June 2017: 10 Questions

Journal of Financial Planning: June 2017

 

Julie Littlechild on Absolute Engagement and Co-Creating the Client Experience

 

WHO: Julie Littlechild

WHAT: Speaker, writer, founder of AbsoluteEngagement.com

WHAT'S ON HER MIND: “I see a fundamentally different role for the client in actually defining and driving value.”

Julie littlechild knows a thing or two about what makes financial advisers successful. She’s been researching both advisers and investors for the past two decades, and her latest book, The Pursuit of Absolute Engagement, builds on some of that prior research to provide a five-step process for achieving absolute engagement, defined by Littlechild as having your personal vision completely aligned with your client and team experience.

For Littlechild, absolute engagement is about creating a business that reflects a meaningful personal vision and structuring it in a way that drives momentum. It’s about designing your business so it is at an intersection of growth and fulfillment. And the motivation is a little personal. It was, in part, Littlechild’s own experience exiting one business and starting another that inspired her to write the book.

Through her work at Absolulte Engagement.com, Littlechild helps advisers design businesses that support the lives they want to live. The Journal recently sat down with her to learn more about achieving absolute engagement, her advice for advisers looking to grow their practices, her thoughts on where the profession is headed, and more.

1. Your new book, The Pursuit of Absolute Engagement, came out earlier this year. Was there a tipping point for you in your career working with financial advisers and researching advisory firms that motivated you to write this book?

It really was born of a number of things that were going on, both in the industry and my own life. First, I was taking a harder look at what success really looked like with advisers. For so many years I had focused almost exclusively on client engagement, and I had quite a narrow focus in that area. And I would have argued that client engagement is what makes people successful when they get it right. I ended up pulling the camera back a little and asking if it was more than that.

I was observing advisers who were not only successful in that they were growing and had, by any traditional standards, successful businesses, but they seemed to be doing it with more joy, or they seemed to have found a place where the business growth intersected with personal fulfillment. I wanted to know about that.

My own personal experience at that time was that I had wound down a business, and I was thinking very long and hard about what I wanted the future to look like. I was asking: What do I want to create here? What pieces of this work do I love? What pieces do I just like? What do I hate? (There were very few of those, in fairness.)

Those two things started to come together. I discovered that if I could focus on my own personal passion and the things that got me all charged up, and if I could dispense with the things that maybe stopped me from going down that path previously, that I could have this extraordinary business. I wanted advisers to be able to do that as well.

2. For a financial adviser, what does it mean to be “absolutely engaged”?

You are absolutely engaged if you have intentionally designed a business that is at that intersection of growth and fulfillment.

It’s about creating a business that reflects a meaningful personal vision and structuring it in a way that drives momentum. Obviously, a lot falls out from there in terms of how that’s done. But the more practical definition of it is that it’s achieved when advisers have completely aligned a personal vision with their client and team experience. When those three things are pulling together, that’s really where we see the magic happen.

3. Now that we know what it means to be absolutely engaged, how do we get there?

I should probably start with some context. In the book we map out three principles that define an approach to business that we saw as common among those who were absolutely engaged, and then those principles are followed by five steps. The context is the research that we did.

We went out and talked to advisers. We looked for individuals who were achieving certain results that I think we’d all agree are great: they were confident in the future of the business; they were generating higher revenue than average; they were spending more time focused on the right activities. And, they were reporting higher energy and lower stress.

In the data, we were able to isolate this group and ask: what’s common across this group? We also layered in some quantitative research that we’ve been doing over the last few years.

There were three things that were common across this group. The first is that the vision started with the adviser. So, instead of jumping straight to the great client experience, or the great team experience, it really started with a personal vision. And for these advisers, their business vision reflected their personal vision.

The personal vision could be, what kinds of clients do I love to work with? What kind of work do I want to do? What role do I want to play on the team? A number of different things contribute to the personal vision. And for these successful advisers, the personal vision is where it starts, and the business vision reflects that. That’s the first principle.

The second principle is that the client and team experiences are tailored to support that personal vision, rather than being looked at in isolation.

The third principle is about personal accountability and renewal. In addition to seeing how these successful advisers approached their businesses, we tended to see individuals giving themselves a break; they were creating the space to be creative and focused on their business at the same time.

So those were principles we saw as similar and common across the group. We wanted to break those down into the steps, and most of the book is structured around five steps, which are awareness, audacity, action, accountability, and renewal.

The first step, awareness, is an introspective step. We don’t ask advisers to make decisions in this stage; in fact, we suggest they don’t make any decisions, because I think that gets in the way of a good plan sometimes. This step is thinking about what really energizes, excites, and inspires you, as it relates to the clients you work with, the role you play, and the work you do.

The next step, audacity, is about saying: now that I’ve done that thinking, how am I going to translate that into a business vision? Am I going to say I will work with a defined target market? Will I do certain types of work? Basically, what does that look like in terms of a business vision?

Step three, action, is really about the client and team experience. It’s saying: now that I’ve got this clarity around the business vision, what does an extraordinary client experience and team experience look like to support that vision?

The last two steps turn it back on the adviser. Steps one, two, and three are about really big, potentially transformational goals. So, accountability is really about saying you need— especially as an entrepreneur—to create a structure of people who can support and motivate you. And renewal is that personal level of feeding your creativity by everything from stretching yourself in other areas, to getting more sleep.

4. You talk and write a lot about transformation—for example, allowing personal vision to drive business vision. Tell us more about the impact a transformational mindset can have on a business.

I do write about that, in part, because I think it’s possible. I think so many of us get to the stage where we don’t even think in terms of transformation because it feels daunting.

I write a fair bit about this in the book—that we’re victim to so many internal roadblocks, like self-editing and feeling such an enormous sense of responsibility for everyone in our lives that we couldn’t possibly think about what our own vision would look like.

Now, in fairness, I don’t think that every adviser needs to make a completely transformational change. Sometimes, it’s just changing one piece of the business. But, to your question, what’s the impact? I think what this kind of thinking does and this transformational mindset is all about is focusing on creating the future that we want rather than just incremental growth.

Most of us start the year thinking, how am I going to grow the business by X percent? A transformational mindset is about stepping back and saying, what am I really trying to create? This opens up the possibility of something that’s bigger or better or different. When we open our minds to that, it takes us down a different path. It causes us to take different actions than just growing by 10 percent or 15 percent, because I don’t think you can tweak your way to transformation. To truly transform, you’ve got to really think about what you’re trying to accomplish and think about the actions that will get you there.

Sometimes it’s provocative for people to even think that way, but because it’s possible, I feel like we owe it to ourselves to do that kind of thinking.

5. You’ve blogged about a concept that most advisers experience called a “fulfillment flatline.” What is that, how is it caused, and what’s the remedy?

It’s an interesting phase, I think, and it almost goes unnoticed because the “flatline” happens in the face of continued growth. So, technically, what it says is most advisers—at least those who have some success—have grown year, over year, over year, right? Their business is going in the right direction. There may be hills and valleys, but it all looks good.

But if we think of growth plotted on a graph and we laid a fulfillment line against the growth line, we see something interesting. Fulfillment would move in tandem with growth for a long time, because entrepreneurs are growing a business and it feels good. But that fulfillment tends to flatline a little, even as growth continues. That’s the sign that something needs to change.

In our research, only a third of advisers said that they were exactly on track to achieve the vision that they’d set; two-thirds were not. And that two-thirds broke down into a couple of different reasons. One we called drift—a feeling that I’m sure everybody can relate to. You’re growing a business, you’re doing the right things, and then you get some clients and you get the team. Then you’re married and having kids and whatever else is going on in your life. And you start going, going, going, so fast that you drift away from that original vision because you’re just trying to keep up. I think a lot of advisers get to that point where they wake up and say, “The vision is still there; I just don’t seem to be on track anymore to get there.”

The other thing that resonates more with me personally is just that things change over time. We get to a stage in life or business where different things start to become important to us, and it’s not good or bad; it’s just different. So we’re off track simply because of that.

Those are the two big reasons why people flatline. It’s interesting, though, because I’d never want to suggest that it’s always a negative impetus for change. I don’t think people should think about this concept of absolute engagement because they’re unhappy with things. It’s more an issue of: can it be better or different?

And so the remedy is: hitting pause, taking stock, and then rethinking the future.

6. What advice can you offer advisers who are looking to attract new clients and grow their businesses?

There’s some crossover here with what we were just talking about with absolute engagement, because I do think attracting new clients starts with a very clear definition of an ideal or target client, building the client experience that directly serves those individuals, and then leveraging that to attract referrals. They’re all so connected.

The only difference with the concept of absolute engagement is that we’ve layered in a litmus test for that definition of the ideal or target client to say, is it authentic? Does it resonate with you personally, or have you just picked some random target market definition because it sounds good? Like, I work with pre-retirees with $250,000 in assets. That doesn’t get you jumping out of bed, at least it doesn’t for many advisers.

So when we’re thinking about growth, we’ve got to start there. We can’t attract everyone, so who are we really trying to attract? Who are we building the business to serve? Have we got a client experience that supports that?

Then we get into referrals. It’s not enough to be referable—that’s only a starting point. You then need to facilitate referrals in some active way. So I think there’s a huge connection between client engagement and growth.

7. What have you learned through your research about managing client expectations?

I think this is often the forgotten piece of client engagement. We spend so much time creating this great client experience, we forget to tell people about it in any formal way.

So, what does managing expectations mean? For me, it means having some sort of consistency and formal process of explaining to clients exactly what they’ll receive.

What we have seen in the research is that managing expectations effectively is linked to increased satisfaction. So, take two clients who both receive the same level of service. For one, it just happens. The other was told in advance that this is what they can expect. We would anticipate seeing higher satisfaction with the one who knew what to expect, because for the other one, it’s just like a happy accident.

Managing client expectations also invites feedback. If you say to a client, “This is what you can expect in the next year,” then you’ve opened up a conversation about what do they expect, and does this meet their expectations or exceed them? And I think that very process can be quite engaging.

8. Has your most recent research of investors revealed anything about generational differences that is important for advisers to know?

It supports it. I feel like there’s almost nothing to be said that everyone doesn’t know at this stage. Whether they’re actually doing anything about it is a different question.

The last major piece of research we did on this was in partnership with TD Ameritrade, and I worked on a white paper with them on this very issue. It was clear that there were substantial differences in the way that younger investors wanted to communicate, in the way they wanted to be educated, and in a variety of different areas.

It was also clear that it wasn’t just “young people.” We’re really talking about consistency among people who are under age 50 now. It turns out “young people” are growing up, and it’s not like they change just because they get to 40 and think, I’m going to go to my parents’ ways now.

There are a lot of similarities among clients under 50 in terms of use of technology, being more interactive, using alternative communication sources, and having a real demand for education. And so, that’s why I think advisers need to take this under-50 group very seriously.

9. You have spent two decades researching and studying both financial advisers and investors. What research finding has surprised you the most?

Three things come to mind. The first is that success starts with personal engagement, and we need to get that straight.

Related, is that client and team engagement need to work together to support the vision, yet we often treat them in complete isolation. Think of this simple example: if I build a business to serve women in transition, then that impacts who’s right for my team. So it’s the way those two things actually work together that’s critical.

And the third goes back many years, but it’s probably the research that is still most often quoted, and we still track it, and it flew in the face of conventional wisdom. It was our referral research where we found that people aren’t referring to help you; they’re referring to help other people, and they don’t refer because you asked them for referrals.

10. What do you think the financial advisory landscape will look like in 10 years? Where is the profession headed?

For me, the biggest change that we’ve seen, and are still seeing, is in how we define value. If you look at how professional services firms—any firms, actually— historically delivered value, we would have called it “firm-centric value.”

In the book, I use a simple example of a coffee shop. So, a coffee shop sets up. I have one kind of coffee. I hope you like it.

Then, we caught on to the fact that we needed to shift to “client-centric value.” So now, the coffee shop talks to clients, finds out what they like, creates five versions of that, and again, hopes it still works. They’re thinking more of client needs, but the value is still coming from the firm; the firm is still deciding what to offer.

The whole notion of “co-created value” is the thing that has my imagination right now. It’s the thing that I think will affect the future of this profession, in which we’re saying, it’s not just about having a range of options; it’s about inviting the client to define what the experience will be in a very different way.

I see a fundamentally different role for the client in actually defining and driving value. For advisers, that means inviting clients into the conversation more, co-creating everything from how we personalize communications, to how we set an agenda for a meeting, to how we decide what appreciation we’ll provide.

Technology is allowing us to do this, because we can actually personalize in a very different way. But it’s a different role for the client, and that’s really where I think I see some of the biggest changes coming.

Carly Schulaka is editor of the Journal. Contact her HERE.

Topic
General Financial Planning Principles