Profiles Of Coaching #3 Real Success Stories of Actual Coaching Clients by Joseph Lukacs, Coach to Top Producers The case I present below is based on an actual client. The challenges, situation, and recommendations are all real. I have only changed the name of the person and omitted the firm name for confidentially reasons. Background: Chip contacted me in January of 2000. He had been in the industry for 15 years, and, as of December 1999, his gross production was $525k and he had amassed approximately $87m in total assets, all in standard transactional non-fee accounts. To the best of his knowledge, Chip had over 500 clients and over 1,000 accounts. Chip had been unsuccessfully trying to move more to a fee-based business, but his lack of organization and a realistic game plan always drove him back to his "traditional" way of doing business. On a typical business day, Chip would receive approximately 30 inbound telephone calls. He would try to make outbound calls on a consistent basis, but because of his lack of organization and the sheer number of his inbound calls, he failed on a daily basis. This caused him to miss opportunities for his clients in the market and cost his clientsí profits and himself commissions. Because of his low production, he had a full-time registered assistant that he shared with two other producers in his office. Chip did a poor job of managing and delegating tasks to her. He spent his day reacting to his business; in the previous two years, he had seen very little growth in new assets and his gross production had declined because of commission discounts to his active clients and a lack of organization. Challenge: Chip's challenge was very common for advisors who are looking to transform their business from transaction/commission-based to one of fee/advisory. They know they have to, they just do not know how to implement the change. Below I have listed some mistakes and challenges that hold an advisor back from making a successful transition to a fee-based business: 1. Not being personally organized 2. Poor time management 3. Lack of a written business plan and goals 4. Fear they are going to ruin their business 5. Lack of a business budget and personal budget 6. A short-term approach or lack of patience. 7. Fear their clients are going to reject the idea 8. Addicted to the ìactionî of doing daily business 9. Not clear on the value they bring to the client relationship 10. Not having a compelling reason to change now (I will do it later.) Not being personally organized: Transitioning to a fee-based business requires you to wear two hats throughout the day. In addition, you have to call and setup either a physical meeting with clients or a telephone call to discuss the change in your relationship. If you are not organized, you will "default" back to the type of business and day you are comfortable with. Poor Time Management: You must be committed to being productive the entire working day. Personal calls, office chats, or staring at your terminal will not give you the focus necessary to change. In addition, you may want to reevaluate your day and set aside time for planning and meeting preparation. Lack of a written business plan and goals: If you are really serious about your business you must have an actionable, concise, and written business plan that outlines in detail your timelines and how you are going to make the transition. Fear they are going to ruin their business: You cannot run your business or live your life in fear of what might happen. You must and should offer fee-based advisory service to all your clients. Let them tell you why they do not believe it would be in their best interest. I will guarantee you if you take no action you will ruin your business at some point in the future. Lack of a business budget and personal budget: If you are running a business and are a financial advisor you must practice what you preach. Most advisors are afraid of the short term financial consequences of transitioning to a fee-based business. If you financially plan and prepare for the transition, you will be more patient with the process and not panic at the first setback. A short-term approach or lack of patience: When you are committed to making the transition plan least 12 months if not 18 -- 24 months until you can fully say you run a fee-based business. We live in an "I want it now!" society. If you have this long-term belief and time frame, you are going to handle the inevitable setbacks and frustrations in stride and not abandon the process. Fear their clients are going to reject the idea: Most advisors are their own worst enemy when dealing with their own clients. If you position fee-based accounts property with the client and show them the advantages to working this way, you will have a good, and perhaps a great, transition ratio. Do not pre-qualify your clients? Let them decide. Addicted to the "action" of doing daily business: If you have been in a transactional environment you probably measure your daily success in the amount of ìgrossî you do each day. Each day you buy and sell based on the markets and your clients. It is very easy to get hooked on the pursuit of daily action and immediate financial results. It can become such a strong addiction that it prevents your subconscious from changing. Not clear on the value they bring to the client relationship: If you have been a stockbroker for your clients and not providing them financial advice and guidance, this issue is one that can really hold you back. If you have asked yourself "How am I going to justify my management fees?" then you must sit down and create a client service plan that outlines all the proactive investment service you can bring to a client. You must be very clear internally with yourself as to your value as an advisor. If not, you will never be able to articulate it with confidence to clients and prospects. Not having a compelling reason to change now (I will do it later.): If you keep procrastinating on getting started with transitioning your business, you probably say things to yourself like, "I will try and call some clients to discuss fee-based accounts," or, "I will try and write a plan to convert as much of my book as possible." If you do not have a compelling reason, then you need to find one, write it out, and read it every day. Here is the question you must ask yourself: "If I don't start transitioning my business successfully now, what is the worst that can happen?" Create a worst-case scenario, write it out, and read it each day. It must scare and disturb you into being effective. The Coach's Recommendations: When Chip contacted me, we discussed the need for him to set goals in writing and to commit to getting organized. In the past he just showed up every day at his office and reacted. First, I asked him to write down in detail what he wanted his business to look like and how it would function in three years. Next, Chip had over 500 clients, but he could not tell me who his top 50 relationships were. He managed his business with a desk calendar and various Rolodex cards with his clientsí information on them. I asked Chip to take two full days off and organize his book of businesses into A, B, and C groups. I told him we really needed to determine where his income came from. Finally, I strongly recommended that he invest in contact management software (Act, Goldmine, etc.). Chip needed to treat his business as a "real" business, which means using technology to improve his effectiveness and organization. We developed a 24-month game plan to systematically shift from being a transactional stockbroker to a fee-based financial advisor. This was an important step to demonstrate we were going to start slow and evolve into the new business model, not make quick, wholesale, economically painful changes. We also agreed we would "draw a line in the sand" and stop taking on any new clients unless they were agreeable to being fee-based. This one decision is very crucial because it breaks the cycle of adding more transactional business to his book. Implementation: Chip divided his clients into A, B, and C categories, cleaned and organized his office. (In addition to the two days I suggested, it took almost a week of blocking out two hours per day.) This process was very important in determining exactly where his business was coming from and uncovering future opportunities with his current clients. Chip was comfortable using computers, so he purchased a contact management program and a notebook computer for his business. He would start by hiring an intern or temp to input all the client data into the program. (In most cases it is better to hire out the initial process of inputting data to someone rather than doing it yourself. A temp should cost you no more than $20 an hour, whereas your time is worth at least $200 an hour - and you have more important tasks to do!) We set a goal of increasing his ROA from 60% to 75% in the next 12 months. We would accomplish this by annuitizing "dead money" and starting to move his clientsí money into fee-based accounts. I asked Chip to set a standard of setting one telephone or office appointment with a client to discuss working to a fee-based arrangement. Most importantly, we started with those clients that have assets but do not create substantial commissions. Chip would practice his approach with these low-risk clients and work up to the high commission, high transactional clients. I asked Chip to commit to meeting with his sales assistant every day in the morning to go over projects and tasks for the day. Chip needed to start delegating responsibility and minor tasks to his assistant. One of the most challenging requests I made of Bill was to stop answering his own phone at certain times of the day. We decided to make afternoons his time to focus on converting his book while the mornings were used to attend to his traditional business. In essence, Chip would wear two hats each day. Results: As of December 2000, Chip has been able to move $10 million of assets from existing clients into fee-based accounts. Also, by sitting down with them and completing an investment plan for them, Chip has gathered an additional $2 million dollars from the first 20 clients he sat down with. (An unexpected bonus to the process.) Chip has done an excellent job using his contact manager and staying organized. He now comes into the office each day and prints out all his client calls, meetings, and to-do's. He has developed a regular call schedule for all his clients. He feels ó for the first time in years ó that he has control of his business and life. Joseph J. Lukacs, Business Coach, is the founder of International Performance Group LLC., a professional business coaching company delivering customized coaching and training, by telephone, to financial and insurance professionals. International Performance Group LLC. is based in Bridgewater, New Jersey. Joseph can be reached at 908-526-8877, by e-mail to joe@ipg-coaching.com, or visit our Web site: http://www.ipg-coaching.com