What are the 4 Stages of a Financial Advisor’s Business?
Through life, we experience several graduations. My daughter recently graduated from Preschool (there was a party). Then kids graduate from elementary school, junior high, then the first of two large celebrations: High School Graduation and College Graduation.
After that, what is there? We do have a party to celebrate marriage or the birth of our first child – those are clearly marked transitions, but then what? How do we know it’s time to transition to other phases in life, recognize the emotions, actions and requirements of those phases? Additionally, if you remember back, when you graduated from one level to the next (say high school to college) when you stepped into the next phase, you also walked into a new building, new teachers, new friends, etc. Everything signaled that the game had changed. Yet, when you graduate from one phase to the next, nothing really signals that change. You walk into the same office with the same staff and the same clients just as you had the day before, so how does your mind make the necessary adjustments to succeed at the next level?
Worse yet, in business, how often do you celebrate graduating from one phase to the next. Do you even recognize what phases there are in a business?
After coaching financial advisors for over 20 years, we’ve come to clearly recognize and delineate four distinct phases in a financial advisor’s business. You see, many of the advisor’s that start working with us are frustrated or bored by their businesses. These two emotions are the top two killers of an advisor’s business. When a financial advisors is bored by their business, they are not driven by the next challenge – they start to look to retirement or worse, unconsciously create challenges to solve (read: problems in life/business). When they are frustrated by their business, they begin to lose their motivation and excitement and start looking for a way out of the business.
We noticed patterns to individuals at various phases in the business and sought to distinguish what was different about each phase. By distinguishing these phases, we can signal to the advisor a graduation to the next phase. With a distinct graduation, we can determine what to expect and what they will need in the next phase which essentially accelerates their success with less frustration and virtually no boredom.
Without knowing what phase you are in, you cannot effectively understand what your business needs, what you need or what to do to achieve success at the new level.
As I researched this topic, I found virtually nothing written or taught about it. The only thing I found was levels determined by production numbers. There was nothing in the way of what to expect when you moved from one production level to another. It was no wonder that there has never been a shortage of bored or frustrated financial advisors.
So, below I summarize the phases in a financial advisor’s business:
Stage I – Survival
This phase typically is experienced from day one until approximately $300,000 in production. It is usually for advisors in the first 5-9 years in business. There seems to be a silent signal that you’ve survived in the business. You can now put food (other than Ramen Noodles) on the table and can, for the most part, effectively pay your bills. You have a sense of what you do and have crossed the mental threshold of now defining yourself as a financial advisor (not just feeling like you are ‘faking it’).
The challenge with this phase, is that you now have a business filled with zombies – zombies are anyone and everyone that would give you even a penny. They came from all walks of life including cold calling and cold ‘door knocking’. They have various net-worths, different interests and a vast array of professions. There are a few gems in the bunch, but the gross majority of them small accounts where you have little in common.
So, now you can pay your bills and have matched the mental construct of now being a financial advisor, rather then just playing one in the office.
Congrats! … Next phase….
Stage II – Thrival
Generally, the production level of this phase is roughly $300,000 – $750,000 and anywhere from 10-18 years in business.
The majority of our clients start working with us in this phase. They seek out a coach because they are often overwhelmed with tasks and underwhelmed by the ‘enjoyment’ of their business. They don’t have a clue how to fix their plateau both mentally and with their production. They continue to try and grow their businesses the same way they did in Phase I – only to feel frustrated and overwhelmed and losing the ‘luster’ they once had for their business.
No one threw them a party, so they don’t know to do anything different. They are also under the curse…
The curse of success! Huh? How can success be a curse? When you have succeeded doing something one way, a fear develops in changing how you have always done things… but that is exactly what needs to happen in order to succeed at this level. ‘But what is it I need to change? I don’t want to screw anything up’.
Well, this is where it is helpful to have a coach who have a history of helping hundreds of people just like yourself and knows the industry inside and out to help you achieve the next level. There is no surprise that financial advisors at this level make up the majority of our business. We help people like yourself make the mental leap necessary to change things that the mind will be resistant to changing – but that it has to change in order to succeed going forward.
I associate this level to LEVERAGE. The first phase was really about gathering assets, and I don’t just mean monetary assets… I mean assets in terms of relationships, skillset, knowledge of the business and staff. This phase is now about leveraging all of those assets. If your relationship with your assistant is weak – your entire business becomes more effective when that relationship is improved and leveraged. If you are overwhelmed by the number of relationships you have to manage – it’s time to leverage those too. What do I mean by leveraging relationships? If you are at this level, there is no doubt you have heard about the 80/20 rule. The problem many advisors have at this stage is that they worked so hard getting all of their relationships, that they are afraid of giving up any of them. They are also under the illusion that maybe, someday, they will get more out of those existing relationships – even if it is only a $10,000 account. Finally, if you don’t have clearly defined systems and processes (and evaluate them regularly), you are missing out on leveraging time and effectiveness. Leveraging any one of these areas will have a tremendous impact on your business – just imagine leveraging every one of them?
There are more mental blocks at this phase than any other phase (yes, even more than the first phase). The technical side of moving the needle on your business is the easy part at this level – the mental part is the more challenging one. This is our forte!
Stage III – Mastery
Between production levels of $750,000-$1,200,000 and over 18 years in business, this phase is about being a master business owner. Business at this level becomes a game, much like golf. Golf cannot be won by a score itself… it is a game that is continually honed by the individual playing it. Business is also a game that can never be won. It can only be played.
Recognizing what your ‘game’ is and honing your skill at it is what this phase is all about. If you’ve hit the proverbial target of becoming a Million Dollar Producer, Congrats! But let me ask you something, did coming to the office the day after you hit that target feel any different than the day before? Likely not. All that work and effort to have your work day still feel the same as it did the day before. This really messes with the mind. It often isn’t until you hit this level that you realize at a deep visceral level that the game is really different then you had defined it before.
Stage IV – Purpose
Typically experienced anywhere above $1,000,000 in production after you have that moment – ‘but what for’?
Not everyone in the business will experience this phase, but if you do, consider yourself a successful advisor – not just monetarily, but also at a much deeper level. The reason it is critical that you recognize what this phase is about is so that you don’t become victim of a mid-life crisis or some other mental consternation. In the end, what is all this for? Once we can pay our bills, feel like we’ve ‘made it’, what then?
Several years ago, Ken and I experienced many of the same emotions and inquiries that happen as we move from Mastery to Purpose. It forced us to consider continuing a very rewarding practice of working with advisors ourselves or growing Getting Results beyond us. The answer became clear when we recognized we had graduated to this phase. The value of what we do at Getting Results is so clear as we experience story after story from out clients, that there was not a doubt that we were committed to providing that value beyond the number of financial advisors that Ken and I could handle. Being clear on these phases, allowed us to recognize the phase we were in and what we needed to do.
Financial Advisors at this level are successful, not just monetarily, but also mentally and spiritually. I don’t necessarily mean spiritually as it relates to religion, but more as to how it relates to a sense of purpose – something that goes beyond ourselves that is often a difficult thing to articulate. This is a phase that can only be experienced, not easily described.
Coaching our clients through each phase has its rewards – but once we reach this level it is impossible to articulate the intrinsic reward that is experienced.
Summary
Each phase has its challenges and rewards. One phase is not necessarily better than another and you will experience frustration and challenge at each level. Half the battle at overcoming that challenge or frustration is knowing what game you are playing and at what level. It is often difficult, if not impossible, to see your own self. To see your own shortcomings, strengths and where you are in this unending continuum called ‘life’. By discerning these phases and helping you graduate from one to the next, I hope to help you experience less boredom and frustration along the way, and more importantly, guide you to the untold success as it relates to all things that define success.
After all, our mission is to Enhance the Experience of your Life through the Success of your Business
