You asked for them: examples and critiques of effective (and not so effective) business beliefs.
For about two years now, through the pages of this
magazine, we've shared our seven-step Value Ladder concept, advanced
applications, and how to use them to differentiate yourself in the
Enough with the theory, you've cried! Let's see some real-life examples of how other advisors are using the Value Ladder to better serve clients, to deliver real value and to capture more assets. Business beliefs answer the third rung of our Value Ladder-Why do you do what you do?
Business beliefs ignite passion in an industry that can be viewed as staid, reserved and overly cautious. They showcase your convictions, and put you-and not your solutions-at the forefront of the conversation.
Why highlight beliefs? Simply stated, business beliefs can win business. One Ohio-based advisor reported to us winning a $4 million institutional mandate from a medical group on the strength of one of his beliefs alone. One doctor on the investment board called him hours after his competitive presentation, noting that what set him apart was not a solution (the two finalists had precisely the same retirement solution!) but his business convictions.
Why We Believe In Business Beliefs
First, committing business beliefs to paper makes you take a stand. Because investing is inherently uncertain, advisors (and clients) seek a sense of certainty to counterbalance their feelings of risk or vulnerability.
Second, beliefs differentiate you by showcasing your personality. They reveal your personality and your character among confusingly similar financial services marketing.
Third, beliefs can lessen your practice risk. Business beliefs are a litmus test, attracting people of the same mind, while repelling relationships where something as fundamental as each other's beliefs are not aligned.
Take a look at some actual business beliefs drafts that have come out of our work with North American advisors. We do not mince words in respect to what we like and do not. How would you critique your own beliefs after reading our thoughts?
Good, Great, Or Extraordinary?
I may lose the will to live if I see another trite belief on asset allocation. Asset allocation may be the most common theme of a financial advisor's beliefs. Important as it is, though, many advisors tend to write dull, undifferentiated beliefs about it. We look here at asset allocation beliefs that range from passable to good, to great, to truly provocative.
I believe in asset allocation and diversification.
Yes. Thanks. Who doesn't?
I believe in asset allocation in order to control risk and enhance performance.
This one says more, but still I, and likely your clients, have heard very similar comments so many times that this belief would not set the advisor apart.
I believe asset allocation is key to maximizing returns while minimizing risk.
The word "key" is the only part that intrigues me.
I believe asset allocation dictates risk and return.
Short, but is it sweet? Can the word risk and return be described in fresher terms?
Here are some beliefs that say a lot more to me:
unemotional active management of assets can over the long term
outperform passive indexing management.
"Unemotional" hits me hard, as everyone-and I am no exception-has made emotionally driven, bad investment decisions.
I believe exceptional performance requires concentrated risks.
Now you are taking a stand! This advisor is tilting against mealy-mouthed bromides about asset allocation. I want to know more.
I believe that understanding risk is more important than understanding return.
This belief takes two common concepts, risk and return, which investors may not clearly understand and presents an entry to further discussion.
I believe the pain of losing money is stronger then the happiness of making money.
This one deals with risk and return, but not by name. It speaks to it in plain English terms.
Advisor A's Business Beliefs
Now here's an advisor I would give 15 minutes to listen to, based on these beliefs. Would you?
I believe that:
Exceptional performance requires concentrated risks.
Contrary viewpoints are difficult to embrace.
Passion leads to devotion.
New opportunities arise every day.
Everything matters in financial markets.
You can feel the passion. You also sense a confidence to leave the pack. The beliefs indicate intense focus on, and study of, the investment world. I would challenge the advisor on the third belief. What does it mean? Whose passion is he talking about? I would not change a word in the other four beliefs.
Advisor B's Business Beliefs
This advisor certainly knows his ideal client.
I believe that:
Educated investors are more disciplined.
Disciplined investors earn more consistent returns.
Most investors are intimidated by the investment process.
Becoming financially independent requires committing 10% to 15% of income to savings.
More risk doesn't net higher returns.
Look for the "springboard effect": Does a belief "spring" you into conversation? Each of these beliefs qualifies. An engaged prospect might ask:
"Am I an educated investor? Who is? How do you educate your clients?"
"What would I need to do to be disciplined in investing?"
"How do you help investors not be intimidated by the investment process?"
"How would you define financial independence-retirement, or simply covering future liabilities?"
"Really. Don't you mean, 'More risk does not necessarily net higher returns?'"
Ten Further Extraordinary Beliefs
1. The process is the solution.
2. In knowing what you own.
3. In collecting and holding high-quality assets.
4. The longest distance between two points is a shortcut.
5. Investment success usually requires not doing what comes naturally.
6. When the time comes sell, you won't want to.
7. The return of your money is just as important as the return on your money.
8. No plan is the right plan, unless you understand it.
9. What "everyone knows" probably is not worth knowing.
10. I am your coach, but you are the owner.
One Last, Enduring Belief
I'll wrap up with a powerful belief that continues to resonate with me: I believe in the power of compound interest. I really like this belief because it is arrestingly basic, so much so that you are tempted to brush it off as obvious. It is accessible to anyone who can remember sixth-grade math, and was inspired by the thinking of no less of a mind than Albert Einstein: "Compounding is the greatest mathematical discovery of all time."
Further, it's widely useful across a range of clients and situations: convincing someone just out of college to begin saving, or challenging a pre-retirement client to think clearly about the consequences of withdrawing wealth before compounding really takes off.
Pen to Paper!
Penning your beliefs is a far cry easier than crafting a one-sentence unique value proposition. It's less involved than creating, branding and depicting a process. Yet the right belief can win a value moment of truth every bit as easily.
To get started, try answering the following on what your beliefs are about:
How to build wealth?
Properly planning for retirement?
The value of a financial plan?
Truly diversifying your portfolio?
The biggest misconceptions among investors?
Selecting the right financial advisor?
If you are inspired to write them down, I will be inspired to read what you've written. Consider e-mailing them to me at firstname.lastname@example.org.
Giles Kavanagh is partner and chief operating officer of Pusateri Consulting and Training (PCT) in Williamsville, N.Y., a global sales training firm that empowers financial organizations and individuals to discover and articulate their unique value. For more information on the Real Value Audit, please visit their Web site, www.pusatericonsulting.com.