Sunday Email - WM 2035 / Psychology Thought

Read time: ~6.30 minutes

Happy Sunday!

Every Sunday I offer strategies for the week ahead and a thought to fuel your action.

The message seemed suspicious - sketchy image, odd wording, yet a legitimate sender. 

It was a reminder of an upcoming subscription renewal. But I no longer leveraged the service. 

I logged in to cancel the subscription to find that it was tied to a recently deleted email address. I was unable to authenticate the log in given they used the old email address for 2-factor authentication. There was no contact information and no chat feature. 

I hit a wall. 

Frustration ensued, I scrambled to somehow gain access. No luck. Trust was shattered, I swore off that company forever.

We've all faced similar customer service disasters. Experiences like mine steadily chisel away confidence.

And some recent data suggests that a similar feeling is being had regarding our very own financial institutions in the US. 

The confidence in our financial institutions is lower than that of Ukraine. Along with being lower than the confidence in Botswana, Niger, Latvia, Madagascar and Kazakhstan. 

Click the chart below to see an interactive ranking of percentage of population that is confident in their countries financial institutions via Gallup: 

(https://public.flourish.studio/visualisation/16717830/)

You get it, faith in our banking system seems anomalously low. 

This paradox has puzzled me for years. Now I think I'm starting to understand why.

The problem isn't infrastructure or know-how. It comes down to the little moments testing trust each day. The 4 C’s:

• Commitment: Do they reliably follow through?

• Caring: Do they show customers matter?

• Consistency: Are experiences predictable?

• Competence: Can they deliver on promises?

Incidents exposing even one missing link corrode consumer faith. Analyze most bank PR nightmares and inevitably some frayed connection emerges.

Yet as wealth advisors, we have an opportunity. We can’t change perceptions of big banks, but we are a financial institution and can do our part. We serve humans. And we can be leaders of trust within all of the financial institution players. 

And it starts (and ends) with elevating each of the 4C’s. To do so, we must shift our mindsets from where we began to what we are. 

The spark igniting the RIA movement 30 years back? Talented advisors serving small client bases. As demand grew, ad hoc operations teams emerged behind stars who were the business. Without that founder, the business collapsed.

Today’s landscape looks much different with consolidation and private equity fueling rapid expansions. Now second gen RIAs struggle scaling while third gen grapple with tightly stretched resources from the start.

Here’s the rift - in focusing narrowly on rapid growth, the foundational trust in firms can fracture. Personalization becomes inconsistent. Care gets lost as things fall through the cracks. And competence depends on particular team members.

We must transition from rainmaker centric organizations to professionalized businesses.

Commitment: 

Commitment means setting realistic expectations and ensuring organizational structures facilitate follow-through. Clarify individual responsibilities and limit the “hats” worn to avoid delays.

One way we have worked to shore this up is to leverage the EOS operating system and the accountability chart associated with EOS. This has allowed us to put people in specific seats and assign specific roles for each seat. With a small company, some people will have multiple seats. And some seats are not necessary for certain sized companies. That is ok. 

The goal for the leader of the business should be to ultimately get people to only be in 2 or fewer seats. This will create a clear understanding of roles and responsibilities. 

Caring: 

This is about showing the other person that they matter.

The root of this particular challenge is letting things fall through the cracks. It is a little similar to what we see in commitment, but instead of delivering on a stated time frame, this is actually getting the work, fully, done. 

To elevate caring, create standardized processes to help ensure that each person knows what they need to do for a specific project or task and when they need to do it. This is about keeping cross team communication more seamless and efficient. 

It is about ensuring that the email from a client regarding an RMD doesn’t stall in the advisors inbox or that it doesn’t get lost via a Teams chat message. 

Processes ensure that running the business is turn key and that you can plug and play team members as they grow into new roles, leave the firm or head out of town. 

Consistency: 

Consistency provides comfort and familiarity. Make interactions and policies reliable despite which team member engages.

It can start as small as ensuring clients hear the same thing every time they call in, that the same hold music is played while on hold or that they come to expect timeliness in responses (within 12 hours or 24 hours, etc). 

Clients want to know that there will be no surprises in the normal course of business for them. That no matter who they talk with they will be getting the same message. As soon as a client gets a different message from two different people on the same task, that is when this part of the trust starts to erode. 

Competence: 

Competence isn’t having every answer, but possessing resources to find them. 

As a business, we must create the tools, processes and resources to help our team gather the answers for clients as efficiently and fully as possible. This means ensuring that you are doing continuous training for your team members. This could also mean providing a knowledge center for employees to access. Or even diving into AI to help team members leverage new technologies to gather answers that are more specific to a client's questions. 

It’s also about creating the culture within your team that empowers team members to connect with each other on finding solutions that one individual may not know. 

So how do we work on tying all this together? It starts with setting a clear vision of where the business is looking to be in a quarter, 1 year and 3 years. Then looking to tie metrics into monitoring progress on each of these. These metrics need to be part of a weekly, monthly and quarterly review. They must be specific and measurable to help distill areas to improve or areas to double down on. 

For too long we’ve clung to a movement sparked by visionaries who built this industry on little more than grit and personal dedication. But in maturing, now we must put the structures in place allowing a thousand unique advisors to shine consistently as one.

The raw elements enabling world class trust in RIAs already exist. We just need to arrange them. Where stalwart banking bureaucracies inevitably struggle, our agility and autonomy become strengths.

And with the right foundations in place, the long term trust and confidence seen in wealth management will be envied by all other verticals of financial services. 

A Thought To Ponder This Week

Warren Buffett famously remarked that building a reputation is a lifelong journey, but you can torpedo it in mere seconds. 

And haven't we all seen a bit too much of that lately?

Shane Parrish, the author of Clear Thinking, spins this a notch tighter, especially when it comes to investing:

“Emotions can multiply all of your progress by zero. It doesn’t matter how much you’ve thought about or worked at something, it can all be undone in an instant.”

Imagine this as a math problem. Let X represent hard work, Y time, and Z emotions. No matter how you boost X & Y, if Z enters the scene, your total plummets to zero.

In wealth management, there's this idea that people are always rational, always looking to maximize benefits.

Yet, reality often tells a different story. Why? Enter stage left: emotions.

Even the most bulletproof plan must navigate the treacherous waters of emotions, which no amount of logic or data can always pacify.

However, there's a silver lining. We can craft strategies that not only acknowledge this emotional variable but dive into the psychology that fuels it. Moving beyond mere numbers to understand what really makes us tick.

As we look to make an impact in the week ahead, here is something to think through: what is one way you can elevate the knowledge of each of your clients to go deeper into the psychology as opposed to just the numbers?

The best is ahead!

-Matt