Summit Nuggets

Here are some highlights from one of the most interesting annual meetings in the advisor space.

The annual AICPA Personal Financial Planning Summit, held this year at a resort location in Austin, TX (with sessions in Dimensional Fund Advisors’ auditorium) is one of the best conferences of the year, even though you may not have ever heard of it.  And contrary to the title, the conference attracts non-CPA advisors who simply want to join a community of leaders and successful advisors as they advance their non-technical skillset. 

I attended this year as facilitator of a fireside chat, where the audience gathered in the evening to talk about what they learned and what they intended to implement when they got back to the office.

To do that effectively, I had to take a lot of notes.  Out of all those pages, I am about to share the highlights of each session.  Warning: people who attended the conference are going to say that there’s a lot of relevant material that I left out.  This is only the highlights, the nuggets, that I found most important and potentially practice-changing.

Persisting advice

My favorite session, and the one I’m going to dwell on the longest, was presented by Moira Somers, executive coach, consulting neuropsychologist, therapist and author of “Advice that Sticks,” a book that provides advice on how to help clients move forward with the advice you give them.  Somers started off by telling the audience something they already knew all too well: “Clients will come to your office to make decisions, and many times the decisions you’ve agreed on don’t stick.”

Why?  Somers said that sometimes advisors’ advice will raise the complexity of their clients’ lives.  Other times the commitment will prove to be an unacceptable time drain.  As an example, you could say: “You need to go to an estate attorney and here are the things you need to say.”  Better: “Here is an estate attorney that I recommend, and I’ll make an appointment for you.”

Best: “I’ll make an appointment with an estate attorney I recommend, and I’ll go with you to make sure everything is covered.”

Somers added one more turn-off, saying that advisors speak so much jargon to clients that one of the most common complaints about working with financial professionals is that “They make me feel stupid.” This is a huge takeaway for some advisors: the more you try to impress your clients with your knowledge, the less likely they are to follow your advice.

You can raise your implementation rate by developing skills as an ‘adherence partner.’  It starts with a deeper fact-finding process.  “Find out what they want you to know about them and do for them,” said Somers, “and then deliver on that.”  This is another nugget: you have to be prepared to probe, because many clients will not be assertive about their own agenda, deferring to yours.  Try to find out if clients are convinced that they need to move forward, that they are connected to the overall plan, and that they have confidence that they can deal with the obstacles in their way (time constraints; complexity; the hassle factor). 

“Recognize right up front,” she said, “that no client walks in your door 100% ready to take action on his/her challenges or your solutions.  Our Maker,” Somers added, “didn’t make us that way.” 

Somers gave some advice on how to run more effective client meetings.  Start with a question like: “What would make this meeting the best use of your time, energy and money?”  At the end, ask: “Is there anything that you really wanted to deal with today, that we haven’t discussed yet?”  And: “Did we accomplish what you wanted to?” 

Meanwhile, provide advice so clear that the clients will be able to explain it when they go home to their family.  When you give a summary of the meeting to clients, ask them to highlight anything they don’t fully understand.

When you give advice, instead of saying: here is what I recommend (in all my authority as expert and professional), instead say: How would you feel about doing (X, which stands for your recommendation).  Are we dealing with the right issue?  Is this the thing you’re concerned about in your life? 

Alternatively: Should this be our next step?  Is there something more important that we should do first?

And: If we were to do (X), how would it help? “This, Somers said, “addresses the ‘promotion mindset’ that drives many individuals.  For other clients, it might be more effective to say: What would it be like if you didn’t do this?  What would this step help you avoid?  This latter question addresses the ‘prevention mindset’ that drives many individuals.

Sometimes there are external factors that you don’t know about.  So you might insert a question like: “Is there anybody who would be upset if we take this action?”

Once the advice is given, find ways to make it easier for clients to implement.  Somers told the story of a very busy couple, both administrators at different local hospitals, who needed a lot of estate planning work.  The advisor respected their time limitations, drafted a plan that was coordinated with outside advisors, and ceremoniously dumped a pile of work in the laps of the couple. 

Unsurprisingly, no progress was made.  Eventually, the advisor broke the work down into smaller, more manageable chunks, on a timetable over the next year.  Suddenly there was progress.

The talk was basically a blueprint for advisors to give more effective recommendations, important information for an audience of high-level technicians.  As Somers said early in the presentation: the quality of your advice is immaterial if the client isn’t taking it.

Diversity and NexGen

The Summit opened with Kate Healy, managing director of Generation Next at TD Ameritrade Institutional, who immediately noted the lack of diversity that was actually obvious in the makeup of her audience.  She said that just 3.5% of people with the CFP designation are African-American and Latino, which obviously doesn’t mirror the demographic makeup of the U.S. population.  Healy offered a statistic which shows that not much is changing: only 36% of firms in a recent survey are looking to hire diverse candidates. 

One argument that might change their minds is expanding your firm’s ability to navigate diverse and often subtle cultural cues.  Healy told the story of an Asian client who told her advisor that she was planning to pay for her daughter’s college education.  The advisor saw that this expenditure would reduce the Monte Carlo percentage chance of retirement success, and offered an argument that we’ve all heard: the child can always take out loans to pay for college, but the parent can’t borrow to pay for retirement.  The advisor persuaded the reluctant client to go back and tell the daughter that she was on her own.

A month or two later, at the next client meeting, the advisor could readily see that the client was emotionally devastated.  One of the first things she said was: “You ruined my life.”  The client’s family was no longer speaking to her.

Why? Because in her culture, family members were expected to help each other out.

Where do you look for talented people from diverse backgrounds?  Healy recommended that you move beyond the limited pool of planning program graduates, and consider the wider cohort of nontraditional college graduates; that is, people who have psychology, sociology or social work degrees—“helpers” as Healy put it.

You can also expand your outreach to the unlimited pool of talented career changers: legal aides, mortgage brokers, benefits administrators, law enforcement officers on pension, retired military, trust department staff and even restaurant staff who have a service mindset and know how to juggle complex responsibilities.  Healy put in a long plug for hiring women who are returning to work after taking time off to take care of children.  She said that some may be willing to work as little as five hours a week as a way to ease back into the workplace.  The key to attracting this giant pool of talent, she said, was to offer flexible hours and work-at-home options.

Mindfulness power

Somers was one of two psychologists who presented at the AICPA Summit.  Dr. Jody Jacobson, of Jacobson Coaching and Consulting in Owings Mills, MD ( gave a presentation that was fundamentally about raising the level of your brain where you make decisions and respond to client situations.

Jacobson described what most of the audience already knew: that you can divide the human brain into three semi-autonomous sections which are products of different stages of evolution.  You have the instinctive lizard brain that is located at the top of the spinal cord, which takes total control whenever a threat is perceived.  Above that is the mammalian brain, which is the seat of emotion and many instincts.  On top, the slowest processor and the last to seize control of a situation, is the higher cognitive cerebral cortex.

Where do you tend to live within this structure?  We all know people who seem to just respond (often defensively) to everything, whose locus of awareness is in or close to the lizard brain.  Others, whose locus is in the mammalian brain, routinely make decisions based on emotion rather than logic.

Your mission (should you decide to accept it), is to raise the percentage of responses to clients that come from the top of your brain, and generally to move the locus of your mental activities up the ladder.

In a stressful situation, Jacobson recommended that advisors take a second to breathe and refocus, giving the upper brain a chance to respond and take charge.  Longer-term, advisors can practice meditation, creating greater mindfulness (and higher cognitive functioning) on a routine basis.

One more nugget: Jacobson advised the audience to go easier on themselves, to be less inclined to beat ourselves up over mistakes—and, therefore, be less likely to carry negativity into the next meeting.  Professional advisors tend to be hypercritical of their actions, which means they have an exaggerated form of a universal human tendency.  “Our brains are velcro for negative memories and teflon for positive ones,” Jacobson told the group.  Later she said, about resolving conflict, that “our default instincts are defensive.”

The mind of the investor

It’s hard to argue with the statistical significance of a recent DFA-commissioned survey that queried 23,000 (!) clients of financial advisors.  In the session that seemed to cause the most jaw-drops from the audience, Stephen de Man, regional director of Dimensional Fund Advisors, offered a number of answers from that huge cohort of financial consumers.  There was, for instance: a “net promoter score” evaluation, where the clients were asked whether they would recommend their advisor to others.  Advisors of the clients surveyed, in aggregate, achieved an amazingly high 68 net promoter score.  This, de Man noted, is higher than the net promoter score given by customers of corporate leaders Apple and Southwest Airlines.

The survey asked: What attributes do you (the client) consider to be most important in an advisor relationship?  Experience With Clients Like Me was the most popular choice, and this by itself points to the importance of having a clear client profile on your website. 

In second place (another surprise) was Investment Returns.

Perhaps the biggest nugget here was that Range of Services, Fees and Expenses and Advisor of Similar Age were relatively unimportant  factors according to the survey respondents.  Yet those are often factors that advisory firms emphasize on their websites.  Perhaps, instead, they should tell (anonymous) client stories that not only illustrate the value of their work, but also what kind of clients they work with.

How many times a year do the clients want to talk with their advisor, either by phone or in person?  The average was 3.9 times a year, which I don’t think surprised anybody.

When they connect with their advisor, what is the most important issue to discuss?  The consistent (and, again, surprising) answer: My Investments, followed by Progress Toward Goals, Current Market/Economic Conditions and (in last place) Personal Non-Financial Matters.  If you’re thinking of eliminating the investment conversation from your client meetings, you might think again.

The survey also looked at the people who were highly UN-likely to recommend their advisor—“detractors”—and found that many of them measured their advisor by the investment return they received.  Avoid the greedy clients if you want long-term relationships.

Creating a sales culture

I’m sure you’ve heard advisory firm founders complain that their G2 advisors don’t ever bring in any business.  The next speaker, Nancy Bleeke, founder and ‘chief sales officer’ of Sales Pro Insider, author of “Conversations That Sell,” offered some advice on how to instill a culture of constant outreach at your firm.

Apparently the people who complain about a lack of G2 sales are in the majority: Bleeke cited statistics showing that 62% of advisory firms rely on one individual to do all the firm’s marketing. 

Why is that?  Bleeke said that sales and marketing have a negative mystique, especially in the minds of Gen X and Y staffers.  If you talk about marketing, their mind immediately turns to things you wouldn’t think of imposing, like making 50 cold calls a day, or selling to their friends and family.  They may also have an anticipatory fear of rejection, and they know they lack marketing skills and training. 

Moreover, their job may require them to spend virtually all of their time servicing their clients.  There simply is no time for me to do this thing that I honestly don’t want to undertake anyway.

The antidotes to this deflecting sentence are obvious.  Start by blocking out time for G2 advisors to engage in marketing activities, and then demystify the process by offering in-house training in the skills that the founder had to learn on his/her own.

Then, on a routine basis, Bleeke recommended that you begin to execute a “transfer of responsibility.” 

Meaning?  “Often in prospect meetings, when the prospect asks a question, the funder will immediately jump in and preempt the G2 advisors,” said Bleeke.  At many firms, G2 advisors are expected to be quiet and listen while the founder runs client meetings.  Where is the opportunity to grow business development skills?

As you provide training, recognize that you have an advantage in winning them over.  Chances are, the G2 advisors believe in the value of the services they’re providing.  If that’s true, and if 10-20% of their time is set aside for marketing activities, then marketing simply means finding ways to spread the word about the great work they’re doing. 

Another nugget that advisors can use immediately: Bleeke’s research has shown that simply adopting a fat bonus for business development doesn’t seem to motivate untrained G2 advisors to start selling.  “Changes in compensation alone is not a driver of behavior change in this area,” Bleeke told the group.

Exceptional client engagement

When her turn came to stand behind the lectern, Cheryl Holland, founder and CEO of Abacus Planning Group in Columbia, SC, got our attention right away.  She said (truthfully) that we all know that just about everything we do professionally, and often technically, is being incrementally commoditized.  (Scary thought.)

The key question her talk was designed to address was: what will we do to maintain our value and competitive advantage going forward?

Holland talked about active listening, and how to apologize when a mistake is made (whether it’s caught by a staffer or the client), and provided an “elements of value” pyramid of types of services from “functional” at the base, upwards to “emotional,” to “life-changing” and finally to “social impact” at the top—along the lines of Maslow’s Hierarchy of Needs.  She shared an agenda template that you can use to prepare clients for your next meeting, and a money history questionnaire that clients can take home.

Several nuggets stood out in her talk.  One was her version of distributed marketing: everybody on the Abacus staff is required to write a periodic article for the local business paper—and Abacus keeps framed versions of the articles posted in the lobby.  In addition, the staff will write simple explanations of different charitable strategies, which go on a one-page PDF with the pictures of board members of the local nonprofits, to be given out to potential donors.

At the end of every client meeting, clients are asked: “What do we have to celebrate?” “We do it at the end because we’ve found that that’s when clients have their peak experience of the meeting,” said Holland.  “We want the peak experience to be a celebration.”

Before that, clients are asked two very strong, basic questions: “What went well for you in this meeting?”  And: “What could we do better?”

Another nugget: Holland showed a slide of her firm’s “gift closet,” which was stocked with books, branded mugs and stuffed dolls (plus wrapping paper), so that sending out gifts is faster and easier.  Just go in the closet, pick out the gift and send it.

At the end, Holland recommended that everybody in the room make a habit of getting 1% better at a time, all the time.  Every week, let staff make suggestions on something that could be improved, be it operations, client service, or advice. 

Why 1% and not a more ambitious number?  Because incremental improvements are less intimidating to staff.  Holland confessed that, as a big picture thinker, she has come into the office with bold life-changing innovations that would be very distracting to the routine operations of the firm.  Scaling back to incremental 1% changes every week will make the firm 50% better each year.  That seems bold enough.

Succession tips

A succession panel talked about transitioning equity in a firm, whether it is an acquisition, internal succession or sale to an outside buyer.  The panel was moderated by Brad Bueermann, CEO of FP Transitions, and featured Michael Goodman of Wealthstream Advisors in New York City (who is simultaneously acquiring local firms and transitioning equity to G2); Ted Sarenski of Blue Ocean Strategic Capital in Syracuse, NY (who recently sold his firm, though he plans to stay on); Sue Stevens of Buckingham Wealth Management’s office in Chicago (who sold her firm and also plans to stay on); and Mark Astrinos of Libra Wealth in Palo Alto, CA (who took over a local advisory firm as an outside succession option).

Nuggets?  Sarenski talked about the fact that he did not sell his firm to the highest bidder, in part because nearly all of the potential acquirers were immediately interested in which of his staff people could be cut to generate higher profits.  His chosen arrangement will retain all staff members.

Goodman told the audience that he saw a huge unexpected shift when he allowed his next generation advisors to become partners in the firm.  “When I announced that my younger planners were now owners and principals,” he said, “clients were suddenly more willing to work with them.  They were no longer ‘second chair,’ and the advisors were more confident about taking charge of the relationship.”

Astrinos was much younger than the advisor whose firm he took over, and he was asked about how the firm managed to retain clients who might be reassured by an advisor with gray hair.  “The first year, we both met with clients,” Astrinos told the group. “The second year, the other advisor said to the clients that “Mark is buying into the firm.”  The third annual meeting, they were told by the older advisor: “I’m retired.  Mark is taking over working with you.”  The result was essentially zero turnover.

Stevens told the audience that the sale of her firm had nothing to do with the money.  She had been trying to create an internal succession plan for years, and once went so far as to transfer half of her client relationships—only to see that potential successor leave.  “I love my clients,” she said.  “I wanted to make sure they would be taken care of.”

There was some discussion of deal structure.  In Sarenski’s case, he will be working as an employee of the larger firm under contract for the next two years, earning a salary.  Under the provisions of the sale, he’ll receive the full payment if 90% or more of the clients transition to the new firm.  In Sarenski’s agreement, there is no ‘add up’ clause where the payment will increase if he brings in new clients. 

That may be short-sighted.  When he did his most recent acquisition, Goodman wrote an ‘ad-up’ clause into his agreement, and has received two new clients from the selling advisor.  On the other end, the agreement has a clause that says that if any of the acquired firm’s top four clients walk away, then the economics of the deal will have to change.

Stevens has a four-year employment agreement, and her sale also has an ‘add up’ kicker.

Astrinos said that even though he was an outside buyer, the valuation was closer to an internal succession—meaning he bought the firm at a lower valuation than would normally be available in a strategic acquisition.  The implication was that this may be the new normal, as advisors—echoing Stevens—select a buyer based on client service and expertise rather than maximized sale price.

Hiring smart

The last day brought Goodman back to the stage, talking about how he hires new members of his staff.  He started by listing a number of mistakes that many advisors make when they acquire talent: they rely primarily on the resume; they focus on cultural fit too early in the process; they hire from the gut; they conduct interviews that sell the position, rather than interviewing for it; they try to find common ground in the interview, and some may give the kind of ‘trip-up’ questions that were all the vogue some years ago, but don’t seem to help identify extraordinary candidates.  (One real-world example: “How many people in the world are out jogging right now?  How would you go about figuring that out?”)

Your goal in the interview process, Goodman said, is to find ‘A’ players, defined as people who have a 90% chance of achieving a set of outcomes that only the top 10% of possible candidates can achieve.  He broke that down into people who have three characteristics: passion for what you want them to do, persistence; and a growth mindset.

Ready to start?  First document exactly what you want this person to accomplish in this role you’re hiring into.  This is not a job description; it’s a set of concrete outcomes that you expect. 

Second: write an executive summary of the job’s core purpose within your firm—the job’s ‘mission,’ so to speak. 

Finally, outline the competencies that you believe this new hire will need in order to achieve the outcomes.

“I would recommend that you not hire a really good generalist,” Goodman added.  “Look for a specialist in each role.”

Goodman recommended a multiple interview process that weeds out candidates as you go.  The first—and biggest weed-outer—is a screening phone call.  Goodman has developed some questions that are likely to incrementally begin to startle the prospective candidate: What are your career goals?  What are you really good at professionally?  What are you not very good at or not interested in doing professionally?  Who were your last five bosses and how did they support you or hold you back?

If the candidate makes it to a second interview, Goodman will probe more deeply into their previous work experience, with questions like: “What were you hired to do?  What accomplishments are you most proud of?  What were some of the low points during that job?  Who were the people you worked with?  Why did you leave that job?  Rank your previous bosses on a scale of 1-10, and tell me what was missing that would have brought them up to a 10.  With each question, Goodman has trained himself to continue probing, with prompts like: “Tell me more.

In these second interviews, which are conducted face-to-face, Goodman will have at least two people in the room, one of them taking notes.  Then he’ll have other staff members meet with this person, so that the current staff can discuss the candidate as a group once the interview is over.

Finalists are given a planning case, and asked to present on it.  Goodman isn’t concerned about whether the candidates create a viable plan; he’s watching the evaluation skills, creativity and attention to detail.

Speaking powerfully

Finally, Apollo Lupescu, vice president at Dimensional Fund Advisors, offered up the best presentation advice he’s learned from hard experience after more than a decade of professional speaking engagements.  He said there are three keys to effectively getting your message heard and believed.

The first was what he called ‘ethos,’ which is whether the recipients of your message consider you to be credible or not before you ever open your mouth.  To illustrate the point, Lupescu told the story of an internationally-famous violinist who wanted his music to be heard by people who didn’t have the means to pay a thousand dollars a ticket.  So he took his violin down into the D.C. subway system and played for the thousands who passed by.  His performance was recorded. 

The punchline: nobody, not one person, stopped to listen.  Why?  Because the world famous violinist was playing with his feet on the sidewalk rather than in a vast music hall, the people walking by assumed he wasn’t worth listening to, and never managed to tune in to the quality of his music.

How can you raise your ethos factor?  Lupescu talked about how you dress, the appearance of the office, even a really nice coffee machine can make a big impression.  But it’s easy to think of other credibility-enhancing activities, including being interviewed in the local or national press, having written a book, and of course polishing your educational credentials.

Second: what Lupescu called ‘pathos,’ which is the emotional element of the issue you’re talking about.  Meaning?  When your client calls because the market is down, the least effective thing you can do is point to a detailed history of quarterly market returns going back 90 years.  Facts don’t matter to someone who is feeling frightened. 

A better approach is to start by acknowledging the feelings that prompted the call in the first place.  “Turns out, everybody is asking about that.  You’re not crazy.  How are you feeling about it?”  Only then can you start to introduce your perspective and the facts behind it.

Finally, the third factor—and, interestingly, the least important—is what Lupescu called ‘logos.’  This is your knowledge of the subject, your command of the logic and evidence.  The nugget here is to be mindful of the violinist story: you can have the greatest command of planning issues, and you should.  But you need the other elements before clients and prospects will take you seriously. 

Lupescu then went on to say that people perceive any message you are delivering to them through three lenses.  First, there’s the actual content.  Let’s agree that it’s important to know your topic.  Second is the voice, your intonation, inflections, the conviction in your voice.  (“No mumbling,” Lupescu said at one point.) 

Third is the non-verbal communication, basically your body language, looking people in the eye, moving around the stage rather than speaking from a seated position, your warmth, whether or not you smile occasionally when you speak.

The nugget here?  Lupescu cited studies which show that only 7% of the credibility and memorability of your talk lies in the actual content—which, of course, is what most of us spend 95% of our time preparing.  Just 38% of credibility and memorability is found in the voice, and the majority—55%—is attributable to non-verbal behavior.  The takeaway here is to spend more time practicing delivery than you spend on the content.

Lupescu said that the least interesting content is data, because it naturally has low emotional impact.  Better to tell stories, use humor and analogies and quotes to make a better emotional connection. 

Meanwhile, in another dimension, presentations about the speaker; that is, “about us,” will inevitably be less effective than presentations “about them,” about the audience members and what is relevant to them. 

This led Lupescu to draw a simple line, extending up and down the page.  On the vertical axis, the deep bottom is “about us” and the top is “about them.”

Cross the vertical line with a horizontal axis, whose left side is labeled “data” and the right is labeled “stories, humor, etc.”  Those crossing lines define four quadrants.  The lower left includes a lot of presentations that are mostly about the speaker and mostly using data.  Everything in this quadrant will be the least effective presentations on the graph.  The upper right quadrant, where the presentation is about relevant issues to the audience, and which uses stories, humor, etc. to make its points, is likely to define the most effective presentations.

Finally, Lupescu recommended that you have “scripts,” which could be answers to questions that come up time and again, or stories that you can tell to illustrate this or that point.  It’s basically a set of 9-12 talking points that you can bring to mind at any moment, and insert into the presentation, depending on the audience. 

Every conference thrives or fails based on the quality of the people who attend, and the AICPA PFP Summit tends to attract generously from the upper echelon.  This year’s meeting was limited to 100 attendees, and sold out before everybody who wanted to could get a seat.  I’m hoping next year’s meeting will have more capacity, because—as I hope you can see from two days of speaker nuggets—the Summit is one of those meetings where you know you’ll get three or more really good ideas for your firm’s next 1% incremental improvement.