ELITE ADVISOR BEST PRACTICES

Why Advisors Need to Be Obsessed About Innovation

Here are 5 traits that great entrepreneurs have in common and 4 keys to “productive misery”

By Elite Advisor Report Staff

Key Takeaways:

  • Like great artists, writers and musicians, great wealth advisors are willing to go through misery on a regular basis in order to create something new and valuable for clients.
  • Four keys to productive misery include having a long-term view, an obsessive focus on clients, a high degree of patience, and clarity of vision and purpose.
  • Great entrepreneurs, regardless of industry, have five common traits—they’re curious, they crave what’s next, they defy tradition, they’re scrappy and they constantly push boundaries.

Our good friend Gary Klaben of Chicago-based Coyle Financial Advisors told us the other day that wealth managers—like artists, writers and musicians—have to go through the “misery” process on a regular basis if they want to keep coming up with unique solution for their clients. And that’s pretty important in this era of robo advisors, hybrid fee structures and a new generation of tech-enabled do-it-yourselfers.

As wealth advisors, we’re professionals too, explained Klaben. “So we have to embrace misery from time to time in order to create something new for our clients.” Klaben said there are four keys to productive misery:

  1. Have a long-term view. As a professional, you’re looking out 20, 30, 40, even 50 years, not just the next couple of years.
  2. Be totally focused on your clients and continually bring them more value as you serve them.
  3. Be very patient.
  4. Be very clear about what you’re doing. What’s the vision and the mission for you out there? This puts you in a state of mind in which you can lead rather than follow. You’re not worried about what other advisors are doing. You’re asking yourself, “What are my clients’ needs? What are they all about? What’s not being served to them? What can we help them with?”

With these steps in mind, you can figure out how to answer these questions. But you have to be willing to put yourself in a miserable state to create these new capabilities for clients and help them down the road with their money matters.

Obsessive innovation

Recently, Elite Advisor Report was invited to the American Society of Association Executives annual conference in Detroit. More than 6,000 association execs from financial, insurance, health care, manufacturing and education attended. Keynote speaker and Detroit native Josh Linkner explained that creative thinking is the driver of both disruption and avoiding being disrupted. “Regardless of your job title or industry, all of us in the corner office need an additional unwritten title of “Chief Disruptor,’ “Business Artist’ or “Entrepreneur,’” said Linkner, CEO and managing partner of Detroit Venture Partners and author of the business best-sellers, Disciplined Dreaming and The Road to Reinvention.

Five obsessions of successful entrepreneurs

That’s not just ivory tower theory, by the way. Linkner founded four technology companies that sold for a combined $200 million, and after becoming a VC, he became obsessed with the creative thinking methods of great entrepreneurs. After interviewing 200 great entrepreneurs and thought leaders for his book, Linkner said five common traits bubbled to the surface. As an advisor, you should pay heed to each of them:

1. Get curious. “The more obsessive you are, the more creative you become,” said Linkner. He recommended asking why—not once, but at least five times in a row, borrowing a page from Toyota. Asking a deep question and then repeatedly probing “why” is not just child’s play. It uncovers layers of behaviors and assumptions that are taken for granted and are where the potential for creative disruption lies.

2. Crave what’s next. Even for wealth advisory and financial services firms that are healthy and not facing disruption, Linkner warns that you must constantly look to the future. “The best of the best are always focused on reinventing themselves,” he said. He shared the example of legendary Duke University basketball coach Mike Krzyzewski, who trains his players to shout “Next play!” after every basket. “Coach K has trained his team to literally shed the pad every 20 to 30 seconds,” said Linkner, who added that LinkedIn handed out 8,000 “What’s Next?” T-shirts to its employees the day of its IPO, so they wouldn’t become complacent and spend their days calculating the value of their stock options.

3. Defy tradition. For many companies, including wealth advisory firms, tradition can be a formidable barrier to innovation. So Linkner advised doing a “judo flip” by doing the 180-degree opposite of what tradition or experience would suggest. He cited the irreverent paint jobs on South African airline Kulula planes that help it stand out in a crowded, highly regulated commodity business. By the way, you don’t need a huge R&D war chest or the budget for Super Bowl ads, said Linkner. Rather than immediately dumping money and resources into solving a problem, try throwing imagination at it, he advised.

4. Get scrappy. True innovators like to “MacGyver” their problems, he said, in reference to the popular 1980s detective show about a protagonist who always got himself out of impossible jams with limited tools and resources. “It’s the classic mindset of the start-up, but even large, well-established organizations can adopt it by envisioning how a new start-up firm would try to gain traction in its niche. You can’t think that way without being the start-up,” said Linkner.

5. Push the boundaries. Genuine disruption comes from more than just incremental change, observed Linkner. He advocates the “10X” test that his firm uses in evaluating venture investments. Does the idea have the potential for a tenfold improvement over an existing product or service that’s being offered? It could be a tenfold improvement in market size, cost, revenue or some other key metric that you use.

Conclusion

“No matter how good things are going, we can’t become intoxicated by our own success,” observed Linkner.