Let’s Just Listen and Take Notes

In 2007 Alan Mulally, the then new president of Ford, clarified one of Ford’s significant problems. Arrogance.

In a meeting at Consumer’s Reports, Ford vehicles were being savaged. The Ford people were defensive and rationalizing. According to Bloomberg Businessweek 03 June 2007, Mulally’s response was simple. He handed each one of the Ford people a pad and pen. “You know what? Let’s just listen and take notes.”

Mulally saw the “rationalize what we do” flaw.  Steven Covey’s 5th habit of highly effective people. “Seek First to Understand, Then to Be Understood” addresses that. It is easy to get caught in the self congratulation swamp.

Customer relations 101, really.

It becomes a simple statement. “We are not going to do anything until we know what you need us to do for you.” That’s the beginning of a good relationship. Fulfilling that mandate is not as easy.

Sometimes in financial services, we find clients have no strategic vision.  They won’t get best answers to the tactical “how” question that follow until they know what that solution addresses.  If the client has muddy ideas about finances, priorities and possibilities they are poorly prepared to meet with an advisor. The process will be torturous.

What happens? As you might expect the advisor, who is almost always tactical, introduces some methods that have worked for others and promotes them as important and useful. The client may not be harmed, but optimization is a long shot.

Product-centric practices violate Covey’s Habit #5. The adviser wants to be understood before understanding.

I doubt advisers want to do it this way, but it becomes a habit when clients are strategy challenged. When the client has no well-formed set of strategic goals, help them to develop those. The future gets easier.

Once there is a strategy for reference, the tactical steps can be presented as, “Given your strategic goal _____, we have examined three alternative ways of addressing it. They work like this. Of these we recommend number 2 because ____.” 

The client can decide productively and understand the fit. The attachment to the client’s goal is a much more compelling invitation to a decision than the more common everyone needs insurance or an RRSP or a TFSA.

Three thoughts:

  1. If a doctor prescribes treatment before diagnosing the condition, it is malpractice.
  2. Rationalizing what is offered rather than demonstrating why it is effective, breeds mistrust and future problems.
  3. When clients don’t know what they want or need, it is risky to provide products or services to them.

For many advisers there will be a relearning process. Part of their problem will be discovering the difference between strategy and tactic. Strategy is purposeful. Tactic is how you do it. For example, there is no such thing as an RRSP strategy. The strategy is to build retirement income. An RRSP is just one of the tools to get to that goal. A “How”

Work at it. It is worth the trouble. It is about what the plan and the methods mean. Clients who understand their plan and how it is executed make good decisions.

Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario.  In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.

Please be in touch if I can help you.  don@moneyfyi.com  866-285-7772

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