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Proven Strategies Blog

2021-03-25 • 7 min video

Join Duncan as he discusses the impact of repositioning your ‘Review Meetings’ into 'Strategy and Tactical Meetings' where you invest the past into the future and make it an extension of your overarching process.


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2021-03-24 • 4 min read

The Signal to Noise Ratio

As a financial advisor, you know all about the distinction between the message and the messenger. The message is more about the products and services you provide and the firm you represent. The messenger is more about you and your ability to be the indispensable voice of reason to clients during times of intense turbulence and uncertainty

With elections looming and countless issues swirling around the globe, the velocity of noise that your clients are exposed to is dizzying. Your goal is to help them tune out that noise and tune in your message of clarity and leadership.

Investing the Past into the Future

The prognosticators in the media know that there’s no marketplace for good news. In order to get peoples attention they stir the pot of negativity and gloom. To counter that, I urge you to consider adding an historical perspective to your messaging.

I realize that these are unprecedented conditions, and that people crave predictions and a vision for the future so that they can face it with anticipation rather than apprehension. But nobody really knows if it’s in fact “different this time.” Likely the most important thing you can do is to simplify your messaging and ask your clients to look back – way back – so that we can separate market conditions from human nature as well as the cycles, peaks and valleys of the investing world.

Every now and again, especially when things look notably bleak in the world markets, I like to review this summary I created after reading A Short History of Financial Euphoria* for the first time. John Kenneth Galbraith takes readers on a substantial tour of world history as it relates to the markets and the mindset of investors, and reminds us that while things and events may change, human nature does not. Greed, fear, ambition, self-interest, trust, confidence and other emotional drivers have always played critical roles when it comes to market fluctuations.

So take a quick read through this summary and consider how you might integrate history into your conversations with your clients. It reminds me of simple and immutable laws of investing including this favorite by Sir John Templeton:

“A Bull market begins on pessimism, grows on skepticism, matures on optimism and dies on Euphoria.”

And keep in mind that the most attractive and refer-able financial advisors in the business do not swim in a pool of sameness. They are unique and compelling because they stand out from the pack. They get the attention of clients, and are memorable, because of the effort they put in to their client relationship management activities. 

A Short History of Financial Euphoria – A Synopsis By Duncan MacPherson

In his foreword to the 1993 edition of A Short History of Financial Euphoria, economist John Kenneth Galbraith writes that investors "might be reminded of the way not only fools, but quite a lot of other people, are recurrently separated from their money in a moment of speculative euphoria."

We feel it prudent to revisit this minor classic. After all, in December 1999, Business Week magazine confidently heralded the new century by printing, "We're running with the bulls again this year. The big story of 2000 is likely to be tech stocks, how far and how fast they will rise." As we all remember, that prediction was proven inaccurate, as the tech bubble soon burst and markets fell. How does that old adage about "hindsight" go?

In A Short History of Financial Euphoria, Galbraith examines significant episodes of speculative boom and bust during the past four hundred years so that their characteristics can be defined and understood. With this information, he hopes to equip investors, as well as all people who work with money, with the insight to protect themselves during a market run-up - what he calls a period of financial euphoria. Galbraith is certainly not confident that regulations will ever be able to achieve such security for investors.

According to Galbraith, speculative episodes start with something capturing the financial imagination, driving up an item’s price or the price of an entire sector. This increase attracts new buyers. Speculation starts to build on itself as more investors jump on board. Those on board talk the investment up, further building interest in it.

There are two types of participants in speculative markets:

  1. Those who feel the run-up is under control and that the market is adjusting to a new, higher norm.
  2. Those (fewer in number) who perceive that the market spike is a result of momentary speculation, and who want to ride the upward wave and get out before it crashes on the rocks of reality.

Specific Features of a Speculative Episode

  1. Something new is being offered. In 1636, it was tulips. In the 1980s, it was junk-bonds.
  2. People’s egos and pocketbooks are rewarded (but only in the short term) for getting on board early.
  3. Debt becomes out of proportion with the underlying means of payment. For example, in Y2K, margin accounts were called in when tech stocks corrected, causing further declines in share value.
  4. The market crashes. Things always fall. And with a bang, not a whimper. Financial operations do not lend themselves to innovation. The reason for this sudden downward change is because both groups mentioned above are predisposed to escape quickly. Something, it doesn't matter what nor how insignificant, triggers the exit. None of this information, however, is new.

The period following the crash is marked by anger against those who had been so recently seen as savvy, recrimination and unsubtle introspection. Rarely will the speculation itself be examined. Why? Because too many people were involved; there's no satisfaction in blaming a community of fools. Also, because society holds the market as the "totem of free-enterprise”, it looks to external forces and/or abuse of the market to explain its failure.

Benefiting from Financial Euphoria

According to Galbraith, investors can benefit from a speculative boom if they resist two compelling forces:

  • A powerful personal belief that investment success was intelligently earned.
  • The pressure of public (and seemingly superior) financial opinion.

Resistance to these forces is extremely difficult because it goes against the very momentum of the episode and its advocates. Those who predict a fall are viewed as doomsayers by both of the above groups.

Two other factors contribute to financial euphoria:

  • Short financial memories.
  • The association of money with intelligence.

In the free-enterprise world, the talent for making money is associated with the talent for social and economic perception, and with careful thought: "the more money, the greater the achievement and the intelligence that supports it," Galbraith writes. We also tend to associate this genius with the leadership of the great financial institutions. Specifically, we believe that the more assets under management, the greater the perception of those running them. In addition, we defer to those who have money to lend. Galbraith reminds us of the old industry saying, however, that "financial genius is before the fall." After the fall, no one looks so smart.

After analyzing the characteristics of a Speculative Episode, Galbraith spends the remainder of the book, fully three-quarters of it, examining historical examples of such episodes. He discusses the Tulip Mania of 1636-37 in Holland, the Banque Royale fiasco in France and the South Sea Company bubble in England during the early 18th Century. Galbraith then crosses the Atlantic to analyze the Great Collapse of the New York Stock Exchange 1929 and Black Monday in October 1987 (United States). These analyses drive home Galbraith’s point - that speculative periods follow the patterns he outlined at the beginning of his book.

Lessons Learned from Economic History

In his summary, Galbraith suggests that while history can teach us lessons best not to be missed, economic history lessons are somewhat ambiguous because of the process of continuous transformation in the field of economics. That aside, he feels that when controlling circumstances are the same, the lessons are clear. Galbraith summarizes the lessons to be learned:

The circumstances that induce the recurrent lapses into financial dementia have not changed. Individuals and institutions are captured by the wondrous satisfaction from accruing wealth. The associated illusion of insight is protected, in turn, by the oft-noted public impression that intelligence, one's own and that of others, marches in close step with the possession of money. Out of that belief comes action, the bidding up of values, whether in land, securities or, art. The upward movement confirms the commitment to personal and group wisdom. And so on to the moment of mass disillusion and the crash. This last, never comes gently. It is always accompanied by a desperate and largely unsuccessful effort to get out. Those who are involved never wish to attribute stupidity to themselves. Markets are also theologically sacrosanct. Some blame can be placed on the more spectacular or felonious of the previous speculators, but not on the recently enchanted (and now disenchanted) participants. The least important questions are the ones most emphasized: What triggered the crash? Were there some special factors that made it so dramatic or drastic? Who should be punished?

Galbraith suggests that not much can be done about this situation beyond having a better understanding of the speculative process. In his customary wry manner, he warns:

There is the possibility, even the likelihood, of self-approving and extravagantly error-prone behavior on the part of those closely associated with money. When a mood of excitement pervades a market or surrounds an investment prospect, when there is a claim of unique opportunity based on special foresight, all sensible people should circle the wagons. Perhaps there is, indeed, opportunity. A rich history provides proof, however, there is only delusion and self-delusion.

Things may change, but human nature stays the same.

Continued Success!

Contributed by Duncan MacPherson

2021-03-23 • 7 min video

In this episode, Duncan discusses the importance and usefulness that video can have in your business. Video acts as an initial connection point to get to know you better and helps to address and answer the sort of unspoken questions that viewers may have.

Looking to incorporate high quality video into your practice? Check out our friends at Idea Decanter who can help you prepare, shoot and edit video to professionally convey your messaging:

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2021-03-22 • 20 second read

Instead of trying to convince a prospect to become client, only accept a new client if the alignment and fit is perfect based on your ideal client profile. How you start a relationship has so much impact in terms of how it will unfold.


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2021-03-19 • 20 second read

One of the most effective ways to sift prospects from suspects and get them to contact you is to deploy a permission marketing approach... This means that you change the call to action from asking them to meet you personally to asking them to request some content from you online. They can begin a relationship with you without actually meeting you at first.

2021-03-18 • 7 min

Gratitude is the foundation for your goals and aspirations and vision for the future.

In this episode Duncan discusses how, as advisors work through the current chaos, there's a golden opportunity to grow down and go upmarket.


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2021-03-17 • 20 second read

From a business development perspective, your website can become an essential and dependable 24/7 driver for you. Of all the benefits that today’s savvy advisors are achieving with their websites and on-line communications, the most important is in making it effortless for clients to introduce friends, family members and business associates. Your web-presence can enhance your referrals and act as an approachable route for communication, not just for your existing clients, but for their statistical circle of 52 friends and family.

2021-03-16 • 5 min video

Drive advocacy, competitor proof your clients, capture money in motion.

Access ‘The Path to Progress’ program and receive THREE-Turnkey Pareto Strategies direct to your inbox.

Sign up and more info here:

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2021-03-16 • 2 minute read

I'm going to let you in on a little secret. Many of the most successful financial advisors I know have increased their persuasive impact by radically altering their sales process with prospective clients. These advisors (many of whom used to be salespeople) have evolved into professional consultants; they now strive to attract new clients rather than chase them. Instead of using a sales process to close business, they use a fit process to fast-track new clients to advocates.

Shake it Up!

When I consult with an advisor as part of our Pareto System Coaching process, one of the first things I'll do is scrutinize the approach he or she uses for prospective client meetings. I then ask these two questions:

  • "Who views it as an accomplishment when you bring on a new client? Are you celebrating because you've closed them or are they excited because they've qualified to work with you?"
  • "Do you ask clients to buy investments from you or do you ask them to buy-into a relationship with you?"

For many advisors, nowhere in their on-boarding process does a new client need to convince the advisor that there is a good fit. It's the advisor doing all the convincing and in the process their salesmanship is actually undermining the lifetime value of the relationship.

When you sell to someone, there is often a sense of anticlimax for the new client and perhaps even a chance that they are feeling some degree of buyer's remorse. The advisor cannot be the only one who gets excited when a new relationship is formed; the client has to have a sense of accomplishment too.

This is one reason that we suggest turning your prospective client process upside down. Instead of pushing prospective clients into making a decision, you can engage and then empower them. Our time-tested, up-front approach has been proven to attract new clients. It combines the use of an agenda with a process that highlights the importance of a relationship based on "fit" rather than one based on pressure and urgency.

When a prospective client approaches your office for the first time, two emotions are front and center: anticipation and apprehension. The anticipation stems from the person's curiosity about you. It is possible for example, that the prospective client is meeting with you because someone spoke highly of you and recommended your services. Keep in mind, every prospective client you meet already has a financial advisor, and is probably meeting with you because he or she is to some degree disillusioned with that advisor. As a result, the prospect is seeking an alternative. At the same time, he or she is apprehensive, fearing change, fearing the unknown and fearing the expected "sales-pitch". People are sold to each and every day. Consequently, they put up walls when they are in a selling encounter. It's a natural self-defense mechanism.

Don't Meet Their Expectations

Most prospective clients walk into a meeting bracing for a presentation in which you strongly promote your products and services. If they assume that your ultimate goal -- your hidden agenda -- is to sell them something, why feed that expectation? Instead, you can do something completely unexpected.

When you meet with a prospective client, shake hands, exchange pleasantries, then sit down and slide a leather portfolio that includes a note pad and pen as well as a printed agenda across the table for him or her to examine. Then launch into the formal segment of the meeting with a personalized version of this opening statement:

"Mr./Mrs. Prospective Client, let me begin by saying how much I appreciate you taking the time to be here today. I know your time is valuable and my goal is to ensure that you feel this meeting was a wise investment. Now, I know you are here primarily to assess my financial planning credentials and approach, and to get to know more about my firm. I will share this information with you during this initial meeting. I wanted to meet with you to get to know you and to determine if we will have good chemistry over the lifetime of our potential relationship. Therefore, because a relationship like this is important for both of us, no one will be making any commitments today. At the end of our meeting, as part of my process, I'll be getting together with my team to discuss your situation, and we'll discuss our compatibility. I'll then call you in 48 hours to let you know if we think we'd be a good fit for you. You can take some time to decide if there is a fit as well. Is that fair?"

A statement like this is a refreshing departure from the usual selling tone of a first meeting. And it has positive results. You will immediately see the prospective client's body language change. Tension and apprehension will melt away when he or she realizes that this is not a typical selling encounter. The prospect was probably expecting the usual selling process, where the meeting builds to the point at which the prospect is asked to "buy" investments. Imagine how much better your potential client will feel when you instead highlight the importance of "buying-into" a meaningful relationship. You will instantly disarm and impress. After all, stewardship is more attractive and persuasive than salesmanship.

The leather portfolio is a powerful and tangible tool that they can hold and take away with them that anchors them to your professionalism. Using an agenda at these meetings is so important because it instantly gives the prospective client a tangible track to follow and it eliminates any fear that you will introduce unwelcome surprises. An agenda is an outline with talking points with prospective client's name on the top and a series of bullets which highlight the main topics that you will discuss at the meeting, things like:

  • Getting to Know Each Other
  • An Introduction to My Firm
  • An Overview of My Asset Management Philosophy and Process
  • What's Important to You?
  • The Uniqueness of My approach
  • Is There a Fit?

It gives the clients a feeling of certainty. The agenda also benefits you, because it establishes where the meeting will go next, so you can actually listen to the prospective client. The agenda also makes it easy for you to explain some of the abstract financial planning concepts because it provides specific talking points. Remember, you are in the knowledge for profit business. You think for a living. You aren't selling something tangible; you are promoting the promise of a comfortable future insulated from external circumstances. You need all the help you can get to demystify what you do; after all, it's not what you say that matters, it's what the prospective client hears and internalizes.

Is There a Fit?

The most important bullet point on the agenda is the last one, which should always be "Is there a fit?" When you get to this point in the meeting, you simply thank the prospective client for attending, and remind him or her that you will now meet with your team. Also confirm that you will contact him or her in 48 hours.

At this point, one of two things will happen. In some cases, the prospective client will thank you and tell you they look forward to hearing from you. More often than not, however, the prospective client will try to close you; they will try to convince you that you should take action right now. I'm not making this up. Because of your forthright and disarming process, the prospective client will have developed a high degree of self-motivation and predisposition. He or she will likely say to you, "I don't need to think about it. I'm confident that there is a good fit and I'm prepared to move forward right now."

So how should you respond to this statement? We tell advisors to say this:

"Mr./Mrs. Prospective Client, I appreciate your enthusiasm however if that is how you feel, that won't change in 48 hours. This is important, so take your time. And this is a process we like to follow so let me discuss it with my team."

Ultimately, you live by the rules you set. If you cave in to the prospective client's request to move ahead immediately, then your entire meeting structure becomes nothing more than a tactic, a gimmick, and you seriously undermine your integrity. There is only one situation in which I would suggest that you could make an exception: if a great client has referred the prospective client to you, and if the prospective client perfectly meets your Ideal Client Criteria based on Assets, Attitude and Advocacy, you can consider making the exception. If you do so, be sure to make it clear that this is an exception. Otherwise, delay instant gratification and stick with the process.

This process empowers a prospective client to come to his or her own conclusions, and to feel great about coming on board with you. Furthermore, you are fast tracking the process of turning a new client into an advocate who is competitor-proof and predisposed to referring other prospective clients to you.

It's funny, when I do presentations on this topic, invariably there will be an advisor in the room who has worked with us in the past and has adopted our approach. Like clockwork, when I finish talking, the advisor will stand up and say, "He's right, this really works!" To that, I respond by saying, "It works because it's right."

Continued Success!

Contributed by: Duncan MacPherson

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2021-03-15 • 20 second read

Whenever a client or partner introduces you to someone, you know that, at some point down the road, those two people will talk and the experience you provided will come up in the conversation. Ensure that the person that was introduced says “thank you!” to the rainmaker. Your commitment to service prompts him or her to validate their delight to the person who referred them, and that validation opens the referral floodgates in the future.

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