ABA Wealth Management Conference

Here are the sessions I am looking forward to over the next three days at the ABA Wealth Management Conference in Scottsdale, Arizona. I’ll be back here next week with observations and potential implications on the intersection of leadership, advice an technology. Let me know if you’re going!

1) Financial Services in a Mobile World
Jon Bluth, Senior Vice President of Product Management, SunGard
Eileen VanScoy, Executive Vice President of Product Management, SunGard
The mobile landscape is rapidly evolving, and the financial services industry is striving to keep pace. Similar to the Internet’s early days, fragmentation, security concerns, legacy infrastructure, monetizing solutions and ROI considerations present challenges and opportunities that must be analyzed and addressed to fully capitalize on the sweeping changes brought about by an increasingly mobile world. This presentation looks at financial firms’ emerging and actual opportunities and risks in deploying mobile technology, and discusses various approaches they can take to cost-effectively and responsibly leverage its many benefits to their business and their clients.

2) Leveraging Operational Benchmarks To Achieve Sustainable, Profitable Growth
Michael Kostoff, Partner, WISE Gateway LLC
In these difficult economic times, it is clear that wealth management executives must “do more with less”–they must drive increased revenue growth while simultaneously reducing costs. This presentation will outline how managers can leverage operational performance benchmarking to accomplish this goal, and deliver profitable growth that is sustainable in any kind of economy.   Strategies for improving staff productivity, ensuring support structure cost efficiencies and enhancing sales performance will be discussed.

3) Family Wealth Management
Pat Armstrong, Senior Vice President and Managing Director, Family Dynamics, Wells Fargo
Arne Boudewyn, Senior Vice President and Senior Director, Family Dynamics, Wells Fargo
This breakout is designed to explore strategies for engaging high net worth families in conversations about the qualitative, non-financial dimensions of wealth, sometimes referred to as the human, intellectual or social capital.  Drawing on research and best practices in the area of family dynamics, the presenters will focus their discussion on challenges and opportunities facing wealth advisors as they work with various family profiles on a range of business and estate planning concerns.   The presenters will illustrate how to surface and leverage family motivators through an interactive discussion with participants, highlighting conversation starters that can enhance the planning process.

4) Luncheon with Speaker

The Art of Vision
Erik Wahl

Your best sustainable edge in business is your ability to visibly differentiate yourself from your competition. The Art of Vision is an entertaining and highly practical program that uncovers new ways to make your organization more creative and ultimately more profitable. It is no longer enough to have good customer service and a good product. The truly great companies have altered the landscape to create a unique experience for the customer. Whether its sales, service or leadership principles; professionals at all levels can achieve superior performance by creatively differentiating themselves from the competition.

5) Expert Teams Produce Extraordinary Results

Stephen Doty, Investment Executive, Northeast Division, U.S. Trust, Bank of America Private Wealth Management

David R. McCune, Region Director, Wells Fargo Wealth Management Group 

HNW client demands are clear – they want to be served by a team of professionals. Clients seek a team of advisors with specific roles and complementary skills and talents, aligned and committed to a common purpose of putting the client first, and who consistently exhibit levels of creativity and collaboration that produce extraordinary results.  But how do we get teams to perform at this level? How do we integrate uniquely qualified individuals to think and act as a team? This interactive session will explore the philosophies that make the team approach successful and share actual experiences of a winning team.

6) General Session
Making it Personal – Relationships and Wealth Management

Joseph Michelli, PhD,
Author and Organizational Consultant

Delivering financial performance for your clients is not enough.  Learn the tools that will engage, retain, build loyalty, and grow referrals.

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7) Client Acquisition in a Wired World
Kathleen Pritchard,  Director, Head of Program Marketing and Customer Insights, Legg Mason
In today’s competitive business landscape, financial professionals who fail to leverage the power of the Internet to acquire new clients are doing themselves a serious disservice. By cultivating an online presence that showcases your specific expertise and service offering, you not only create opportunities to meet qualified prospects, but also build credibility and rapport that increases your chance of winning their business. Key topics include best practices for websites and email campaigns; building a network of contacts to facilitate referrals, both as an individual and a professional; using online search tools to identify potential clients, understand their individual needs/interests and use that information in initial meetings to open more new relationships; managing your online reputation; delivering a consistent message that reflects your value proposition; recognizing compliance concerns; and more. Also featured is a discussion on how financial professionals can enhance their client acquisition efforts by using popular online “social networking” services like LinkedIn, Facebook, and Twitter.

Free Advice From a Mentor

I have mentored dozens of young professionals over the years, and even though each situation is unique, I always end up giving these three pieces of advice. It’s not like I planned it all out, or even wrote it out before now, but here they are:

1. There is no secret handshake
2. Focus on getting better, not getting credentials
3. It all starts with you

There is no secret handshake

The CEO of a venture-backed technology company whom I know well once asked me: “Do you ever get the feeling that when someone comes to you for career advice, what they’re really looking for is the secret handshake?” 

Yes, I have gotten that feeling.

My best mentoring relationships have involved mentees who truly want to improve their performance, learn new skills, take on more responsibility or just learn more about what a potential career path might look like for them.

The best way to ensure that a mentoring relationship with me is short (and not particularly rewarding for either of us) is to mistake it as an opportunity to simply learn the secret handshake.

Do you really think I’ll hire you or connect you with someone merely because you want more money or a better title?

Put some clothes on that naked ambition, you’ll catch a cold.

Focus on getting better, not getting credentials

I often get questions like “Should I get an MBA (or any one of the alphabet soup of certifications in the financial industry: CFA, CFP^®, CIMA, CTFA, etc.)?”

My consistent answer to all who ask is that if you want to learn more about that particular area and want to study it deeper, go for it. I’m a big believer of continuous learning, and earlier in my career I worked to get an MBA and put a few initials after my own name.

On the other hand, if you think that simply tacking those initials after your name will open a whole new world for you, you will probably be disappointed.

I still remember a soon-to-be-freshly-minted MBA who wanted to ‘remind’ me that he would have this very important graduate degree by the time of his next performance review, and that he hoped that would qualify him for a promotion.

I ‘reminded’ him that he was still the same person with the same level of performance, so probably not.

It all starts with you

This is kind of a two-for-one. First, I mean that before you start on any exploration of future paths, you need to understand your strengths, your passions, what gives you energy and what saps you dry.

I also mean that the whole process of working with a mentor isn’t a passive activity of absorbing second-hand knowledge through osmosis.

I was very proud and excited when my company asked me a few years ago to participate in the pilot of a program called MentorConnect, kind of an internal match.com to put mentors and mentees together based on specific skills and experiences.

I learned to start by asking mentees to share any relevant standardized test results they may have taken recently (Meyers-Briggs, PDI, StrengthsFinder, DiSC, etc.), and if they didn’t have any, I had them start with StrengthsFinder 2.0. Not only did this help give the mentee and me a logical starting place, it helped to quickly identify those who were only looking for the secret handshake. Those types often would not do the work.

I also recall the bright young assistant who was referred to me by her boss for some career advice a few years ago. She wasn’t sure what she wanted, but she was sure she should be higher in the organization by now. I took her to lunch, and we talked for an hour and a half. I gave her a couple of books to read for our subsequent meetings. I must have followed up three of four times when I ran into her, but she hadn’t quite found the time to even buy the books, let alone read them.

I guess I wasn’t completely surprised when she dropped by a couple of months later to let me know she was quitting the firm.

She was going to work on her MBA.

And no doubt continue her quest for that elusive secret handshake.

You Do Realize This is a People Business, Don’t You?

Bankers sometimes have a hard time understanding why their industry has satisfaction ratings right down there with utilities, cell carriers and bankrupt airlines. Maybe it’s because they sometimes have more in common with these business models than they would really care to admit. Companies and industries that score poorly in customer satisfaction tend to treat customers like replaceable cogs in their profit machine, rather than empowered consumers with unmet needs and lots of alternatives.

Source: flickr.com via David on Pinterest

David Armano has an amazing knack for boiling down sometimes complex concepts to compelling and easy to grasp infographics. And while the one above was intended to depict a much broader economic view, I think it works just as well in the narrower context of financial services.

It’s not a Wonderful Life any more

Financial institutions have long since evolved from the folksy image of It’s a Wonderful Life‘s Bailey Building and Loan. Competitive forces drove the financial industry to embrace consolidation, standardized underwriting, securitization, more consolidation, credit cards, ATMs, broader product offerings, specialized segmentation, data analytics, even more consolidation, and countless other changes. Over the long run, much of it was good, and the industry has improved efficiency and profitability over time.

But somewhere along the way, too many institutions (and too many advisors) came to believe in that seductive fiction that has fooled so many other industries– that customers are easily locked in with real or perceived monopolies, contracts, terms and conditions, EULAs, whatever– and that the path to profitability is to leverage that servitude with a cascade of new (and usually involuntary) revenue streams from the indentured.

Many bankers are truly puzzled by the virulent public reaction to their attempts to defray the costs of delivering deposit accounts. After all, they have cost accounting on their side. It has been a well-known fact amongst bank executives for at least 25 years that most checking accounts are unprofitable in a fully-loaded cost analysis. A similar Pareto Principle has long existed across client cohorts as well– the “vital few” subsidize the “trivial many”.

Why recapturing costs alone doesn’t work:

So why not focus on reducing the unprofitability of a large percentage of your clients? Managing the cost to serve is a very real issue for most firms, and I am a firm believer in the need to focus marketing efforts on clients who have a high probability of being profitable in reasonable amount of time.

What I think most firms and advisors misunderstand is that many clients at every tier actually are willing to pay more– if they receive something of value in exchange. And here’s where it get’s a little tricky– the clients get to decide what provides value and what does not– and not every client will choose the same things.

What does work:

This is where data analytics can really add the most value. Finding clients who will willingly choose to consume additional services for additional cost. (If you do it right, you can add $5 in revenue for every $1 in added cost.)

Firms that really do it right focus their efforts across all of the client segments, not just on reducing unprofitability in the lower tiers. Further improving the profitability of the top 20-25% of your clients can improve their subsidization of the masses and reduce the temptation to annoy the majority of your clients. (Banks and checking accounts may have been the original “freemium” business model.)

Let’s go back to the airlines. The ones thriving, both in customer satisfaction scores and in profitability, are improving the customer experience for all of their clients while they simultaneously raise the bar for their most profitable clientele. Doing only the latter creates ill will that will never be offset by increased profitability for the subsidizers.

You do realize that this is a people business, don’t you?

Five Leadership Lessons From The Godfather

Today Paramount and Cinemark are celebrating the 40th anniversary of the release of The Godfather with a one day showing of the iconic film in 55 Cinemark XD theaters. The movie is my all-time favorite (with the possible exception of The Godfather II). In honor of the anniversary (which is actually later this month), I offer these five leadership lessons from the film:

1. You need a wartime Consigliere
2. Just because some businesses might be OK for other people, they may not be right for you
3. Never tell anyone outside the Family what you are thinking again
4. Leave the gun. Take the cannoli.
5. Make them an offer they can’t refuse

You need a wartime Consigliere

When Michael was plotting his revenge against the other families, he announced that he was replacing his own step-brother as trusted advisor: “Tom Hagen is no longer Consigliere. He’s going to be our lawyer in Vegas. That’s no reflection on Tom, it’s just the way I want it.” Then to Tom: “You’re not a wartime Consigliere, Tom. Things could get rough with the move we’re making.”

Loyalty, history and track record are important factors in keeping people on your team, but don’t confuse that with having the right people with the right skills and experiences in the right positions at the right time.

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Just because some businesses might be OK for other people, they may not be right for you

When Don Corleone sits down with Sollozzo, who is seeking financing and political protection in order to expand  his illegal drug business, Don Corleone tells him: “…I must say no to you and let me give you my reasons. It’s true I have a lot of friends in politics, but they wouldn’t be so friendly if they knew my business was drugs instead of gambling, which they consider a harmless vice. But drugs, that’s a dirty business.”

Banks buying brokerage houses. Brokers and investment banks getting bank charters. RIAs buying financial planning firms. None of these are necessarily bad ideas, but expand your offerings because it makes sense strategically, and because you are sure you can execute and understand the risks, not because it’s an appealing source of new revenue. If you’re simply looking for a new source of revenue, why not sell hamburgers?

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“Never tell anyone outside the Family what you are thinking again”

After Sollozzo exits the above scene, Don Corleone tells this to his hot-headed oldest son Sonny, because he had asked a question of Sollozzo about his proposal.

In this era of social media communications and 24/7 open-source networking and crowd sourcing, remember to keep some things within the firm. That’s how competitive advantages are created.

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“Leave the gun. Take the cannoli.”

Experienced hit man Clemenza tells this to Rocco after he kills the traitor Paulie.

Know what’s important to keep close and what is expendable.

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Make them an offer they can’t refuse

When Johnny Fontane come to Don Corelone for help in getting a movie role, he is worried that it is too late since the movie starts shooting in a week. The Godfather confidently reassures him: “I’m gonna make him an offer he won’t refuse.”

The old horse’s head in the bed routine is not recommended, but you should understand the currency that works for anyone you’re trying to influence– their wants and needs and worries. If you can help them, you may very well make them an offer they can’t refuse.

Why Your Team Is Not Successful

Struggling to understand why your team is not successful?

As a leader, it’s your job to figure out the answers. Here are five questions to ask yourself:

1. Is everyone on the team clear about the team’s overall goal and their specific objectives?
2. Do each member’s objectives tie out to the overall team goal?
3. Does every member of the team have the ability and the drive to achieve their objectives?
4. Is everyone held accountable for achieving their objectives?
5. Does your culture support and encourage constant learning, growth and adjustment?

Is everyone on the team clear about the team’s overall goal and their specific objectives?

A survey conducted by the consulting firm Partners in Leadership found that 84% of respondents “indicated that changing priorities create confusion around the key results the organization needs to achieve“ (emphasis mine). Everyone on your team needs to have a consistent answer to the question “What are our overarching goals?” Otherwise, everyone is not “rowing in the same direction”, as the saying goes.

Do each member’s objectives tie out to the overall team goal?

False success is worse than clear failure. Failure is important, healthy and good. Failure teaches you what did not work if you are brave enough to embrace the lessons learned and make adjustments in the future (see below). False success comes from creating individual victories for the members of your team that don’t add up to team success. Individuals should have goals that are highly aligned with things within their control (sales, audit results, client satisfaction, etc.), but they should also be aligned with the goals and needs of the entire team or organization. There is no real victory in celebrating a bunch of individual “winners” if it doesn’t add up to a team win. Chicago Bulls coach Phil Jackson’s goal was not for Michael Jordan to necessarily average 35 points a game, it was for the Bulls to win the NBA championship.

Does every member of the team have the ability and the drive to achieve their objectives?

It’s important to be brutally honest about the ability (skill) and drive (will) of each member of the team. Skill without will is worthless, and you will be doing the rest of your team a favor by separating those players from your team. Will without skill is preferable, but not everyone can be trained to do the job adequately. Think about moving these players to a role to which they may be better suited.

Is everyone held accountable for achieving their objectives?

Nothing hurts team morale and undermines top performers’ discretionary effort than seeing those around them fail to be held accountable for underperformance. Ensuring accountability without devolving into finger pointing is an art well covered in the book The Oz Principle: Getting Results Through Individual and Organizational Accountability.

Does your culture support and encourage constant learning, growth and adjustment?

Ray Dalio, the founder of acclaimed hedge fund Bridgewater Associates, has written and shares freely an amazing piece of managerial advice which he titles, simply: Principles. It is available in its entirety from the firm’s website. It is a treasure trove of quotables (sure to be shared in future posts), but the relevant advice here is in a section he calls “To Get the Culture Right…”

Create a Culture in Which It Is OK to Make Mistakes

but Unacceptable Not to Identify, Analyze, and Learn From Them

If you can answer yes to each of those questions, your team is surely on its way to success.