This is more than a recession. It’s the edge of fundamental industry change. If you change your business model accordingly, you’ll prosper tremendously in the future. If you don’t, you’ll become irrelevant.
The danger is “Paradigm Drag”. Paradigm drag is the tendency to stick with the old ways of doing business despite the obvious necessity to change. You “drag” around your old business paradigm rather than moving forward.
It’s serious and actually made the recession worse for many advisors. Their insistence on sticking with their old approach caused everyone more grief than necessary.
For instance, consumers are experiencing “role confusion”. They didn’t know what their advisors were supposed to do so they came up with unrealistic expectations of their own. They ended up very unhappy. Most advisors aren’t so happy either. Mainstream media makes it worse.
This is avoidable with the proper use of engagement documentation I call the “Client Connection Letter”. Still, in a very recent, informal survey I took, less than a third of advisors use them regularly – even though they are a regulatory requirement. Most advisors don’t formally engage new prospects and they don’t re-engage existing ones – hence, “role confusion”. Clients and the media will always “guess high” and you will be held to standards you can’t imagine. That’s why if you hadn’t “engaged” your clients, life was worse for everyone. You must have a proper engagement letter. Clarify your role, services, and benefits.
You must also enhance client communication standards. Too many consumers tell me that their advisors have “checked out” leaving them alone to figure out what’s happening. They start to look elsewhere. If you don’t have a personalized client communication strategy, you must. Today.
Finally, stop pretending you can be all things to all people. “One-stop shopping” from one advisor is wrong. Instead, “quarterback” the talents of an advisory team that can do better for your clients at any level. Be a “One Call Advisor” with all the right connections.
Think about the other changes you have resisted making over the past few years. Do what needs to be done. Think about some of the things you used to do that would help today. Do them. When you do, you’ll discover that the recession has done you a favor and helped make your business better than ever.