In his heyday, Larry Bird was recognized as the ultimate three-point shooter. In 1986, a championship year, he made 82 threes. His team, the Boston Celtics, made 138 total. The league average was 77.
In the 2015-2016 season, all-star guard Stephen Curry made 402 three-point shots. His team, the Golden State Warriors, made over a thousand. Back in 1985-1986, only two teams even attempted more than 400 three-pointers. By 2015-16, the league average per team was almost 700 three-point shots made.
The game has expanded, and the trend is not going to change. There is even talk of adding a four-point line, as the range of so many players has expanded to nearly 30 feet from the basket (the NBA three-point line is at 23.75 feet).
I’ve been a partial season ticket holder for a few years, and I hear many of the old-timers rue the loss of defense, the pick and roll, and the disappearance of the midrange jumper. Despite all the rumblings, the game isn’t going back to what it once was with slowdown offenses, smothering defenses and scores in the 80s.
The pace has accelerated and doesn’t promise to slow down anytime soon. What is required? Broadened skill sets. Seven footers now have to be able to shoot the three-point shot if they hope to optimize their court time—there are, of course, a few exceptions for mutant species of rebounders and shot-blockers. Everybody needs to be able to shoot from afar or they become a liability on the court for their team.
Financial Advice In Flux
For the last couple of years as I’ve traveled the globe and addressed financial planning and advisory conferences, I have been telling audiences that the financial services profession is at a historic inflection point—and a radical and substantive shift in value propositions is required, immediately. This is not an overdramatization or a sensationalized siren. This is a reality check. As is the case in basketball, a broadened skill set is now required, and there is no turning back to how it once was.
After making these remarks recently at the FPA Congress in Sydney, Australia, I was followed to the podium by Stephen Glenfield, CEO of the Financial Adviser Standards and Ethics Authority, who informed the audience of 1,500 planners and advisors of how different their world has become. For example, a bachelor’s degree or better is now required to practice in financial advice. Those who have been practicing for years without this level of education are now required to complete specific educational courses to qualify.
In Australia, the “Future of Financial Advice” reforms, introduced in 2012, were enacted to better align the incentives of clients and advisors. In Canada, advisors have been working under the “Client Relationship Model—Phase 2,” also introduced in 2013. In the U.K., advisors are adjusting their practices to the “retail distribution review” (RDR)—a set of rules aimed at introducing more transparency and fairness to the investment industry.
“In the U.S., they introduced a fiduciary requirement to put your client first, but if you go back 15 years, the U.S. would normally be 10 years ahead of the world,” said Jacqueline Lockie, the head of financial planning at the Chartered Institute for Securities & Investment, a global body headquartered in London. “A lot of regulators around the world are now looking to the FCA [the U.K.’s Financial Conduct Authority] to see what they are doing. RDR really has had a positive impact on the U.K. advice market by helping the public see how they are paying for the advice they seek.”
In South Africa, one key question being examined is, “Do you receive financial advice from an ‘adviser’ or an ‘agent,’ and what exactly is the difference between the two?” Once the RDR legislation is enacted in South Africa, registered financial advisers (RFAs) will be the only ones able to offer financial advice. According to the current version of the RDR, an RFA can be an individual or a company, but in both cases, its ability to provide professional, independent financial advice will have to be verified by an external source.
At the heart of the reform in South Africa is a set of rules on how customers should be treated—aptly called “treating customers fairly” (TCF). One of the rules (No. 4) is interesting to note: “Where advice is given, it is suitable and takes account of customer circumstances.” This seems so obvious that it’s hard to understand how financial professionals operate without doing so. Yet many do. That game is disappearing.
Expanding Your Range
In his 2005 book, A Whole New Mind, Daniel Pink presciently states that the “value propositions of the future would be seated in the right side of the brain.” For financial professionals, this means that if key value propositions can be replicated by software, algorithms and artificial intelligence, then they are at the mercy of the market and what it is willing to pay—which is increasingly less each year. Commoditization relies on pervasiveness and standardization to flex its muscles. Once a program can achieve what advisors have been doing for their clients, the advisors are now at the mercy of the going price of the technology. Asset allocation, rebalancing, fund selection and comparative research are a few obvious examples of irreversibly eroded value propositions that once paid the bills for planners.
Exactly what is meant by a “right-brain oriented value proposition”? I’ll offer three examples of what might fill that void in our current quest for a more substantive value proposition:
A. Comprehension of Context
I’ve read from more than one brain researcher that the most immediate curiosity of the right brain when faced with any proposition or input is: How does this apply to me? How does it fit into my situation? I often ask financial planning audiences, “Have you ever prepared what you believe to be a comprehensive and applicable plan for clients, only to see them fail to act upon it?” Every planner is familiar with this frustration.
My suspicion about this particular phenomenon of inertia is that the plan is not properly anchored in your clients’ story. Knowing their numbers isn’t enough. Clients don’t feel the plan until they know you have heard and comprehended their story, which should form the core of the plan itself. Developing a plan based only on numbers and facts is like having all the bones in place, but the sinew, organs, blood, skin and bones never come to life. In similar fashion, the client’s background—the current and unfolding stories—are the vehicle for bringing his or her plan to life. To expand your range, you need to gain a broader understanding of your client’s biography.
B. Narrative and Understanding
What kind of experiences have your clients had with money and investing? What have been their worst and best experiences? What kind of experiences, good or bad, have your clients had with other financial professionals? What kind of financial vicissitudes have they witnessed with their families and friends? How have these observations influenced their current perspectives? These are the types of queries I recommend for enabling dialogue and building client narratives around their personal experiences and observations. I call it the “Fiscalosophy” dialogue—seeking to understand their perspectives on key financial issues.
C. Emotional Connectivity
Are your clients certain that you “get it” and “get them”? Everyone in the financial services profession purports to be in the “relationship building” business, but let’s step back and examine how relationships are built: They are developed over time and through trying circumstances in which people are able to demonstrate their commitment to others. Relationships are also built through the honest exchanges of our stories. My stories reveal what I’m about and yours reveal the same. In that exchange, we find common ground—sometimes we stand on it for a lifetime.
It’s not enough to be on “friendly terms,” which doesn’t require emotional connectivity; a smile from a distance doesn’t equal a firm and friendly handshake. Our gestures can mean the difference between “I can tolerate you” and “I’m really thankful for you.” Far too many professionals are content with a peripheral comprehension and superficial rapport when much deeper and more profound connections are available. To expand our range, we need to be willing to go deeper into the dialogue.
As an advisor recently told me in Johannesburg, “When I make clients my focus and not their money, and do everything in my power to understand them, their situation and their future challenges, they don’t come into my office and tell me they found something online that does what I do for one-third the cost.” This advisor understands the three-ball, and she added it to her game before she had to.
We are at a historic inflection point in the arc of financial planning and advice. What got us here will not take us forward. The machine-like advisory functions are no longer as profitable. The human functions hold far greater promise amid intensified scrutiny and advancing technology. The game isn’t going to slow down in order for you to catch up … it’s time to take your game to a new level.
Mitch Anthony is the author of the industry best seller StorySelling for Financial Advisors and the groundbreaking The New Retirementality (now in its fourth edition). A highly sought-after speaker, Mitch is widely regarded as a thought leader and pioneer in Financial Life Planning.