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Angie Herbers | Sep 19, 2022
Employees are back in offices, at least for part of the week, and the business world is starting to look something like it did three years ago, at least on the surface. But in wealth management and elsewhere, significant cultural shifts are occurring that will likely be lasting. The societal and economic changes due to the pandemic will have impacts for financial advice firms for years to come. We’ve noticed several key areas leaders are focusing on now and should be aware of and prepared to respond to.
Properly training employees has always been a key to advisor firms’ success. Having a team that really knows what they’re doing translates into client retention and referrals. But because the pandemic has interjected more independence in firms’ cultures than ever before, training has become even more critical to carry out client services.
The in-office, top-down management model of the past made it easy to see the training blind-spots of firm employees. In-office, ongoing training facilitated a lot of learning by osmosis: Junior employees observed firsthand how things were done and fell in line.
Well, that nine-to-five, “punch card” mentality is virtually gone. Hastened along by the pandemic, organizations have moved into more independent cultures where employees can decide what they need to get done and when to do it. Employers still expect their people to log at least eight hours a day, but they’re giving a lot more latitude in how they get their work done. If you can be productive with a laptop at 6 a.m., at your kitchen table … go for it.
But organizations are also finding that not all their people are equipped to manage themselves in more independent cultures. In fact, more-independent cultures require employees to know more than ever before. For one thing, they need to become experts in managing their time.
How, in hybrid cultures, do firms give employees a 360-degree understanding of the client service model so they can understand where their work fits in and why they’re doing it? How do they train new employees to respond with empathy and compassion to clients and colleagues in this new culture? How do firms train employees to manage their time better?
In the old model of work, where employees were in the office five days a week, new team members were expected to learn soft and hard skills from the veteran colleagues they sat next to every day. The new employees learned through observation and modeling, including the way they themselves were treated. Firms are now in the process of figuring how to replace this training-by-osmosis with training suited to a hybrid culture.
Training, by the way, remains perhaps the most impactful thing that firms can do to engineer strong, sustainable growth. Proper training helps to create inspired, loyal employees who, in turn, impress clients, who ultimately become fans of your firm and send you referrals.
The second significant trend we’re seeing is a renewed focus on key performance indicators (KPIs) for decision making. Not long ago, many advisory firm leaders made decisions based on intuition. Pre-COVID, in fact, my consulting firm had many clients who flat-out refused to put together KPIs. They preferred to make decisions based on gut feelings and what they were observing each day. They might say, “I feel like our close ratio is really great,” or “I feel like we’re growing really well right now.” But they didn’t run the numbers to verify that impression.
There’s been a big shift: Advisory firms are increasingly asking about KPIs and expressing a desire to move them forward. They’re laying the groundwork for decisions by looking at trend lines and what is objectively happening rather than what they sense is happening. This shift is facilitated by modern data systems, which let firms of all sizes start to make more strategic decisions based on the numbers. One of my favorite KPIs, by the way, is the client referral rate.
Interest in KPIs always ticks up in times of uncertainty and revenue pressure. It’s been the case throughout my 20 years of consulting: When there’s a bear market or a threat of a bear market, advisory firms tend to move toward data and facts and away from intuition. And today we are indeed seeing firms seek a much more objective look at the business than was the case prior to the pandemic.
There are several marketing systems and approaches that have been proven effective in boosting advisor firms’ growth. Some work better than others, but there are plenty that work. The problem is that many advisory firms don’t have the patience to stick with them long enough to get results. As a result, they wind up jumping from one to the next. This costs them the opportunity to build brand power. And that brand power isn’t just logos or catch phrases, it’s having the entire team consistently delivering the same service and communication and using the same client experience process. It’s critical for businesses that want to grow to build and sustain their brand.
And to do that, firms must be very consistent about what the brand is. Consistency trumps novelty here. The idea is to create a clear brand message and repeat it again and again with consistency, to the point where clients and non-clients think of you when they hear it. How a firm communicates to clients and prospects, the language you use on your website and materials and on your podcast and in client meetings: All the messaging must be consistent to maximize your brand power.
Why is this particularly important right now? One reason is that we’ve been in a bear market. Having a consistent message will not only help firms overcome the loss of revenues in this market cycle, but it will also help them compound future cash flows. And the period of transition out of a once-in-a-lifetime challenge like the COVID pandemic is as good a time as any to decide what your firm stands for and to push that message consistently out into the world.
A focus on training programs for employees, deepening your understanding of firm wide KPIs, and enhancing brand power keeps leadership focused on the areas that produce future growth. Today, a long-term view on the impact of future earnings is what’s most important.
Angie Herbers is the founder and CEO of Herbers & Co, a consultancy firm for financial advisors.
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