As we talked about a few weeks ago, in order for a consultant to truly add value, he or she must be able to:

1. Provide an in-depth assessment and analysis of the business area(s) in question; AND
2. Be able to provide not only a roadmap to solve the problems, but also be able to help implement the  solutions.

It is this second point where many consultants fall short. Top consultants are able to formulate a solutions roadmap that includes other solutions providers as appropriate and necessary. The larger the network of experts that a consultant has working relationships with, the better off clients typically are (recall the mention in our earlier post of the faculty of our partner firm Consult P³).

There is, however, another very important attribute that makes a consultant valuable. He/she must be willing to tell you the truth – to be brutally honest – whether or not you as the client are ready to hear it. There is a shared burden in this respect. As a client, you should only be willing to hire a consultant if you are receptive to getting an honest assessment and be willing to take constructive criticism. One of the most disheartening things you can ever do for your employees is hire a consultant, solicit feedback, get people excited that change is on the way, and then do nothing.

Likewise, if you are prepared to hear the good the bad and the ugly, you need to make sure that the consultant you hire is willing to do that. The best consultants know that their analyses might so infuriate the client to the point that there will be no future business. If a consultant is willing to be that truthful – to tell the truth, the whole truth and nothing but the truth – then they may be the right consultant for you.

The consultant should of course be tactful as well – but you see the point. Hire a consultant only if you are ready and willing to hear the truth and make the necessary changes to improve your business.

I spent almost eight years at Morgan Keegan and still have many friends who work there. So it saddens me to see what’s happening to the firm. Many will say that the sale to Regions Bank was the beginning of the end. While to some extent this may be true, what has led the firm to where it is today is greed – turning the other way and ignoring the unsustainable returns of the mutual funds that have now caused the firm so much trouble. If something seem to be good to be true…..

Now what happens? Probably one of two outcomes. Either the firm will be sold to a private equity firm or to another broker/dealer; insiders speculate that talks have been under way for awhile, and now that the “for sale” announcement has been made by Regions, it better happen fast or the advisors will start running for the doors.

The two inevitable losers from any sale – the home office staff and the City of Memphis. If a private equity firm buys the firm, you can bet that belts will be tightened and staff levels reduced. The same goes if the firm is bought by another broker/dealer – the odds of the home being in Memphis are pretty slim, and no one at Regions has the same loyalty to Memphis as Allen Morgan and his mostly long-retired gang.

For advisors, a sale to a private equity firm would be better; a sale to a wirehouse would result in a mass exodus, retention bonuses not withstanding. But even if Morgan Keegan remains quasi-independent, and is not melded into another broker/dealer, you have to wonder how far the firm is behind the competition now – certainly from a technology point of view – given the amount of money and time it has had to dedicate to the many lawsuits it has faced.

Yes, unfortunately, there are many losers. The dedicated home office that appears to be a loser under any scenario. The many advisors who didn’t sell a lot of the funds in question, have not been sued by clients, yet nonetheless have suffered from the reputational damage that has been done to the firm.

It saddens me that this is happening to this once great firm. Hopefully I will be proved wrong, and the end-result will not be a negative one for my friends at the firm.

Over the past few weeks there have a number of reports and studies released about the types of communications advisors want from managers. The results are similar and not surprising – less is more (fewer e-mails) and performance isn’t everything. Duh!

It never ceases to amaze me that so many people fail to understand that communications have changed. Whether you embrace social media or not, it has changed the way that people interact. In order to be successful and develop long-term relationships, you have to deliver to people the content that they want, and you need to deliver when they want it and how they want it – period. If you don’t, someone else will.

How do you know what to deliver, how to deliver it and with what frequency? Ask the question. We all get too many emails. We all get tired of self-promotion. So why do so many people in our industry not get that? While these studies looked at managers and advisors, the message is germane for all industry participants. While you may not get it – the person you are trying to reach certainly does. And the fact that you don’t hurts your chances of success.

Even if you have a long-standing relationship with someone, it’s always helpful to periodically ask if they want any change to the types of information that you provide them, how frequently you provide it and how you provide it. If nothing else, they will appreciate that you asked.

Communications 101 in today’s world – give ’em what they want – not what you want – embrace it or be left behind.

A newly released study by Mellon Transition Management (a branch of BNY Mellon Asset Management) shows that manager turnover in the institutional marketplace is slowing back to historical, pre-financial crisis levels. (Click here to read the Fundfire article about the study.) On the surface, great news, right? Maybe – maybe not.

On the bright side, this trend could be an indicator that now that the dust has settled, and the market has been on an uptrend , committees are taking more time in evaluating their managers before deciding to make any switches. It could also be reflective, as the article points out, of the fact that changing managers can be costly and time-consuming. There could also be compliance reasons for this slowing of manager changes.

In addition, even if managers are underperforming their peers, there is less of a “rush to judgement” in up markets.

On the flip side, the negative here for the investment management industry is that whatever the reason – time, cost, compliance, performance or some combination – its going to be harder to grow your AUM and  get new clients. In a zero sum game like manager changes, one manager typically wins at another managers expense, a slowing trend is good for protecting what you have but not so good for growing your business.

The upshot is that if indeed manager transitions are slowing and taking longer when they do happen, then the importance of your marketing message and value-added proposition becomes more important than ever. In addition, client service takes on an increasingly important role in client retention.

To me at least, this slowdown in manager turnover is a net negative for most managers. What do you think?

In a recent survey of advisors conducted by IMCA and Cerulli Associates (the two organizations team-up each quarter to present industry research), the top reasons were given for both how advisors acquired new clients as well as why they lost others last year. (I give these reports a lot of validity since both of these organizations are top notch and the advisors they survey – IMCA members – tend to be high quality advisors.)

The top two ways clients were acquired? REFERRALS – coming in at number one were referrals from friends/family/existing clients and at number two were referrals from other professionals. These results are not surprising, and reinforce the notion that if you don’t have a formal referral program in your practice, and if you are not actively seeking referrals, then you are missing out on perhaps the best and surest source of new business.

The top reason why clients were lost? They passed away. (Clients unhappy with performance came in at number two and client has relationships with other advisors came in at number three.) While it is inevitable that clients die, this does not mean that you have to lose their family as clients. This result reinforces another notion that a lot of people in this business talk about, but not a lot of them do well – cultivating multi-generational relationships.

Just as referrals should be easy – a happy client should be more than willing to refer others to you – so should getting to know your client’s family so that they too become clients. Do you know your client’s children? Their birthday’s? If you don’t, there is no time like the present to start.

In a way, these results should be heartening because both the best way to get new clients AND not lose current ones, are relatively easy things to do – if you do them!