Why the Advice Business is Still a Sales Business

Aug 11, 2016


As Raef Lee, Michael Kitces and I wrote in The Next Wave of Financial Planning, our industry is evolving from pure, transactional money management for very wealthy clients and institutions to comprehensive wealth management advice, including tax, estate, philanthropic planning and generational transfer. Newer advisors are starting out in the advice business, but most seasoned advisors (still in the majority) got their start in wirehouses or captive insurance agencies, where they were taught the basics of selling products first. I thought about this as I was talking to a father/son advisory business last week and a few questions came to mind:

  • As we move to the advice business, are we forgetting that this is still a sales business?
  • Who is teaching the younger advisor that sales is not a dirty word?
  • When is the last time you seasoned advisors brushed up on your sales skills
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Someone still has to say “yes”

The father/son advisory team I mentioned was not unlike countless firms that I’ve met over the years. “Dad” created a successful firm by focusing on estate planning to high-net-worth clients. He got his start by selling insurance products and then moved to asset management in the 90s, as a way to pick up assets that were “left on the table” after he closed a large sale. His son was brought into the family business right out of college and after a few years of focusing on asset allocation, fund selection and investment technology, he became the investment specialist. Their challenge was two-fold, as the firm was not really growing and the son was not turning out to be the succession plan the father had hoped for.

I think one of the things missing in this firm (and many firms like it) is a sales culture. A sales culture doesn’t have to be like in the movies (see: Boiler Room or Glengarry Glen Ross), but it does have to start with the idea that new business equates to new assets, which equates to new revenue – which all starts with a prospect saying YES to working with you. That, my friends, is sales. And to grow a business, you need sales.

The son was busy (very busy), but only with existing clients’ assets. He never learned how to sell, be a rainmaker, or grow a book of business. Dad’s product-oriented skillset got tired and didn’t evolve. What worked 35 years ago with Boomers trying to grow their assets and protect their estate didn’t translate with the kids and grandkids of his clients, and certainly didn’t fit with the advice-driven clients of today.

When is the last time you were coached?

A few years back, I sat in an advisor’s office, observing client and prospect meetings. I was there to watch and learn, but I was amazed that after each meeting, as soon as the client/prospect left, he turned to me and asked what I thought of his presentation, conversation and advice. He asked me how I would have explained a concept or how I might have worded an answer to a question. He even role-played a few times to make sure he nailed a concept or ideally positioned something.

Because he had someone in the room, he was getting sales coaching. This advisor had over $400 million in AUM, yet was asking for feedback to get better and build on his sales skills. I learned a lot during that experience, but I think what I took away the most was his desire to solicit feedback and be coached. We can always be better.

If you’re a seasoned advisor, ask yourself:

  • When is the last time that I brought someone in (staff, stakeholder, partner, OSJ or wholesaler) to observe my skills? When is the last time I got some honest feedback on my abilities?
  • What steps have I taken in the last year to improve my communication skills?
  • What investments have I made in myself and in my skills?
  • How have I incented my staff and partners to think about bringing in new assets? Have I created a sales culture to growing the business?

Like father, like son (or daughter)?

For many, having a son or daughter joining the family business is a blessing. At the same time, the offspring is probably joining a successful firm and most likely didn’t witness the business as it was getting started. They missed the long nights, multiple “no’s” from prospects, product pitches and sales managers focused on a quota. They didn’t see most of the work that it took to get there. The son/daughter joins the firm without much training and certainly not a lot of direct skills – especially sales skills. Frankly, many parents are setting their own kids up for failure by not imposing some of the same challenges that they had to overcome.

In my experience, many of these offspring are technically superior to their parents in most aspects, but lack the ability to communicate or to sell.

If you’re a less experienced advisor, ask yourself:

  • When is the last time I asked for business (additional wallet share, to meet the kids and grandkids, etc.)?
  • Should I have a quota for new business? How do I know I’m performing to expectations?
  • Is my compensation aligned correctly? Since compensation drives behavior, am I being compensated for the right thing and if not, shouldn’t I be?
  • Have I asked for help? Have I asked my lead planner, OSJ, wholesaler, etc. to role play or coach me in a situation?

A family affair? Not really

It doesn’t have to be a father/son (or a mother/daughter, for that matter) scenario. With the Department of Labor’s new fiduciary rule, I think we will see younger advisors going from college directly into advisory businesses in greater numbers than before. Many will bypass the traditional starting grounds of wire houses and general agencies, as the rule will make it harder for younger advisors to earn a living without commissions.

But the training and coaching that those traditional proving grounds use to prepare young advisors (and provide sales training for older advisors) cannot be forgotten. For revenue to be earned, someone has to say yes – the question is, who will be asking? Probably someone with a sales culture in their firm.

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John Anderson

John Anderson

John Anderson is the creator and lead author of Practically Speaking blog and Managing Director of Practice Management Solutions for the SEI Advisor Network.

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