Bowen, founder and CEO of CEG Worldwide, previously worked as a financial advisor and firm executive. He served successively as CEO of Reinhardt Werba Bowen Advisory Services and Assante Capital Management.

Interesting Times

There's an ancient curse that says, "May you live in interesting times." I was never clear on why "interesting" was such a bad word—until now, as we face what is widely being called the worst financial crisis since the Great Depression. But here's something else that you might find interesting: This environment offers unparalleled opportunities for advisors to grow their businesses and come out of the current mess stronger than ever.

Indeed, right now, some of the top advisors in the industry are making very smart decisions that will enable them to capture more assets from their existing clients, as well as bring some new clients on board. All of this is happening while the world, in some ways, seems to be crumbling around us.

Here's the really good news: These advisors' breakthrough successes in the current environment can serve as lessons for planners as this next year begins and we look for ways to remain relevant to our clients' financial lives. If you respond effectively to the challenges and realize the tremendous opportunities that exist—thanks to today's treacherous markets—you will find that, by the end of the year, these "interesting" times will have been among some of the best of your career.

Money in Motion
It might seem strange to think that there are lots of business-building opportunities out there right now, especially if you're worried about simply riding out the storm. But there is a lot of money that will be moving around in the coming months. The advisors who come out on top a year from now will be those who effectively pursue this money in motion.

Consider the results of a survey performed by Russ Alan Prince last October—right in the middle of the meltdown—of 400 affluent investors with at least $1 million invested:

• 81% of clients with at least $1 million invested said they were going to leave their advisors.
  
  
• 86% of those clients were not going to refer their advisors to their friends and associates; they actually planned on warning their friends and associates about their advisors.
  
  
• Only 2% of those clients were planning to make referrals.
  
  

Of course, the actual percentage of clients who do transfer to other advisors will not be as high as 81%. But the large number of investors who are unhappy with their advisors and who intend to transfer tells us that there are lots of affluent investors in play-and will be for some time-for advisors with a compelling value proposition.

The data paints a clear picture of what advisors must do during the coming year: Play defense by making sure your clients aren't among the unhappy investor group and play offense by attracting dissatisfied investors as they search for alternatives.

Capturing Opportunity
If your relationships with your most trusted clients, friends and associates remain strong, now is the time to ask them for referrals. Here's how:

Bring up the research mentioned above. Discuss how shocking it is and how disappointed you are in the financial services industry. Point out that there clearly are lots of affluent people who are unhappy with their advisors and who are not enjoying a solid advisor-client experience. Add that you would appreciate the opportunity to provide someone they know with the type of positive experience you have with them.

When you call these prospects, offer to give them a second opinion on their portfolios (at no charge), using the type of consultative approach I've outlined in my past columns. The prospects will generally be open to your review—after all, there's a strong chance that many of them fall into that 81% of investors who want to fire their advisors.

Many of the advisors we coach at CEG Worldwide are using this business development method quite successfully. One advisor reports receiving three or four referrals per week in recent months from a combination of his existing clients and his strategic alliance with other professionals. Even better, his "second-opinion" approach with these prospects has resulted in two new clients, each worth approximately $6.5 million. In total, he expects his business to be up 10% in 2008. Our most successful coaching client received an additional $90 million in net new assets through this process.

Paying Attention
With existing clients, you've got to proactively reach out if you want to keep their business. You know that already, of course, but it's all too easy to hide from those incoming phone calls and panicky emails. For example, our earlier research showed that only 18.3% of advisors proactively reached out to their clients during the October 1997 market downturn. Not contacting your clients in stressful times undoubtedly increases the chances that they will join the unhappy 81%.

In many cases, all you have to do is listen to your clients and be empathetic to their situations. A simple invitation to "tell me about your concerns" can be extraordinarily powerful to clients whose emotions are running high. Many of them just want to know that you are right there with them.

Acknowledge the emotions we are all feeling right now and that it's a stressful time across the board. Help your clients separate their emotional reaction to today's volatility from making smart decisions about their money. You have to deal with clients' emotions first because they can't be rational until they calm down-the brain just doesn't work that way. You may even try saying exactly that to your clients. But just make sure that you emphasize that you will not let them invest based on emotional responses.

One top advisor is successfully calming his clients' nerves by reminding them that he and his family are invested in exactly the same way as his clients are, and that he, too, is angry about the current environment. With this, his clients quickly realize that they're all in the same foxhole, facing the same issues together. Once that fact is established and the client's emotions are much more under control, the advisor can then focus his or her attention on making smart financial decisions in partnership with the client.

Another advisor we work with has boosted his business by 25% over the past year simply by proactively reaching out to clients. His demonstration of care and concern has resulted in a $1 million client deciding to transfer $6 million in additional assets to him; another client has added more than $4 million in new assets.

Discovery Channel
It is also important to remind your clients of the value you bring to the table. With that in mind, take them through a discovery meeting (or a rediscovery meeting). This meeting should help your clients to identify their most important financial values, concerns and goals, allowing you to be able to work together to craft solutions.

Discovery meetings are extremely important right now because the upheaval in the markets has caused many investors to rethink their priorities and goals. By checking in and finding out what has fundamentally changed with your clients, you will accomplish two goals: You show yourself to be an advisor who cares deeply about their situation, and you are able to see what solutions you need to start implementing to reflect your clients' new perspectives.

Finally, the wealth management business model gives advisors flexibility with their clients that can help them to weather this challenging period. True wealth management goes well beyond investments and financial planning to also incorporate advanced planning—strategies for solving other key areas important to affluent investors, such as philanthropy, wealth transfer, asset protection and income taxes. Wealth managers have an important option today that many investment-centric advisors don't-bringing value to their clients in ways that don't involve investing.

In the coming months, I will explore even more ways for you to navigate the current crisis and actually grow your businesses despite what is most likely to be an extraordinarily tough market in the year ahead. The fact is, you can make an immediate and positive impact on your clients and your business. In a financial world that often seems relentlessly chaotic, remember that you can largely control the future of your business by being the type of advisor that clients and prospects need right now.

Reprinted from: Financial Planning