by Mitch Anthony
An advisor who works for a large publicly traded company walked up to me after I had delivered a talk to his firm on building client relationships. He offered this little excerpt from his firm's Monday morning "fire up the troops" meeting: "Do the right thing for your clients," followed by "And all of you need to sell more of this product. Go get 'em!" This advisor told me that he couldn't help but feel frustrated by the hypocrisy of thinking you are serving people by pushing product.
I encouraged him to try to look past his boss' mixed message to the machinery that drives such a missive. The underlying problem is the quarterly report and its focus on short-term results. It's a strange sort of fiscal insanity that has a stranglehold on many firms.
This type of performance measurement almost always ignores the normal, natural course of growth with lines that show peaks, valleys, spurts, and flattening periods, substituting them with artificial lines that display a never-ending staircase upward and onward. Achieving such an unnatural course of growth places the players (from the top down) in a constant pressure cooker. Like water, earnings expectations run downhill. Everything and everyone in its path is affected because the water just keeps coming. There's no time to think or breathe.
Take away the tension of unrealistic growth patterns, and people will find a pace and pattern for growth that is sustainable over the long run.
One study reported that companies focused on short-term gains ended up performing poorly when it came to long-term growth. Fortunately, there are companies out there that focus on long-term growth because they understand the value of having a long-term view.
According to an article published earlier this year in the Harvard Business Review, paying executives based on performance (i.e. quarterly returns) can actually damage a company by lessening their focus on long-term growth in favor of short-term gains. The Conference Board's Blue Ribbon Commission on restoring public trust blamed "short-termism" for contributing to business malfeasance.
What does this have to do with financial advisors and their clients?
I am not foolish enough to believe that this article is going to convince any firms to rethink their focus on quarterly earnings, but I will continue to challenge each of them to rethink their message to their advisors. The growth you see from investing in long-term relationships with your clients will, in the long term, lead to far superior financial results because true financial advisors will flourish in and be loyal to such an environment—and so will their clients.
An obsession with short-term measures for the sake of meeting short-term goals does not help and, in fact, clearly sabotages the goal of being a trusted advisor. It's not good for the advisor, the client—or the organization.
When you are told to squeeze as much revenue as possible out of every interaction, how do you keep the manipulation and marksmanship out of your approach? This poisoned sort of thinking reviles good souls who find themselves thinking such thoughts against their better selves. I have heard their confessions and resulting feelings of self-loathing for having had such thoughts. These are good people I'm talking about—those who are being asked to act against the best version of themselves, only because of the wizard's demands from behind the curtain.
If we help our clients make considerable progress in their financial lives, then we will be rewarded with more assets and more opportunities to manage wealth and risk. Imagine having this conversation:
"Mr. and Mrs. Jones, our firm is built on the principle of getting to know who our clients are and building relationships that serve you over a lifetime. Now, if you don't mind, our hour is almost up and you haven't decided on any insurance or investments yet. Which product sounds better for you today?"
Have we completely lost touch with sanity in our business models? Being a resident of Rochester, Minn., home to the world-renowned Mayo Clinic, I decided to put this question to a psychiatrist: "How would you describe this condition of focusing/obsessing on short-term results to the point of interfering with and impeding long-term stability and well-being?" Here is his answer:
"This person would be classified as having anti-social personality disorder (ASPD) with narcissistic tendencies or having a narcissistic personality disorder (NPD) with anti-social tendencies, depending on that person's primary and secondary motivations."
So, there you have it. If advisors were to focus on short-term gains at the expense of long-term growth on the couch, they would be diagnosed as either having ASPD with narcissistic tendencies or having NPD with anti-social tendencies, depending on their primary and secondary motives, of course. In other words, they would be classified as sociopaths and narcissists.
Of course, no one in their right mind would proffer something so ridiculous; yet, organizational structures and measures for success are built upon this very approach.
Remember, being prepared to go the distance is better than kicking into sales overdrive—for you, your clients, and your firm. Don't let anyone tell you otherwise.
© 2016 Mitch Anthony
Mitch Anthony is the founder and president of Advisor Insights Inc. and the Financial Life Planning Institute, the leading provider of financial life planning tools and programs for the financial services industry.
For almost two decades, Mitch and his team have provided training and development for both individual advisors and major organizations throughout the world. Mitch personally consults with many of the largest and most-recognizable names in the financial services industry on both financial life planning and relationship development.
Mitch is a consistently top-rated presenter who has spoken to groups ranging from 10 to more than 10,000. He has been named one of the financial services industry's top "Movers & Shakers" for his pioneering work. Through the Institute, he has partnered with Texas Tech University, the University of Georgia, and Utah Valley University to develop financial life planning programs for their undergraduate programs.
Mitch is a sought-after expert for the media, and a regular columnist for Financial Advisor magazine. His columns have appeared on CBS MarketWatch and in the Journal of Financial Planning. His original comic strip "Stanley Brambles, CFG (Certified Financial Guru)" has appeared monthly in the print edition of Research magazine. Mitch is also host of the daily radio feature, The Daily Dose, heard on over 100 radio stations nationwide.
Mitch is also the author of many groundbreaking books for advisors and consumers, including perennial bestseller StorySelling for Financial Advisors, cited by "Financial Advisor" magazine as the number one "must-read" book for financial professionals. Mitch's other books include The New Retirementality (now in its 4th edition), From the Boiler Room to the Living Room, Your Clients for Life, Your Client's Story, and The Financial Lit-Kit: The Cash in the Hat, The Bean is Not Green, and Where Did the Money Go?. For information on these books and more resources, click here. Contact Mitch at email@example.com.
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THE E.P.I.C. RETIREMENT
In The E.P.I.C. Retirement, Mitch moves the "retirement" conversation to the next level by challenging advisors to step up, broaden their capacity, and embrace a new role—retirement coach. Retirement coaching is the future of retirement planning—this new approach represents the value proposition that will separate successful advisors from the rest.
The E.P.I.C. retirement is one that is engaging, purposeful, integrated, and challenging. More than 15 years ago, Mitch broke through the ceiling of retirement planning with his groundbreaking book, The New Retirementality. He continues to change the dialogue about retirement from one focused solely on money to one focused on purpose. View a preview here.