Listening to your clients can help; so can teaching your computer to listen to you.
Every advisor knows that creating a client advisory
board (CAB) is a great idea. So why do so few advisors do it? When I
speak at conferences, I often ask how many advisors in the room have
established a CAB. After all, it sounds simple enough to do. Yet almost
no one actually takes the time to set up a CAB. Apparently, it's like
dieting and exercising: You know you should do it, but it takes you out
of our daily routine and never gets done.
So it was no huge surprise when Steve Wershing, president of Ensemble Financial Services in Rochester, N.Y., told me about Bruce Peters of PeerHQ, a Pittsford, N.Y., consultant dedicated to helping businesses create and maintain CABs.
Peters aims to elevate CABs to a strategic-level tool. While advisors who create CABs might be inclined to aim the effort toward getting referrals, Peters says the return on your CAB investment can actually be much greater than a handful of referrals. A CAB can help you redirect your marketing campaign and even reinvent your business. While a CAB can also bring referrals, that should not be its focus.
Peters, who says he has facilitated 242 CAB sessions over the past three years, arranged his first CAB for a financial advisory firm after he had moderated about 100 CABs for a variety of other businesses. A senior partner of the advisory firm was about to retire, and that was the main issue being discussed in the session.
Twenty minutes into the discussion, Peters says he realized that he was involved in the most intense CAB session he had ever facilitated. "Clients of financial advisors view the success of their advisor as part of their own economic security," says Peters. "They are incredibly engaged and bound up in the success of their advisor, and they will do almost everything they can to help their advisor become successful. As a consequence, the value of the feedback you get from CABs for financial advisors is extremely high."
Peters says it is not uncommon for him to come out of a session with a new marketing plan for a firm. For instance, at one CAB meeting he hosted, the firm's owner presented a new marketing plan. His CAB-at their first session-trashed the plan. They told the advisor that his strongest suit was educating clients and they helped him in a two-hour session design an agenda for a workshop, and they told him he was targeting the wrong types of clients for his services. Each CAB member personally invited two friends to attend the new workshop. "The advisor fulfilled his target for new clients for the entire year with that one workshop," says Peters.
Peters says that not all CAB sessions follow the agenda he writes with his clients before each session. However, unpredictable meetings can be the best ones. One advisor he worked with wanted to devote his CAB session to his strategic plan for the year.
Peters says that ten minutes into the meeting, CAB members laid it on the line with the advisor: "They had one concern and one concern only," Peters recalls. "The advisor was switching broker-dealers and his clients were concerned that they would not get the same level of service after the switch."
Peters says the agenda for the meeting was scrapped and the CAB spent the entire session telling the advisor how he should transition his practice to the new firm in a client-friendly way. "If we did not have that CAB meeting, that issue might never have been aired by the firm's clients," says Peters. "Clients might have simply left the advisor and he might never have known why."
Peters previously worked for a group called TEC, which stood for The Executive Committee, and that eventually led him into CAB consulting. TEC brings together CEOs and facilitates meetings and coaching sessions where they can share ideas and help each other. TEC, which recently changed its name to Vistage after it was purchased by former junk-bond financier Michael Milken, says it has 12,000 CEO members in 15 countries worldwide. Peters spent five years running CEO groups for the firm and eventually recruited facilitators for the CEO groups.
One day about three years ago, a member of one of the CEO groups who Peters worked with approached him about creating a CAB for his company, PAETEC Communications. Peters says he spent four months researching the idea of creating a CAB. Peters says few firms were offering services to create and facilitate CABs, and none were using a CAB as a strategic tool. Peters says he asked the CEO what the program would look like in two years if it was successful. The CEO said he would have CABs in all 19 major markets where his company had a presence. Two years later, Peters says, PAETEC has 21 regional advisory boards that meet three times annually, and along the way Peters realized he had a real business in helping companies create a CAB.
To try to validate whether what Peters is offering is effective, I called the CEO of Wershing's firm. As I mentioned earlier, Wershing was the person who originally told me about Peters. Wershing runs Ensemble Financial Services, a Rochester, N.Y., firm where RIAs can outsource client reporting, financial planning and other services, and he has been encouraging RIAs to hire Peters. Wershing concedes he's had little success because of the price tag. But Wershing says he became convinced of the value of CABs after seeing what it did for Ensemble's parent company, AM&M Financial Services.
Tom Rogers, the president and CEO of AM&M, says Peters instructed him and his management team to create a diverse board-from clients that had been with AM&M for 20 years to those who had been clients for less than a year, from those who wanted AM&M only to sell financial planning advice and no products to those who wanted AM&M to sell products as well as financial planning. It took two months to come up with a list of 17 clients, and 15 accepted a place on AM&M's CAB.
Clients were invited to join the CAB in a detailed letter, and that was followed up by a phone call. They are not paid or given free services or gifts. "You don't pay them because you don't want them to feel like they're being bought," says Peters. Rogers says that the firm has conducted three CAB meetings in the past year and that this is the right pace for his firm. Meetings are held at country clubs and meeting rooms, and no less than 12 of the 15 members have shown up for the two- to three-hour sessions.
"Most of what we learn from the board comes as a total surprise to us," says Rogers. For instance, AM&M was acquired last year by Tompkins Trustco Inc., a publicly traded financial services holding company. "We accepted the merger as a successful step for us and never realized that clients were concerned about it," says Rogers. AM&M's CAB expressed concerns that the holding company would require AM&M to sell proprietary products or impose sales quotas and institute other changes that could compromise the integrity of the firm's advice. "We knew that Tompkins never intended to do such things and had an excellent track record," says Rogers, "and it never occurred to us that clients would be concerned about it."
That CAB meeting was focused on explaining the benefits of the acquisition and explaining it to the client board. The CAB mapped out a strategy for reassuring clients that the acquisition would not impact AM&M's advice and services. Ironically, at the following CAB meeting a few months later, one of the CAB members who at the previous session had been most vocal in his concerns about the acquisition, asked why AM&M had not corresponded with clients about the new products that would be made available to them as a result of the acquisition. "We learned that people were not afraid about the new services we would be able to make available through the new company, just that they would be sold aggressively," says Rogers. The CAB helped draft a letter offering the new services in a way that would not be heavy handed.
Rogers says AM&M did not create a CAB to get referrals, but the referrals have come anyway. "With the amount of money we've spent on it, I'd say that the referrals alone have offset the costs," says Rogers. "And we didn't even do this for the referrals."
Depending on the size of the board, Peters charges between $3,000 and $7,500 for each CAB Session, and on an annual basis the fee ranges from $10,000 a year to $18,000. Peters creates a transcript of every session and summarizes it in a 12-page report.
Peters warns firms that they should not expect the first meeting to be a love-fest. "It can get ugly," he says. "I had a client walk into a meeting with 32 pages of complaints, and you usually hear a list of grievances at the first meeting. But that lends credibility to the seriousness of the meeting and my role is to make sure the advisor does not become defensive, and to turn it into a learning experience."
"You can create a CAB on your own, too," admits Peters. "And it will be valuable. How could it not be? But if you want to professionalize your practice and make it a privilege for clients to participate, then it pays to do this in the most professional way."
Not A Typist? No Problem
I'm writing this story in a way that is a little scary for me. For the first time in my life, I'm not using the keyboard to write. I'm dictating the story using speech recognition software called Dragon Naturally Speaking from Nuance Communications Inc.
For a writer, using speech recognition software like this is unnatural. But considering that this is the first time I ever used this software, it's impressive that I'm able to use it right out of the box with almost no preparation. And I have a feeling that I could get used to it, if I had to.
I probably should've started using software like this awhile ago. For almost ten years, I have had tendonitis in my right arm from hitting the keys when I type. I'm a fast but not very accurate typist. I slam at the keys, and I'm sure that is what has caused my condition. So using speech recognition software is probably a really good idea for me. But enough about me.
What I'm really interested in doing is finding out if advisors could use this software to make their lives easier. This program can write documents and e-mails. You can use voice commands to browse the Internet, and it works with just about any Windows or Web-based application. So if you use Junxure or ProTracker as your CRM system, for instance, and you want to insert letters to clients, you can dictate them. Or if you use a Web-based CRM system, like SalesForce.com, you can enter data through voice commands.
For some advisors, getting in front of a keyboard can be intimidating and no fun at all. If you're one of those people who prefer talking to writing, then this software might be for you. It's not uncommon to be a great talker and a lousy writer. If any of this sounds like you, then you would probably be a good candidate for the Dragon software.
If you typically write notes on a pad during a client meeting and then type them up into a computer, using the software may be a better alternative. After a client meeting, you might prefer to dictate the notes into the computer.
The program is not able to transcribe a telephone call with a client, because it will only transcribe your voice. It also cannot be used to transcribe client meetings, because it's not capable of multiperson speech recognition. It can only recognize one person's voice at a time.
For advisors who are already dictating notes and letters and who have an assistant to transcribe a recording, this program could also be a timesaver and a money-saver. If you are experienced at giving dictation, meaning that you know how to dictate punctuation and formatting of documents, then using this software could be easier for you.
I admit that I never expected this program to work as well as it seems to. Speech recognition technology has been around for a while, but it wasn't very accurate and has not been widely embraced. Dragon Naturally Speaking has long been the best-known name in this category of software. Right now, I'm having almost no difficulty making the software accurately transcribe exactly what I am saying. A tutorial took about 20 minutes, and in that short time I learned several commands that are allowing me to insert commas, delete certain words and insert punctuation. It's really incredibly easy to use the basic speech recognition part of the program.
But there are some kinks. Using the software properly will take time to master. While you can get up and running in minutes and dictate a document, it'll take some time to learn how to navigate to specific words in a document. It will also take time before you can edit your document using voice commands. That's frustrating and probably gets in the way of success for most people. It will take a commitment to be great at it.
However, instead of editing with voice commands, you can also edit your document on the keyboard. Whenever you create a document using speech recognition, you have the option of keeping the voice recording so that you can go back and edit the document using voice commands, or deleting the recording and just editing the document on the keyboard manually. Storing all your voice recordings will eventually eat up a lot of space on your hard drive. Each recorded minute takes up about 1.5 MB of space on your hard drive. (To give you an idea of how well the program works, when I said it will use 1.5 MB of space, the program inserted the number correctly and used the letters, "MB," so that I didn't have to do any special commands. On the other hand, writing this last sentence, and getting the program to write the letters M and B took manual intervention and wasted my time. But there is no reason why you would not use the speech recognition software to get your basic ideas on paper and then go in and manually edit it with your keyboard.
Installing the software took me about 30 minutes. It comes on two CDs, and at the end of the installation you're asked to "train" the software so that it understands your way of speaking. The Professional version of the software comes with a headset and microphone, but they are actually pretty chintzy, and you'd probably want to purchase an upgraded headset with a microphone. You train the software by reading certain prepared passages into the microphone. It was easy and took about 15 minutes to complete. A tutorial takes another 10 minutes to complete.
Dragon Naturally Speaking 9 comes in three different versions. The Standard Version has a list price of $99.99 but can be purchased online for about $80. This version is good if all you want to do is surf the Web and capture your text in a word processor without formatting capabilities.
The Preferred version has a list price of $199.99, and like the Standard version supports only a wired headset and works inside of Microsoft Word, Corel WordPerfect and Internet Explorer. Unlike the Standard version, the Preferred version let's you create dictation files that you can listen to. The Preferred version also allows you to format documents using voice commands and works with a digital recorder. It can be purchased online for about $150.
The Professional version of the software lists for $899.99, but can be purchased online for about $625. This version includes all of the bells and whistles. Not only does it work with all Microsoft Office applications and Windows applications, such as Excel and PowerPoint, but it also supports a wireless headset and microphone. So you could buy a Bluetooth microphone, and not be tethered to your desk. Another feature of the professional version is that it allows you to create what Nuance refers to as, "voice shortcuts," which are sections of text that you use over and over again. If you begin all of your client letters with the same introductory paragraph, you could create an audio shortcut for that introductory paragraph, and it will be inserted in your letter.
In addition, while all three versions of the software-the Standard, Preferred and Professional versions- have a vocabulary of 300,000 words, the Professional version allows you to add vocabulary words. For instance, a term like the "Standard & Poor's 500" would be automatically added to your vocabulary list when you set up the Professional version. In addition, when you install the Professional version, it scans all of your e-mails and documents to look for words that that are not on the program's vocabulary list. Those new words are then added to your vocabulary list automatically. For financial advisors, who use a lot of specialized jargon, this might be a useful feature.
Perhaps the most useful feature for a financial advisor is that the Professional version can process a "wav" file. If you have an assistant who transcribes your correspondence, you can install Dragon on his computer and use your voice profile on that computer. You could then e-mail your assistant the wav file and your assistant could then allow Dragon to create the transcript of the recording. Your assistant would just be manually formatting the document and cleaning up any inaccuracies instead of having to transcribe the entire document from scratch, which would take much longer.
This software is not for advisors who are facile writers and fast typists. But if you are currently using a transcription service or would like to try to dictate letters and documents, it's a worthwhile investment. As a writer, Dragon naturally speaking may not be my new way of writing my column. But that's because I'm a writer, and I am compelled to hit a keyboard. It's just that way for me. But I wrote almost this entire article by dictating it. I don't think I write as well when dictating, because I'm not editing every word and going back and changing every sentence. But that may be something I could get used to, if I really tried. For an advisor who does not like to write, however, but who must get his ideas down on paper quickly to correspond with clients and vendors, this is a useful program.
Andrew Gluck, a longtime writer and
journalist, is CEO of Advisor Products Inc., a Westbury, N.Y.,
marketing company serving 1,500 advisory firms.