WE’RE IN A COMPLETELY DIFFERENT BUSINESS: The most valuable service is different than most believe

Hi, my name is Mark Little. I’ve been a financialadvisor since April 28

of 1981,

981. I’ve been around the block, and the

one thing that I can tell you with almost complete authority

is that we are in a completely different business

than most financial advisors realize.

So let me go through it with you and see if this makes sense

to you. And even clients think we’re

in a different business than we’re actually in.

So clients and financial advisors

all believe that the business that we’re in is

what we were actually hired to do. So in my case,

I came out of the investment channel of our

industry. So I thought for a long time, we were hired

by clients as investment managers, and so we

managed investments, and that’s the business we’re in.

No. Financial planners create financial plans.

They think, oh, I’m in the financial planning business. No.

Estate planners, tax advisors,

so forth. People in our industry and even the clients

think that it’s all about financial products or financial services,

and that’s the business that a financial advisor in.

Here’s the problem. I’ve been working with affluent

clients for many, many decades, and the problem is, at some point,

a client in a long term relationship will

come to you with a terrible idea.

They will get nervous. There’s some fear based

issue that will drive their emotions, and they will

call and ask for an appointment, or they’ll call in a panic,

and they will proceed to recommend some just

really terrible, terrible idea, something that if

they take action on this emotion based idea

of theirs, it could and quite often has,

in my experience, just completely blown up

their financial strategy. I could give

you examples of this. I mean, I’ve been doing this for more

than four decades, so I’ve seen clients call in with

all kinds of crazy stuff, but currently

it could be coming to a financial advisor and

saying, hey, I know it’s not part of the

plan, but I’m reading the headlines. There’s war breaking out

all over the world. I think I’d like to just sell everything and

put the cash on the sideline, and then when

things settle down, we’ll start moving it back in again. Or the

political environment is just so tumultuous right

now. If so and so gets elected

as president, then that’s it.

I’m out. I’m selling everything. It’s just going to

get too crazy, and I don’t want to be

in the financial markets when it happens. So I’d like to move

all of it, or most of it, into a little side account.

Just sit in cash and wait until the coast is

clear. Or it could be just the know.

I’ve been reading for several years that we’re going to have a recession. We’re going

to have a recession. And I just watched CNBC

or I watched the business news channel and I

heard a bunch of experts talking about how earnings have been

inching up during this supposed we’re going to have a recession

and that can’t last forever. Things are so overpriced in the market

right now, it’s very risky.

I just would like to move to cash. So you get the idea.

So at that moment when the client calls in or

at that moment when the client comes in and you’re sitting there

talking to them about this brilliant

idea that they just woke up at three in the morning and had

last night, that moment, that moment where they’ve

pitched this grotesque idea and

that moment where it’s now your turn, it’s your turn to

talk. They want to know your reaction to what

they are just now proposing. That right there,

that’s the business we’re really in now, most financial

advisors, and I’m not talking about you,

you may be laughing right now and saying, oh yeah, I’ve lived that moment many,

many times. Well let me tell you, having dealt with financial

advisors, I’ve been in the business 40 years, but I’ve

been dealing with other financial advisors in this way

since 2002. So I’ve had a lot of experience talking

about this topic with many, many high end,

let’s call them world class financial advisors. And I will tell

you, even at a high level of experience and a high level of

skill, most financial advisors are unskilled

when it comes to that moment.

Like what to say in response to something, you initially

are hearing this and you think it’s a joke. No,

most financial advisors are either unskilled

or maybe it’s better to say unprepared, like they haven’t really

thought through. Here’s what I’m going to say.

To have a coherent and concise and powerful conversation

about this knitwit idea being

proposed by a highly affluent, highly successful

person who in every other part of their life they’ve

been successful. So they think they’re approaching this from a very

rational, very sensible. They think what they’re proposing

is just the best idea in the world,

the most safe and the most obvious

idea in the world.

When they say these things, that’s when you’re needed the most.

And I’m telling you from experience, most financial advisors choke in

that moment. They say stuff, but it’s not compelling.

And then the client makes one of the worst financial decisions in the

world and then what do they do? Well, at some point they’re talking

with their friends years later and they’re saying, what’s your

experience with your financial advisor? And they say, well,

I haven’t done that great, actually. I’ve lost

money since I’ve been with them. But they kind of forget that moment where

they blew up their own strategy. And whether they do or

don’t fire their financial advisor is sort of beside the point.

The point is they make a decision that is terrible and

it really throws off everything in their financial strategy.

And so what am I actually saying here?

Well, this is a skill issue. I’m saying to be prepared

now, I recommend a preemptive approach.

As a matter of fact, I’ve been dealing with this issue for so long

that I know a preemptive approach works

just when you’re talking with a client in the early stages

of the relationship. And if this moment has never occurred

with a client of yours, then now is the

time to begin preemptive conversations. I’m talking about just regular

routine meetings where you meet with the client.

This is where you’re prepared in advance to

say things that later when they come to you with

this terrible idea that you have planted

seeds in the past of how you’re going to

respond in a situation like that. So what

I do and what I train for advisors in our program

is that you develop some investment principles,

some fundamental investment principles. And that’s

what I’ve done years ago when I first sit down with

a brand new client, they say, well, let’s do it. Let’s start working together.

And I go, well, one last thing before we move forward. I have

these three fundamental investment principles and I need

to discuss them with you. And if these three

fundamental investment principles sound logical to

you, well, then we can move forward. But if these three fundamental

principles don’t sound solid to you, well,

then it’s probably not going to be a good fit to work together because

everything we do is around these sound principles. And so

then you explain what your principles are.

Now, we have full training on this, but I’m saying you can

do this on your own. You can establish your core. You can say

what really makes an investment portfolio

successful. Put yourself in a kind of a flash forward

situation. Let’s say you work with a client for 2030 years.

They’re at the end of their life. They’re looking back over their investment

returns, and it’s highly successful. What are

the fundamental principles that had to be in place for that to

be true? So that’s what I’m saying.

Sit down with a piece of paper, start taking notes as

to what you think are the fundamental principles, and then

craft a skilled communication around

this. What I’m saying is communication

is a skill, and this is the most important

part of your craft. You are in the communication business

when the client comes to you with a disastrous idea

that’s going to ruin their financial strategy. Just craft two or

three short conversations so that you can plant

these seeds about your fundamental investment

principles two or three times every year.

Little short conversations that you can just throw it

in there and in the course of your routine client progress

meetings or phone calls with a client throughout the year, just kind of throw it

in. Just long as we always remember the three

fundamental investment principles, everything’s going to be okay. Now,

this is a preemptive conversation before they start to really hit

the panic button and panic and come to you with a terrible idea.

So this will do what? This will ensure that

your client is not surprised that when they do

come to you in that moment with a really horrible idea,

that you are, in essence,

reiterating sound principles. Not only that you have

been saying over and over throughout the years, two or three times every

single year, but it’s something that you

can recall that they agreed to and agreed

in principle to before you even started working

together, and that this brilliant idea of

theirs to blow up their financial strategy violates

one or all of these financial principles.

And then how do you handle when they come to you in that moment

and they are now quiet? They want to know your reaction to

this rotten idea.

The strategy that I teach, and it really works well,

is don’t start attacking their idea, even if what

you’re doing is recalling conversations you’ve had with them in the

past. Preemptive conversations. Don’t argue.

They are in an emotional state. This will not work, this arguing

strategy. So this is not the moment to exert your

skills as an experienced financial advisor. And you

should believe me, because I’ve been in this business for x number of years.

No, it’s not the intellectual part of their brain that’s

working at the moment. It’s the fear panic button that’s

in their head. And the only thing that will work is

questions. Say, okay,

so explain what you mean. So they come

with an idea. They want to move to cash. What do you mean

move to cash? And for how long and what’s the process?

You’re recommending to know when the coast is clear and

we get back in, because this sort of a strategy creates

additional problems in the future. We’ve got to get back

in and just ask questions.

How did you come to this conclusion? When did you come to this conclusion?

Do you see now how by asking questions,

it’s a low emotion situation, you’re reducing,

in essence, the drama of the whole thing, and it

gives them time to calm down. And once they start talking rationally in

response to very good, well prepared questions,

well, then you can explain

that this violates all the fundamental investment principles,

or at least one of the fundamental investment principles.

And you can say the truth. You can say, look, people have tried

to do this over the decades. This is called timing the market or whatever it

is that they’re describing to you. And you just say,

no investor has been able to do what you’re describing consistently

over the years. As a matter of fact, the ones who try blow

up their investment strategy and always look back on it and regret it.

Well, that’s all I have. So you could sit down and create your fundamental

investment principles, begin having these preemptive conversations

anytime before the moment they come to you. Because if

you wait and start dealing with this conversation skillfully,

at the moment they are about to jump off the cliff,

it’ll be too late. The only way to talk them

down off the cliff that I have found is to earn

the right by having conversations that they will remember

later about. I’m calling them

the fundamental investment principles, the thing that works. So you

can create your own, I know you can do it, or you can join our

program and jump in the river and we’ll share

all these client focused tactics and strategies that have worked so

well over the years. But either way, be prepared for that

moment. That is the business we’re all really in.

We’re there to protect the client. We’re there to help them achieve their financial

objectives. And they don’t achieve their

goals if they blow up their strategy every few

number of years. And it’s your job to prevent

that from happening. If there’s any possible way you can do it,

and through skilled conversation that’s

prepared well in advance, you can do that.

So that’s it. And we

wish you every future success with this.