The Right Side of the Table

“Being on the “right side” of the table, for Scott, meant forgetting about what you wanted to sell. The question was what did the client want to achieve? What dangers did clients have that they wanted to eliminate? What opportunities did they want to capture? What strengths did they want to maximize? Above all, what was the big picture that clients had for themselves, for their families, and for their businesses? Scott’s approach looked at clients as whole human beings who had concerns and aspirations that spanned their own life-times and beyond.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page XIV-XV
“Probably the biggest thing that all client-centered advisers share is a particular quality of client. These clients are very intelligent, successful, multi-dimensional individuals who demand custom-designed service in all areas of their lives. For that reason, only a certain kind of adviser will be acceptable to them.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page XV
“If you would sell what John Smith buys, you must see through John Smith’s eyes.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page XVI (The Right Side of the Table, Financial Planner, Selling, Clients) “What happens when the wealth holder consciously becomes aware that they have more financial resources than they are ever going to need? They begin to come to grips with the fact that wealth is not the endpoint they spent a lifetime perceiving it to be. No, wealth is merely the means to an end. Somebody moved the prize and the spot is vacant. Where should they place their daily focus? Contemplative wealth holders are beginning to see wealth as an accelerator. It is a tool for magnifying the meaning and purpose of life. It provides leverage. But leverage toward what?” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 7
“Net Worth Brackets: Based on our personal experiences in working with wealth holders and the experiences of the thousands of advisers we have trained across the United States and Canada, we believe the marketplace behaviors can be segmented into four categories: 1. Emerging Affluent: Under $1 million or $150,000 in annual household income. 2. Affluent: $1 to $3 million or $150,000 – $250,000 in annual household income. 3. Emerging Wealthy: $3 to $10 million or $250,000 – $500,000 in annual household income. 4. High Wealth: $10 million or more or $500,000 or more in annual household income. Source: Paul G. Schervish, Ph. D, Director, Center on Wealth and Philanthropy, Professor of Sociology, Boston College.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 13
“The Trust Formula: C + R + I / SO….where C= Credibility. Credibility represents accuracy and completeness. It also accounts for the ability to anticipate needs and articulate insights. R= Reliability. Reliability represents repeated links between promise and action. It also includes communicating in the client’s preferred medium of communication, and the frequency of contact. I= Intimacy. Intimacy represents a willingness to discuss tough topics, and the ability to do so in a manner that is palatable and even welcome. SO= Self-orientation. Self-orientation represents anything that draws focus away from the client and toward the planner. It quantifies the adviser’s underlying motivation for being in the relationship. It includes a verbal tendency to spend too much time relating the client’s stories in your own stories. Note that self-orientation is the denominator and is therefore significant to the total score. It has the ability to break down successful ratings in other elements of trust. In this category, a low score means the adviser is not self-oriented.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 15 – 16
“We have found that while advisers are focused on eliminating estate taxes and directing more and more money to the heirs, wealth holders are more concerned about what will happen to the heirs when the money’s in hand.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 18
“The Planning Horizon represents a metaphoric horizontal line. Conversations that take place above the horizon surround the wealth holder’s deepest and most personal intent for their wealth. Why are they planning in the first place? Conversations that take place below the horizon surround the strategies and products that can influence the achievement of the wealth holder’s goals as identified above the horizon.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 19
“The Three Adviser Styles. These styles offer insight into advisers’ varying roles and behaviors within those roles. They also offer decision-making opportunities regarding current and future business models. The Sales Style: Persuading a prospect or client to follow a specific course of action or purchase a particular product. The Advice Style: Providing an opinion about how to remedy or enhance a particular situation. The Discernment Style: Asking a sufficient number of the right questions for consumers to achieve their own conclusions.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 25
“Most advisers ask questions. Some advisers ask follow-up questions. The discernment-based adviser asks enough of the right questions for the wealth holder to reach their own conclusions at far greater depth than they could through the delivery of external recommendations.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page XV
“When an adviser begins to search for the same kind of deep introspection that a wealth holder longs for in his or her planning life, the two minds merge at the discernment style. In this style, the adviser uses deeper and deeper questioning to stimulate the client to reach his or her own best conclusions.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 27
“The dictionary definition of “Sell” is “to persuade another to recognize the worth or desirability of something.” The sales style is based on persuading the client to follow a specific course of action or to purchase a specific product.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 32
“Advisers who thrive in the sales style: Enjoy the thrill of the kill. Lose interest or momentum after the initial sale. Love to learn the intricacies of how powerful products work. Enjoy the simplicity of a transactional business.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 32
“Discern is defined as “to perceive with the eyes or intellect; to detect; to recognize or comprehend mentally.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 35
“Discernment-based behavior is listening without looking for a solution. It’s asking questions that aren’t designed to lead the client to purchase. It’s about helping the client still his or her world for a moment, creating a timeless space in which he or she can make a deeply confident choice.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 41
“Example of Questions to Your Best Clients: What has been the most positive aspect of planning you’ve done, either with my firm or another adviser? What has been the most frustrating? How would you describe my role in your financial situation? Given what you know about me, what do you think I should do more of or less of in my business model? What remaining doubts do you have about your wealth or its impact on your family? Where would you turn to resolve the doubts? If one thing could change about the complexity that wealth has created in your life, what would it be?” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 47
“However, the most trusted adviser of the future will define comprehensive management as something altogether different. Comprehensive will include accountability for overseeing every insurance professional of every kind; every money manager, whether or not you manage the assets; all of the CPAs and attorneys, any specialist in play at any given time; the wealth holder’s philanthropic adviser; and even his or her bankers. This management role will account for every facet of the wealth holder’s financial life, but won’t stop there. It will address the manner in which their life intersects with their wealth. How will adult children manage and preserve the family’s tangible and intangible assets? What mentorship is required? It will include documenting the wealth holder’s value systems and decision-making patterns and then sharing them with future generations.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 58.
“This management concept may cause some to contemplate whether to strive for the most trusted adviser role. Being in this role does not mean you have to take phone calls 24 hours a day or be interrupted on a sailboat in the Bahamas. It does mean that you must have a team in place to manage the intricacies and a high-level person who is accessible when you’re not available. In the emerging-wealthy market, you will need a team that goes beyond an administrative or client service person. In the high-wealth market, and as you move up the net worth spectrum, advisers will have to build out a real back office with a variety of technical and support people.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 58-59.
“Advisers go into planning thinking the client is looking for a solution. In reality, they’re not even sure what the problem is. They’re simply overwhelmed with symptoms, a particular point of pain they want exorcised from their lives. What they really need is clarity about what’s bugging them, why they want fixed, and why, so they can confidently select a solution. They need help figuring out the shape of the hole before they can even consider what kind of peg will offer a snug fit.” Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 59
“Advisers go into planning thinking the client is looking for a solution. In reality, they’re not even sure what the problem is. They’re simply overwhelmed with symptoms, a particular point of pain they want exorcised from their lives. What they really need is clarity about what’s bugging them, what they want fixed, and why, so they can confidently select a solution. They need help figuring out the shape of the hole before they can even consider what kind of peg will offer a snug fit.” Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 59 (The Right Side of the Table, Financial Planning, Financial Planner, Clients, Philanthropy)
“Led by the most trusted adviser, the Core Team’s permanent roles cover four essential areas of competence: tax management, legal management, investment management, and risk management. Core Team members must be willing to take comprehensive responsibility for their arena even when it means verbalizing a need they can’t personally fill and recommending the temporary addition of a specialist/ expert on the team. They are each compensated according to their individual business models.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 79-80
“The demand for the Intentional Team Model calls the bluff of the one-stop-shop. In the affluent marketplace, the one-stop-shop will cease to be viable for four key reasons. First, wealth holders have best-in-class expectations. They have the business acumen to know that no single organization can maintain this level of talent in every discipline. They recognize that top talent often feels stifled under the weight of bureaucracy and sets out to hang its own shingle. Second, today’s wealth holder encounters the need for very specific solution providers. There are so many intricacies to complex planning; a single organization can’t possibly house every facet under one roof in a financially viable business model. Third, some of the wealth holder’s planning needs are temporary. Third, some of the wealth holder’s planning needs are temporary. It isn’t cost-effective, and therefore it isn’t likely that a single institution would house all of the expertise to address every facet of future planning- both known and unknown. Last, every wealth holder has existing relationships. In the smoke-and-mirror media barrage of today’s financial services marketplace, it is tough to relinquish the one known commodity in his or her planning- the trust he or she places in longstanding advisers.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 86
“Many advisers still provide planning for free in hopes of getting the insurance sale. Some advisers charge fees to manage assets include the planning in this single bulk fee. Some charge planning fees, but the fee is not commensurate with the promised scope of work. Often even the wealth holder doubts it’s enough to cover a full planning process. We know in our hearts and our intellects that an explicit exchange of value requires clear communication and a defined price tag, yet many advisers have not yet achieved a business model in which their behavior reflects their subconscious belief system. Much of this may be connected to a lack of confidence or process. If I charge a fee, I have to do the work. If I charge a fee, I must be able to clearly document what I’m charging for. It must be able to articulate a compelling value proposition for my planning process. If I charge larger fees, I might scare the guy away and blow the insurance sale. If I’m going to manage a nice chunk of assets, I don’t need to stand on ceremony and charge a separate fee for planning. I think I’ll hold off on that for a while. Things seem to be working just fine the way they are. We submit to you that there is no other profession besides financial services that provides such detailed work, requiring substantial expertise and integrity, in the hope of being compensated for it later, during a different and very specific facet of the relationship.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 90
“Picture a wealth holder sitting down with a renowned architect and a luxury home builder. The wealth holder tells them to build a top-notch house to his liking, using the best talent and materials they can find. At the end of the 18-month process, they’ll all come back to the table and he’ll decide whether to buy the house. How long does it take the architect and the builder to back away from the negotiating table? How can we be stewards of a process we’re not explicitly and sufficiently paid to execute? What other professional discipline allows the first encounter with a new client to be a loss leader? If the wealth holder isn’t paying a fee, what is their expectation for quality? Wealth holders understand value exchange. They engage in dozens of fee-for-service relationships daily with their vendors, domestic help, and medical professionals. What do they expect from professionals who give their greatest talent away for free? And how committed are they to a process that either lacks clear definition or is so good it doesn’t cost anything?” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 90-91
“When wealth holders come into a relationship paying a fee that seems unbelievably small in relation to the work at hand or paying no fee at all, consider their mindset and commitment level. They’re not agreeing to plan, they’re agreeing to test you. Why not stick a toe in and see how the water feels? What have they got to lose? On the other side of the table sits a professional who just agreed to do work for less than he or she is worth in the open market. What emotion is the adviser bringing to the table? Fear? Lack of confidence? Consider the dynamic that was just created. The wealth holder has one eye casually on the diagnostics and the adviser is hooked up to an oxygen tank of financial fumes in hopes of a huge payday that is months or years away. Two intelligent successful people have just engaged in a dysfunctional dance that may spin, dip, and twirl for months or years at a time.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 91
“Just as the adviser has attempted to remove the financial barriers to entry, he or she has created a relationship roadblock. If you’re smart and do good work, wealth holders can’t figure out why you’re working for free. It makes them uncomfortable. If wealth holders have to question a professional’s motivation on any level, the questioning presents a natural obstacle to decision making. As the work increases in intensity, quality, and duration, the question mark becomes larger than life. The pending product sale becomes an elephant in the room. It stands between the wealth holder and the adviser, creating intense suction, eliminating the perception of objectivity like a giant relationship vacuum.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 92
“It’s important to note that many advisers who manage money and charge asset management fees are likewise engaging in this unintentional barter. A common practice is to charge a 1 percent asset management fee and to include the financial planning services in that 1 percent. There is not communication about what portion of the 1 percent is being allocated to the planning services. What happens when the market causes downward pressure on asset management fees? Now the adviser has to charge .75 percent or .5 percent to remain competitive. Can he or she still afford to do the financial plan? Which portion is being squeezed- the quality of the plan or the quality of the investment advice and service? If the plan is so good, why not ask the wealth holder to pay for it? If it’s not, why is it being offered at all?” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 92-93
“Picture this. A cleaning service shows up at your house unannounced. They mention the names of several of your neighbors whom you know and trust and ask to clean your house to see if you like it. They’re building their business and you’re just the type of client who fits their service model. It feels uncomfortable. Shouldn’t everyone get paid for their work? They persist. You accept. A week later, they’re still cleaning. You’ve never seen anyone work so hard, yet they won’t accept payment. Don’t worry, they say, they’ll be compensated plenty in the end. You wonder where all that money’s going to come from. The next day, you get home from work and they’ve been grocery shopping and cooking. They took your dog to the groomer and did your laundry. At this point, you have no idea what services they offer and how much it’ll cost you. The work looks good but the commerce confusion is overwhelming. You politely cut a check for what seems reasonable and back out of the deal. It was far too vague and far too good to be true. In contrast, when a professional relationship begins with a clear fee-for-service value exchange, certain things happen. The adviser demonstrates confidence in what he or she is bringing to the planning table. The wealth holder makes a clear and committed choice to be part of the process. It’s far easier to help someone who wants to be helped. By charging an explicit fee just for planning services, one that is commensurate with your expertise and scope of work, you’ve taken yourself out of the sales model and into the advice model. Now, let’s make sure the value exchange plays out.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 93
“Lay it all on the table. When was the last time you met a self-made person who preferred a relationship interlaced with secrecy and two-way mirrors? Confidence is contagious. Make yours part of your value exchange.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 95
“When planning is provided for free in lieu of a pending insurance sale, future revenue is, in essence, borrowed to pay for current time and talent. Another possibility is that commissions from past sales are consumed to cover current overhead. As such, there’s little or no money left to provide the post-sale service that the contract obligates the seller to provide.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 95
“It is worth noting that if the most trusted adviser provides the selection, placement, and post-sale service of the insurance product, he or she can receive the commission compensation without jeopardizing the most trusted advisor role.” The Right Side of the Table: Where do You Sit in the Minds of the Affluent? By Scott Fithian and Todd Fithian. Page 96