Start dating your clients

Financial advisers are realising that the value in their businesses is the relationships they have with clients, not just the skills they offer, says Philip M. Randall, managing partner of The Thorndyke Group.

Wednesday, August 9th 2017, 3:04PM

Dr. Phillip M. Randall came out from America for the National Adviser’s Conference. It’s a 20-year retrospective for him, because the last time he was here was 20 years ago when the Sky City was opened, where the conference is.

Phillip, tell us what you do and what you are going to talk about.

In terms of my everyday activity, I am the Managing Partner of The Thorndyke Group, which is a human resource capital consultancy, involved in individual and organizational effectiveness. In addition to that, I think it’s important to note that I am a professor at the Capella University. I think what is relevant for my time here after 20 years is that I am the Board Member of the LearnLong Institute of Education and Research, which is very germane to this whole topic around life planning, whole-life planning and the issue of the older worker.

Are you going to look at the 20-year time period since you were last here, and giving your stories on where we were then, where we’ve got to now and where we’re going?

Yes, exactly.

What are the key observations you have on where we’re going?

In terms of where we’re going, we’re entering a period which I characterise as a disruptive period. It is all predicated on the aspect of artificial intelligence – the manifestation and growth of the ‘humanoid’. It is key, particularly in the area of financial planning, because today the financial planner actually utilises artificial intelligence in developing portfolio recommendations. Behind the scenes, that’s what’s going on.

A lot of people will wonder what artificial intelligence means to them and their businesses, but to you, it’s quite important?

Yes. The key aspect of it is a prospective client - what are they looking for when they’re engaging a consultant of services? Three things: one is good judgement, the second one is skills to do what is needed, and the third is empathy. At this particular juncture, what is happening in terms of artificial intelligence (or the ‘robots’ or the ‘avatar’, however you want to talk about it or describe it) is that they can now, at the beck and call of the human, exercise good judgement and they also have skills. But they have not been able – as of yet – to capture the ability to demonstrate empathy.

So, is that about the adviser having the relationship with and empathy for their clients?

That’s exactly right. That’s what a human has, and the adviser is obviously a human! It’s building a relationship predicated on trust. Trust is a manifestation of a relationship, which is critical to success.

Do you think that financial advisers are now realising that the value they have is actually the relationship with their clients, in comparison to 20 years ago, when they were very much focused on the skills?

That is clearly the case. 20 years ago, I was advocating a model of whole-person planning based on criticality of the relationship. I would say that now, practically every adviser would have heard that a hundred times. The clarion, or call of action, that I think is important in this particular conference is the question, “So, what are you going to do about it?”

What are they going to do?

The hope is that they’re going to see the necessity of creating a relationship, and doing so through the act of nourishing the relationship. It’s understanding that relationships should really be built based on the understanding of the following aspect: “the more you know about me, the more responsible for me you become.” As a result, if you understand that psychology, you will then say, “Well, what I need to do in order to build a relationship is to share with the client as much about me as possible and then to learn from the client as much about him or her as possible.”

It’s probably quite challenging for some of the advisers to open up about who they are?

Indeed! If for the most part you’ve been very transactional, and opaque in your transaction, then you’re not going to be able to build a relationship. When I talk about relationships, I try to translate it for everyday people; you’re dating, for example! If you’re dating and you’re trying to build a relationship, the relationship that you’re trying to get to is one of intimacy. That means you need to be able to know the person well enough to meet their unexpressed needs. Right? Because everybody is going to try and meet the needs that they say they have! The differentiation in the marketplace will be such, that those who can create a relationship that’s intimate enough that “I know what you need before you say it.”

Do you think many financial planners would be doing that?

At this particular time, I don’t think that many are doing that. But there are niches. Those niches have been able to show that they have been able to grow their business through this investment; investment and an interest in the individual, in terms of what it is they’re trying to achieve. A fundamental understanding is how your client spends the most of their time. Well, work is how most of us spend a major portion of our time. Work dictates much of everything. It gets us up in the morning and brings us home at night. It tells us when to eat and tells us when to sleep.

There’s no quick and easy way to build that empathy and trust, is there? Is it a long-term project?

Yes. I wouldn’t suggest that you approach it as a “quick and easy”. I do expect that it would be a long-term engagement that you’re working towards. But it starts out with asking the individual about them and sharing with the individual about you.

So, it’s not just about doing a risk profile questionnaire?

In the business, we call it a structured interview, meaning that you have already predetermined the questions, you ask the question and you listen. The key to this is that nature gave us two ears and one mouth, so listen twice as much! That’s the idea.

Does it limit how many clients an adviser can have?

It used to be a case of having to make a lot of sales. What is emerging in your culture here is this idea of fee-base, so they have time. The interaction and engagement is based on the fee, so they have time to develop that relationship. The model that I use in order to even create this discussion is old private banking. Private banking was where you actually had a banker - although it wasn’t involved in banking as we know it today, but it was called a private banker. That person had a relationship with you and generations, in given families. And what did they do? Not only did they manage your money, as it were, but they also managed your relationship with your physician, managed your relationship with your children and their education, etc. They were always there supporting you.

Are we going full-circle back to the old way of doing things?

I hope. That is my appeal.

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