" and asset gathering.
8 On the company's previous mentality: "Who cared if 20 percent of your clients were generating 80 percent of or more of your revenue? The goal was to earn more revenue, not to overthink where it came from. But when that revenue stopped coming, the 80/20 Rule began to matter very much." [Here presumably he's referring to clients giving up in despair during the post-2000 tech crash, pulling their money, having their account values drop because everybody all owned the same garden variety tech stocks, etc.
8 Supernova segmentation: the broker and his team segmented their client book, using the process to reduce their client list down to the very best; first, figure out who those "best clients" actually are, and then give them exceptional service.
Chapter 2: Contact: The Humble Foundation of the Ultimate Client Experience
9ff "Exceptional service is a perception; it's harder to measure than portfolio value and differs from one client to the next." Also comments here on the Supernova contact ritual of 12/4/2: 12 contacts, one per month; of those four of them include a quarterly review of the full portfolio, and two of the meetings are to be face to face with a broad agenda. Also some comments here on how "needing to use discipline" to do something is a drain on energy, but creating rituals to do those things keeps that energy free for other purposes. [To put this in my own words, basically the idea here is instead of using "willpower," just install a habit that eventually becomes truly habitual, so you don't have to burn bandwidth thinking about it, pumping yourself up for it, steeling yourself for it, etc. It's just automatic because you've installed the habit. Note that if you can keep a new habit going for 30 days, it will likely stick.]
11 On the paradox that happened as Merrill migrated their financial advisors to a fee-based business model (away from commission/transaction based income): the clients wanted it as well, but now that there weren't sales calls to make, there were no reasons to call the clients at all. [!]
12 Note here the author talks about embarking on a journey to discover what the clients actually wanted. The steps they took here included asking some of the very few financial advisors in the region "who stood out among our uniformly poor client service scores," they "consulted the business literature" and they "visited various business schools." [Note here the second-order takeaway: it is entirely possible that you may be entrusting your money with a financial advisor who not only has deeply unhappy clients, but also who works for a firm that has no idea how to please its clients!]
12ff They discover that the primary element of customer service is regular scheduled contact; then a discussion follows of the five key drivers of exceptional service:
1) Scheduled contacts and conversations, also something that the client has on their calendar, the client doesn't want to find themselves on the other end of an unexpected call
2) rapid response to problems
3) attention to details
4) anticipating issues before they become urgent
5) depth and breadth of services offered
13 Note that at this time Merrill had no regularly scheduled contact built in to their system!
14 On thinking about how the contact should work: how often, what is there to talk about; note that high net worth clients value time, so they're not going to tolerate irrelevant chitchat; thus the idea here is to use the brokerage statement, either monthly or quarterly, as a framework for relevant client communication.
14ff More on the 12/4/2 ritual [the author goes into more detail in Chapter 4]; and then comments here that there weren't enough hours in the day to provide regular contact to all their clients, in other words the FAs had to segment their book and only do this with a subset of clients. Discussion of Jim Loehr and Tony Schwartz's book The Power of Full Engagement, "managing energy, not time, is the key to high performance and personal renewal." [Clearly at least the author has ingested the subtitle of the book!] The idea here [once again] is to create rituals, basically install habits, and then make them just be automatic behaviors rather than using your willpower; "Rituals provide a stable framework in which creative breakthroughs often occur." [It gets me thinking here that these financial advisors couldn't "will their practices to change" any more than they can "will the bond market to change" ...but they can implement positive rituals like a frequent, scheduled conversation with clients, and then perhaps certain insights might emerge from this later. This is an unexpectedly good example of staying in your circle of control, and creating an environment in your circle of control that leads you to find insight or good ideas, helps you make good decisions, etc.] Finally, more comments on recognizing that willpower is a limited resource, you want to use it wisely, call upon it selectively, not use it up, use it constantly, or waste it on minor things. [Sounds like The Power of Full Engagement is probably worth reading.]
Chapter 3: Segmentation: The Supernova Non-Negotiable
19 Note the bullet points here explaining the chapter's ideas:
* 100 clients is optimal
* Rank initially by production per client, using a max of 100 clients and a minimum production threshold. * The growth in your books comes from continually moving your minimum threshold upward
* "Talk to your clients on both sides of the segmentation divide about the reasons why [you either do not communicate that much with them or you do]."
23 "Segmentation of an unmanageable client load is not a best practice worth observing and adapting. It's not a suggestion or a recommendation. It is an absolute."
24 On having those top 100 clients receive extremely high-quality customer service, then they will be the referral engine that drives future growth.
27ff Ideal clients, second best clients, clients who you tolerate, clients you'd like to hand off but haven't gotten around to it; this is sort of a "soft segmentation"; these client differences can change from day to day; also your CA [client associate] needs to know which clients are which as well; note the example here of the FA who took his book from 631 clients to 33. [!!--in a moment we will learn that this FA discovered 90% of his production came from 13% of his clients.]
30ff A pilot user of this program was attempting to work out which of his clients were his "best" clients, as well as how to think about what the right number was of those clients; he worked through his book, some 631 accounts, finding that 131 of them were essentially inactive, that he had 90% of his revenue production from just 13% of his clients; he had clients with million dollar balances but yet no production; but also he had several low-asset clients with significant production. And then there were some clients who had minimal production who didn't really accept contact from the broker [maybe you would call these "intransigently unproductive" accounts: either fire these clients or literally spend 0% of your time on them].
[A few things about the 80/20 Rule that are prompting me to think more expansively about this idea. One of the unintentionally funny notions in Richard Koch's book The 80/20 Principle was to look at your investments through the 80/20 lens and figure out which 20% of your investments will produce 80% of your returns--and just own those! The problem of course is we don't know the future, thus you won't know which stock is which until afterward. But yet the underlying idea is to avoid just owning a long list of tickers, you want to think about which bets ought to be bigger, have a cutoff point for many of your smaller bets, and don't permit too much of your bandwidth to be stolen away by too many names. There will be times when the markets correct viciously and you want to be able to focus on the key names that you want to own more of, and so you will want to be hypercognized and ready--not distracted--at those moments, and use those selloffs to acquire those assets in order to produce meaningful future wealth. You can also think about other life domains to apply 80/20 to strip out things that waste your life force, and to add more of the things that add to your life force: this can be friends, social activities, your personal pastimes, what adds value to your own family and household, etc. Also note the idea here that this broker had to dig a lot deeper to understand what was really going on in his book: perhaps the insight here is that most of the time things are not what they seem, the mechanics of your "book" aren't what you expect [you can substitute a lot of life domains or conceptual domains here for "book" by the way in this sentence!]. Further, sometimes you have to roll the numbers and the data around in your head a little bit to really think about what 80/20 means and what the implications are, and what you can do with those implications. You usually can do a lot more with this data than you think but you have to think about it quietly for a while.]
31ff Next this FA did a more subjective screening of his client book: did he like the client, did the client like him, does the client just use him as a broker or does the client see him as a "managing money" type of service, did the client have the potential to become a whale? Also looking at which clients were imposing costs on him and his team: hard dollar costs, soft dollar costs, time costs, who was demanding discounts, who was paying for full service, etc. And then yet another somewhat subjective screen: who produced referrals or assisted them in networking? In other words, which clients could be drivers of his book's future growth? Finally: were there any clients that met all these criteria? The FA identified 33 such clients, and it turned out that those 33 clients produced 91% of his business. Even more striking: getting rid of the remaining 83% of his accounts only cost him $39,000 in annual production. [Thus this wasn't really an 80/20 principle it was 90/10 or more! This section here is extremely interesting, extremely compelling: it's interesting to hear the various qualitative and quantitative ways that he looks at his client book.] Finally it's worth noting that they considered priority clients to have either $250,000 in assets at Merrill or to generate $5,000 a year in annual production. [Keep in mind of course these are mid to late 1990s numbers, 25-ish years ago, so you'd probably have to triple or maybe quadruple this number for this tier of service today. In other words, this is worth thinking about in terms of your personal assets and where you might find yourself in terms of obtaining true high quality service from an FA at the various full-service brokerage firms out there.]
33 These were 11 factors that he screened on:
Revenue production
Value of assets
Priority client status
Likeability
Approach buy-in
Financial wherewithal
Priority client capability
Hard-dollar profitability
Soft-dollar profitability
Price-value perception
Opportunity for future growth
33ff Interesting comments on how they framed the service to the clients who made the cut: they described it as an all-first class airline, the client was on the passenger list on a small plane and everyone on board would be first class; that we would do this first class service for a year, and if they preferred another kind of relationship after that, that would be fine; and that the service would include regular scheduled contact involving the 12/4/2 method. Some of the clients were hesitant and wanted to wait and see; some loved the idea; some didn't really believe that the service level would actually improve as claimed; some actually brought over even more investment assets to Merrill.
35 Note here the kinds of questions and issues the FAs would deal with on this higher service level: handling taxes, estate planning, what financial values do they want to pass on, etc. [These are the sorts of things that all of us should be asking ourselves as we try to establish and grow our financial lives.]
36ff On failure points of the segmentation process: 1) too many clients to begin with, 2) adding clients without eliminating others, 3) poor execution of the min/max balance; comments here on min/max and the fact that over time they discovered the max number of clients was around 100. [Also note the funny comment here the author makes about how there's always a small handful of extra clients, like parents of a major client, smaller clients essential to your networking/acquisition program, or "the kind of person you need to accommodate if you plan on getting into heaven."] On the minimum: the minimum size of investable assets that a client must have to be part of this premier class service; on the idea that every year that minimum level should go higher [meaning: as you add more and larger ideal clients]. "The closet has room for only 20 suits."
38ff Intriguing comments here on how to deal with clients that you hand off: Merrill Lynch itself has a certain scale in the sense that there are junior FAs as well as smaller offices that can handle these clients; thus these "smaller" clients would be top 100 clients for those FAs. Also an interesting little anecdote here about one of the Merrill brokers who had a good relationship with an independent advisor with a much smaller business: he knew that clients who dropped below her minimum would be well served by this outside advisor; likewise via this advisor she also gained large clients who needed a level of service beyond what this smaller office could provide; the author talks about how "good things happen naturally" as a result of the 80/20 book winnowing process.
38ff Finally "text box" blurbs here on the necessity of knowing exactly what clients pay you and what they cost you by segmenting your production and the cost of that production, and then identifying the high-maintenance clients; also on focusing your discernment on the metrics that you think are most important, compared to the 11 screens that the example advisor used in this chapter; and then on approaching the process "with a generous spirit," helping the clients at this handoff point may very well pay dividends in the long run: from the advisors who "inherit" these clients, from the clients who receive better service afterwards, etc.; and then once you've taken your book down to its proper level to think about segmenting all the other things in your life that you do, from the products you offer to the associations/networking groups you belong to, etc. "What else can you segment in your practice?" [And of course by extension what else can you segment throughout your life?]
Chapter 4: Organization: Promises Made, Promises Kept
41 Bullet points here on how this a major shift in operational practice; on making "deposits into the bank of trust" as the Supernova process creates multiple opportunities for you to build trust with the client; on the important roles of the client associate, the CA; on the use of paper folders which are superior to electronic systems; how the Supernova process gives "ideal documentation repositories for compliance purposes"; and how you become "highly referable" once you've organized under this 12/4/2 contact ritual.
45 [It's kind of amusing to think about how we love to throw "technology" at things when their key tool here is a deliberately non-technological physical paper folder]; Also a good paragraph here talking about how "guilt and obligation" are productivity enablers.
45ff On the CA, the client associate, at Merrill which has an increased and more important role in the Supernova practice: on making clear to the FAs what are we going to talk about and when exactly when they interact with clients every month.
46ff The folder as a "permanent record": "a comprehensive picture, on paper, of who that client is." An evolving biography of the client and his life as told to the FA and CA: the assets under management the dreams behind those assets, the anniversaries, grandkids, favorite movies, etc.; "it's a powerful tool for delivering the exceptional client experience." Different metaphors here: think of it like a medical chart that the doctor looks at, or the administrator running your dental office where the scheduler make sure that there is someone in every seat such that the practice makes more money when the seats are full. Other interesting [and totally true] comments here about how a paper folder doesn't crash, its data doesn't get erased, since the folder is physical it goes thump when dropped on a desk, they're tangible, they contain actual physical information in physical form. [I find the same with my investing notebook: something happens when I physically write in my notebook: I recall details better, I keep the information in a mental format that lets me invert it, play with it, see connections, etc. Journaling likewise somehow is more powerful and effective when you do it by hand.]
48-9 Comments here on the fact that if there's 100 clients under the 12/4/2 contact process, this means 30 appointments a week, six appointments a day. This consists of: three phone updates of 20 minutes (limited agenda, also asking "have there been any changes since the last time we talked?"), two phone reviews of 40 minutes (similar to the phone updates but also including a quarterly review), and one appointment in person for hour. This adds up to 3 hours and 20 minutes, thus it takes up about half your day, leaving the other half for planning, prep time and marketing. You can do the calls the first 10 days of the month, do them in the morning, whatever works.
48-9 On asking two questions before hanging up or sending the call to the CA for scheduling, both for the 20 minute and 40 minute update calls:
1) What was the value to you today?
2) What do you appreciate about our service to you?
49ff "The CA owns the calendar--period." All the meetings and calls are on the calendar, the client has been notified, reminded and confirmed, one team the author gives as an example use formal-looking appointment cards, even for telephone meetings. The FA gains focus and can provide efficient service by giving up control. When the folder thumps on your desk with a 10:30 call with Mr. and Mrs. Martin, you are going to feel guilty unless you take care of that call because the folder doesn't go away, this is the idea of employing guilt and obligation. "There's genius in the intersection of the physical folder and a very human need to do the right thing by the people working for you and with you." Also comments here on Peter Drucker's book The Effective Executive, on effectiveness as a habit, something that's practiced; on urging businesspeople to pay attention to where their time goes, and also on how effectiveness means concentrating on the areas that produce outstanding results, on getting the right things done.
51 Comments here on the "Bank of Trust": every call you make to a client is a "deposit" into the Bank of Trust, you'll make mistakes and screw up things which causes a "withdrawal" from the Bank of Trust, but you already will have the account well in the black, thus it can handle occasional minor withdrawals.
51ff Beautiful comments here on phone tag and what to do to avoid it, since it is the worst time waster: first of all the client should be on the phone already when the call goes to the FA, but if not the FA leaves a message: "Sorry we missed you, I had our appointment scheduled for today at 3:00 p.m. Please call [the CA] back to reschedule." The client either calls back right away (and the calls takes place) or they don't and it's rescheduled. "Said one FA, a year into Supernova, with amazement in her voice: 'My phone hardly ever rings.'"
52ff On batch processing: do similar things at the same time; also on the fact that the days are now organized and ritualized and so there's time for creative thinking and insight, and there's no crisis reaction or playing catch-up [In the language of Stephen Covey, they are in Quadrant II: "important but not urgent"]. Also comments here on the Supernova file folders are perfect for meeting compliance officers' needs. Also note this quote: "All work is unplanned unless you plan all of it."
54ff On what happened in the longer run: the clients started to realize that this is a way better service; the structured meetings and conversations became much more meaningful, and this became the number one way that clients referred prospective clients to the FAs: they could say to the prospective clients that they're going to call you every month, have two face-to-face meetings, etc. They introduced us as "the people who quarterback our financial lives and that we talked to every month. It's a real differentiator, and we began to use it as a marketing strategy."
56 Finally some bullet points here on batch processing communications: on using a voicemail message that says "you return calls between such and such an hour" while having every inbound call outside those hours go directly into voicemail; also don't listen to messages beforehand, batch process all voicemails. Likewise with emails: turn it off until you're ready to batch process them.
Chapter 5: Planning: Inspired Action
61 A kind of metadiscussion here [I'm not sure if the author means it or not] but he writes about how not a single client or prospect ever said they "want" Supernova: not the project, its components, the schedule of calls and contacts, etc., That's not what they want. What they want is the aggregate that these components produce which ends up being useful financial planning. In other words, if you tell the clients what it literally is that you're providing, they won't realize what it will be to them and they won't want it! [This is a huge insight worth thinking about: things look like something to people on one side, but they don't look like the same thing to people on the other side, and sometimes those things look like nothing... but they're actually really something huge. Worth ruminating on this on a few levels: see for example the solipsism problem of seeing something and thinking it isn't the thing that it is, or seeing the various components of something but failing to think about what it actually looks in aggregate or failing to see a product from the client's perspective; these kinds of errors happen all the time, and because there is solipsism at the foundation of the error, we never even notice.]
62ff Comments here on what financial planning is: "True planning is a synthesis of financial acumen, customer intimacy, creative thinking, life coaching, personal training, and team culture."
63ff [Note that this set of habits of regularly scheduled client meetings actually creates a financial plan, the execution of that financial plan, along with a long-term client relationship: they are all emergent properties or second-order properties of this routinized appointment system. Very elegant and fascinating.]
65ff On thinking of the FA as a family CFO: "You're the CEO, we're the CFO" [another good analogy].
67 You can get a little bit cynical about this, but also it's worth noting the clients don't really care that much about how brilliant the investment plan, nor do they really care about the brilliance of the investment strategies. The author says, "it's not the most important thing you're offering nor is it the least."
67-8 Also comments here on the personal growth of the FAs as they evolve into "coaches" for their clients; also on this kind of relationship they liken to an impenetrable forcefield around your client, competitors will have no chance to lure them away from you, the client becomes invested in you, etc.
70 Comments here from Malcolm Gladwell's book Blink on the difference between doctors who get sued for malpractice and those who don't: the difference is basically some 3 minutes of specific discussion on problems with gentle humor, encouraging the clients to tell them more, doing just a little bit extra listening and a bit of active engagement in the patient's outcome. The author translates this over into financial relationships with clients. Then comments from Aristotle from On Rhetoric on the ethos, pathos and logos, your character, your genuine self that you share, and basically "truth"--or as the author puts it: with data points and trend lines you can "keep Aristotle in the room" so you can then "weave ethos, pathos, and logos into your conversations."
Chapter 6: Acquisition: Explosive Growth Under Control
73 Pull-out text box here on growth being intentional, continuous, based on raising your minimum asset threshold, not just based on acquiring more clients; on setting up advisory teams for those clients who fall out of your minimum asset requirements, also on developing a vertical specialization and becoming "slightly famous" in that vertical; on using professional networking with CFPs, insurance brokers, etc.
78 On how the Supernova process creates time to grow the business by controlling your client contact; the increase in service quality makes the FA more "referable."
79ff On being candid with a client about your min/max thresholds, the minimum assets and maximum number of clients; thus they will know what kinds of people to refer to you; see also here an interesting response to the risk that a client might hesitate to refer a friend because they might get rejected if they don't have enough money; the response here is that the FA will say "we'll talk with them for at least an hour to explore if it's a good fit, if not we'll recommend another team we're confident in."
82fd Other insights on building a strong referral process: getting out of sales vernacular and into a marketing environment, developing the advisor's brand, either by specialization and client type (entrepreneurs or corporate attorneys or whatever), building high visibility among cultural or charitable leaders, or from high quality financial planning, so that you are positioned in a way that you can sell effectively; interesting idea here on after an in-person meeting to brainstorm with the customer, for example asking them what it is that they value from this specific meeting, then brainstorming on connecting the specific value with anyone else they might know who might also benefit.
84ff On using information about the client's family members and their life situations as a potential referral source.
85 "You've also told your client in very clear terms that you take their referrals seriously enough to invest an hour in each one. If they understand your contact system, they know the significance of that commitment. Chances are that the quality of the referrals will reflect it."
85ff On vertical specialization: example here of a vertical brokerage business that serves anesthesiologists, where the FA even wrote articles for their trade publications and presented at their conferences.
86 Note this very useful metaquestion: "If you were me and trying to build your business with anesthesiologists, what would you do?" Also on the idea of positioning your clients to take ownership in your growth.
87ff Another interesting quote here on networking with the client's CPA or estate planning attorney; also another really well-structured profiling/referral generating question: Can you enthusiastically recommend your CPA? [If yes] "We need to know who the best CPAs in town are because our other clients should be working with the best. Can you introduce us?" [If no] "Then let us help you. We know three CPAs who would be good fits for you: we can help you qualify them, we'll bring them into meet you and you can decide." This is win-win for you and the client whether they hate their CPA or love their CPA, it deepens your network and your financial team, it helps the client, you might actually bring that CPA more business too, etc. "If your client can't enthusiastically recommend their CPA, rescue them." On the immense value of becoming a go-to guy when it comes to professional resources; you become a connector; see also other network-able domains here in addition to CPAs: estate attorneys, estate planners, also homebuilders, architects, etc. [These are great ideas, they are thinking expansively about referrals, networking, forming a professional support network around the client.]
90 Finally an interesting insight here about finding out for sure whether you're "referable": do an anonymous survey through a third party of your clients to understand what they say: "...your brand is not what you say it is: it's what customers say you are."
Chapter 7: Leading the Practice: Leaders Developing Leaders
91 On the idea of the "game board": taking what it is you're trying to accomplish, breaking it down into discrete actionable steps, and have those steps posted and tracked for the entire team to see, thus making every day into performance review with ongoing, plainly visible feedback.
95ff On the concept of "servant leadership": comments here on AT&T manager Robert Greenleaf and his essay "The Servant as Leader"; he finds that institutions and elders were not doing a good job serving young people and likewise doing a poor job of leading; also Greenleaf's work inspired Stephen Covey, Ken Blanchard and Larry Wilson; on Larry Wilson's concept of "developmental leadership": helping your colleagues to grow and develop as a high form of service and leadership; on the difference between getting work done through people and "getting people done through work": the first group is a command-and-control model, the second is a trust and developmental environment. [Interesting and useful ideas here!]
96-7 Note the text box here describing the "stand-up meeting" where one of the FA teams has an 11:00 meeting standing up: "The whole thing is over by the time most meetings get everyone at the table with their freshened-up coffee."
99ff Example here of a dental practice which used a game board, setting quantifiable tasks and goals for the office team, where it is clear that the dentist makes money when his time is focused on patients, not on scheduling the next appointment or doing tech work like x-rays, trying to find new clients, etc.
101ff On the Supernova gameboard: regularly scheduled client contact; seeing larger goals in the form of a series of small steps; setting and tracking goals like referral calls and meetings; on how the game board creates reflective accountability because the game board is publicly posted and marked, "it fosters an internal environment of reflection." "With publicly posted goals, improvement opportunities are revealed in real time, and with an explicit invitation for group-generated problem solving."
106ff Comments here on W. Edwards Deming, the World War II era quality guru and his 14 points: note point 8 ("Drive out fear and build trust so that everyone can work more effectively") is foundational--if it isn't implemented the other 13 points won't work. [All of these 14 points are exceptional.]
108-9 On making sure each client is "owned" by a CA, so things won't get dropped or fall through the cracks; on proper listening skills (including useful but easy to forget advice here including never compose what you're going to say while the other person is talking; don't use the words no, but or however, etc.)
110 "If you can't change the people, you have to change the people."
To Read:
Larry Wilson: The One-Minute Sales Person
Larry Wilson: Changing the Game: The New Way to Sell
Larry Wilson: Play to Win! Choosing Growth over Fear in Work and Life
Joseph Badaracco: Leading Quietly
Debra Meyerson: Tempered Radicals
Patricia Aburdene: Megatrends 2010
***Jim Loehr and Tony Schwartz: The Power of Full Engagement
Jacob Needleman: Money and the Meaning of Life: Spiritual Search in a Material World [Note: this book turned out to be a massive disappointment, incoherent word salad.]
Richard Weylman: Opening Closed Doors: Key to Reaching Hard-To-Reach People
Bill Cates: Get More Referrals Now!
Steven Van Yoder: Get Slightly Famous
Larry Biederman: SMART Marketing
Robert Greenleaf: "The Servant as Leader" [essay]
George Reavis: Propel Frontline Leaders
Mihaly Csikszentmihalyi: Good Business: Leadership, Flow, and the Making of Meaning
Mihaly Csikszentmihalyi: Good Business: Leadership, Flow, and the Making of Meaning
W. Edwards Deming: Out of the Crisis
Marshall Goldsmith: What Got You Here Won't Get You There