Making Future-Focused Decisions

Recently I’ve been involved in several multiple-day meetings. One with the leaders of my company and another was with my external wholesalers. I hosted my direct reports in Sanibel, Florida, and it was the first time we had been together as a team in more than two years. The meeting for the company leader was largely in-person, although I attended virtually. Obviously, it would have been better if I had been there, but I still got the needed information via the Zoom connection. It’s not unique as companies struggle to have to connect. Meetings that combined virtual and in-person are the wave of the future. What matters is that the right content is delivered.

During the in-person meeting, my team developed the content. We took advantage of being together physically and conducted smaller roundtable discussions followed by a full group session. We hammered out our 2022 topics, all designed to educate and motivate advisors to use protected income for their clients’ income and accumulation goals.

The idea was to get buy-in on all the topics to get more engagement from our sales team. Over the last two years, our engagement with advisors has dropped. Advisors are not as available, and they control their time more carefully than ever before. With a raging stock market in the background, there appears to be no reason to change. Why should the advisor change?

Their income increased by 15-20% with the value of the assets under management increase.

We can show through 5,000 market simulations that the clients’ probability of success increases by using a percentage of the assets under management. Several software programs can demonstrate the usefulness of protected income in portfolios. Unfortunately, few follow the research to make the best decision for their clients.

This takes me back to our sales meeting. In the closing afternoon session, I invited the Own It team to speak. Over the past two years, we have kept our cohesiveness through video platforms like Allego and Rush. We have attempted to reach advisors in a variety of ways and better utilize asynchronous learning. We have deployed digital sales pages to better use assets in an “on demand” environment to better serve our advisors.

However, nothing substitutes the in-person connectivity. But the content that the Own It team delivered was far more important than being in a room together. I felt this was the right time to bring this content to my team as we begin to acknowledge that “normal” is possible and should be acceptable again.

Here is the key statement to the session’s content:

Your Next Decision is Your Best Decision.

Think about that statement for a few minutes. This has so many implications to our industry and society.

First, we have been accustomed to seeing gains in equity markets in double digits for many years in a row. While we are seeing volatility return, many think this will be short term like other recent corrections. The issue is not if a bull market or bear market is in our future. The issue is how Americans can live in an uncertain and likely longer retirement period. How can we make sure – not hope or think it will work – but truly be sure that our clients’ assets will provide the needed income for the rest of their lives, provide the legacy they envisioned for their families, and have the needed liquidity for emergencies that are likely to happen along the way? The decision to focus our attention on this issue needs to be addressed and can no longer be ignored.

We risk losing clients and endangering their retirements. We must make a decision to talk to our clients about their concerns and risks in retirement rather than just talk about returns. We are likely to earn a living by controlling the risks in retirement versus managing the rate of return going forward. It’s a decision that every financial professional that acts as a business owner has to make. Where will your market be in 10-15 years? And what decisions do you need to make today be there when your clients need you?

Second, we must be thinking about our next decisions, not our past decisions. All of us have had times when we wish we would have done something differently. I know our clients have these thoughts all the time. I can’t tell you how many times I’ve heard advisors say their clients wished they had locked in their gains prior to a major market correction because they can’t sleep at night. We can’t change those mistakes or misfortunes. We can only focus on the next decision.

A new perspective helps that decision — I lost money, now I want to invest differently. I didn’t know how much risk I was taking until I took too much. I need to grow my client base, but I relied on referrals from clients earning double-digit returns. All those experiences can shape our next decision. What’s important is that we use that experience – not always our education – to make the decision. Our next might be our most important in our business.

Finally, we need to make sure the next decision is our best. We talked about using our experience versus our education. Too many times, we ignore the clients’ perspective and their lens in making decisions, especially portfolio decisions. Is our decision to use a certain percentage of equities and fixed income based on pure science or how the client feels? Can the client tolerate that mixture?

While we want to systematize our business, we must be aware that humans are different and unique. We can make sure that we keep their portfolios to their authenticity by doing one simple thing better than other professionals – listening. We have many clients overexposed to equities. They have previously told us they are enjoying the statements they received. It’s our job to question that. Are they going to be happy in the future if this portfolio changes by just one standard deviation resulting in a negative return for the statement period? And, what happens if that continues for six, nine or 12 months? Will they feel the same?

This isn’t a popular conversation to have with a client following a bull market. But it’s exactly what should be important to our clients. That decision – to stay invested or reconsider – might be their best decision. And, it is their next decision that they have to make as we continue to see volatility. More importantly, it shouldn’t be based on recent returns. We must have difficult, inconvenient and challenging conversations with our clients and our peers to be better than the competition.

Think about you next decision. And make it your best.

Transformational Tactic:

Your next decision can be your best decision. But to do that, you must focus on more than just returns. Use the tools available to you to stay connected. And use your experience and expertise to make a decision based on how your client feels and what will help them reach their goals.