Is Trail the right Financial Model for you?

Trail commission. Is it the silver bullet that justifiably allows Financial Brokers to build value in their businesses and eventually sell the business at a healthy multiple? Or is it a somewhat opaque way for advisers to be paid, sometimes with very tenuous links between the value provided by the adviser and the payment received?

Is it the right model for your business?


Trail commission is not perfect

Okay, let’s get the negatives out of the way first… Trail is far from perfect; in fact one could argue that it has some potential conflicts of interest for Financial Brokers. The word potential is highlighted for a reason – trail commission doesn’t in itself cause the conflicts, but the use of trail by individual Financial Brokers could. Let’s look at a few areas of possible conflict for advisers,

1. A client gets a windfall, let’s say an inheritance. If the adviser’s income is based on the amount of assets under management, income increases if the money is invested. If the client pays off their mortgage, it doesn’t.

2. What does the client with €3 million invested through the adviser get that’s different from the client with €500,000 invested? Are bigger clients simply subsidising smaller clients?

3. Similar to the above, a wealthy client gives you €500,000 to invest. You then find out that they have €2 million invested elsewhere themselves. What additional services will they get when giving you the money to manage, that will justify your huge increase in fee? Of course if you are providing comprehensive financial planning, with future cashflow planning sitting at the heart of it, there’s part of your answer – you need visibility of all assets to provide the complete picture.

And then there are the negatives simply in terms of trail commission as a business model. You secure a senior executive in a large company as a client. But after your factfind and analysis you find that the client’s wealth is tied up in a company sponsored pension scheme, also with an AVC scheme on great terms. Unless the client has other investment assets, there’s not much earnings potential for you on a trail basis.

And what happens when markets fall sharply or indeed the client decides that its now time to de-cumulate assets? Your earnings take a drop, even though your work may not.


But there’s a lot to be said for it!

First of all it’s relatively easily explained. Clients understand that a small percentage of their money will be taken as charges. Trail is simply an addition here and clients “get” that.

Then of course trail is very easily collected – this is such an enormously important point! Advisers say all of the time that it’s hard to get a client to write another cheque, especially year after year. Trail makes this problem go away and the adviser / client relationship continues each year without this hurdle.

And clients see a level of alignment of interests too – if the portfolio sees strong growth, both the client and the adviser win, if the portfolio falls in value, they both lose. Is this fair for the adviser? That’s a question for another day!


It’s all about your proposition

To me, this is the nub of it. If an adviser is simply adding trail onto policies as a means of securing ongoing payment without giving too much thought about what they are delivering, I believe this is a very flawed model and a very risky strategy. If an adviser cannot demonstrate and communicate their value, and as a result link the trail back to what they do, they are on very unstable ground.

On the other hand, if your advice proposition is crystal clear, clients understand it and are happy to pay for it, well then trail commission is a very appropriate method of collection of your fee. And were trail commission ever to disappear as a means of collection of fees, clients would be clear about the value you are adding and the fees that still need to be paid.


What would I do myself?

I’m not an adviser so you could argue that it’s easy for me to be a bit sanctimonious on this issue! However I could also argue that trail is not a feature of my business model (which is based entirely on fees) – so I only get paid when I can demonstrate value. When you have to demonstrate value to get paid, trust me you work very hard on your proposition!

At the end of the day if I was an adviser, I think I would use trail commission as a method of payment. But I would link it clearly back to the value that I’m adding, and ensure the client sees the trail commission as simply a method of payment for the advice given. The quantum of trail would be decided by the services provided. I’d give clients choice; fees, retainers, trail etc. Their choice, but they need to be clear that they are paying you for the value of your advice, rather than the setting up of a product. Because it is in the provision of advice where Financial Brokers add value and change clients’ lives for the better.


6 Steps to better Networking

Networking is a really important business activity, but it’s one that fills a lot of people with dread… They think of standing around in crowded rooms with no one to talk to, or being pinned in the corner with somebody talking endlessly about some mind-numbingly boring topic. And so while most people recognise the importance of networking, very few people do enough of it. In fact, I find it’s the one activity that causes the most discomfort when it ends up on the marketing plan for a Financial Broker!

So what can you do to make it easier and more effective? After all, if it actually works and helps you generate new clients, you are much more likely to continue to do it.

Recognise that it isn’t easy

It isn’t easy… but it isn’t easy for anyone. So while you might think that it’s so easy for certain people, that tends to be because they’ve worked really hard at becoming good at networking.  However, while some people might appear to find it easier than others, everyone at least has a common purpose  – they are there to build connections. So approach it from the point of view that at least everyone has the same goal and are open to talking to you.

You must have a strategy

At the end of the day, you’ve got to be standing in the traffic if you want to get knocked down! But it’s not enough to wander blindly into a networking event without a clue of how you’re about to approach it. This starts before the event where you try and get a handle on who is likely to be there. Are there lists of attendees available in advance? Can you check out who members of the business group / conference attendees are? Once you’ve an idea of who will be there, you can start thinking about who your preferred “targets” are. And then you can start doing some quick research on them through their website and LinkedIn profile. And this research will hopefully come in very handy later…

Be a first mover

Don’t just head for your pals and spend your night in deep conversation with them! By all means, if they are in a group of people that you want to meet, take the opportunity to get introduced into the group. But be active and make the first move to start conversations. Others will thank you for this and it also gives you the opportunity to guide the conversation.

Be interested

And this is where your research comes in really useful! If you can show a level of interest in the people you meet – some knowledge of their business, some connections you have in common, it might even be that you know about some quirky interest of theirs, this will ease them into the conversation as you are opening the door for them to talk about themselves. And then be interested because your interest in them will come back in spades. They will naturally want to reciprocate and turn the conversation towards you, which of course is then your opening…

Hone your own pitch

When you get over the initial chit-chat and move on to talking about your reason for being at the event and what you have to offer, this simply must be interesting and must grab their attention. At the end of the day, they will be talking to many people that day so you must be in some way memorable. If you are pitching your wares, paint pictures of solutions, not saying why you’re such a great financial planner. Let people see how you will solve problems for them and enrich their lives in some way.

Follow up brilliantly!

Then when all the hard work is done, make sure you take the final step. Contact people after the event saying how it was great to meet them and thanking them for their time. Connect with them on LinkedIn and if you send out a company newsletter, suggest that they be added to the circulation list. Send them information if this makes sense. If there’s a favour you can do for them, maybe there’s someone else you can introduce them to – well then this is even better.

So yes, networking is not easy. But hopefully these few thoughts might make the task a little less daunting for you!

The World of Financial Brokers today

Last month I agreed to put my head on the chopping block and give my general observations of Financial Brokers in Ireland today, my views formed by the work I’ve been fortunate to carry out with a great number of you over the last four years. So here goes…

A very resilient bunch of people

This is my overall sense of Financial Brokers and is the factor that has impressed me the most since 2011. At that stage many Financial Brokers were on their knees, as the market for personal financial advice and solutions had dried up almost completely. However most of you simply dug in, scaled back your businesses to a more sustainable size, re-examined your propositions and got out there meeting your existing and prospective clients. Thankfully in 2014 and again in 2015, many of you are now reaping the rewards of the effort put in during these tough years.

Financial Brokers do invest in their businesses

When I started out in 2011, if I had got a euro from every person who said to me that “brokers won’t pay for anything”, I’d be a richer man! The bottom line is that Financial Brokers are willing to invest in their businesses, where they see value in doing so. The days of only engaging with suppliers when a provider will foot the bill are long over.  Yes, you are very discerning about when and with whom you engage, making sure that you can see a clear return for your investment. But you’re 100% right! This ensures suppliers (like me) are focused on the value we can bring to you, rather than simply pushing products and services at you. Is this any different to the work you do with your clients?

Many Financial Brokers are not great at communicating the value you add

You know somewhere in the back of your mind the value of what you do and know that you are delivering value to your clients. The problem for many of you is that your clients are just not seeing it. From my experience of working with many Financial Brokers, this stems from not taking the time to actually articulate what you do and the value that that you add, and as a result not actually documenting your proposition. As a result, there are lots of “chats” happening with prospective clients, instead of structured conversations with relevant marketing supports that set out your proposition in a compelling and engaging way.

Some Financial Brokers are still trying to be “all things to all men”

Having a clear target market makes your life so easy. You can then focus your client value proposition, your sales activities, your marketing messages and indeed your whole support infrastructure around meeting the needs of specific groups. But some only see the risks involved in this – narrow groups of people to target, missing broader opportunities etc. As a result, many Financial Brokers continue to try to appeal to everyone. And as a result, they don’t really connect with anyone. Yes, your target market must be big enough to sustain you. But if you then focus your efforts on them, you gain the opportunity of creating a real standout positioning for yourself.

Pricing is a major challenge

As more and more Financial Brokers move from transaction based pricing to advice based pricing models, the big question that you are confronted with is how much to charge. This first of all comes back to your actual proposition(s), then how good you are at actually communicating these to your clients. Even then, there is a certain amount of trial and error. Certainly I know from working with many Financial Brokers in this area (and from my own work), you need to initially work out sensible pricing levels and then keep them under review going forwards. For those Financial Brokers with well thought out propositions, experience suggests that they tend to initially set their pricing levels too low and end up reviewing them upwards as they gain more confidence in their pricing. And yes, in many or most cases, the fees are collected through the commission system.

These are some of the main observations that I have of Financial Brokers today. In the main, you are an enjoyable group of people to work with, challenging too because of your ambition to see your businesses thrive. And that’s what keeps it interesting for me.

Set great Performance Goals for 2015

I wrote a few months ago about the important role that goal setting plays in getting your whole team pulling in the same direction. We’re now going to dig a bit deeper and set out a few thoughts on how to develop really effective goals to help to drive your business forwards.

Align the Goals

In my previous article on this topic, I set out the importance of alignment between the goals of each individual and the actual goals of the organisations. This might seem obvious, but sometimes I come across obscure goals that really have no relevance to the objectives of the organisation – this can happen when the process is rushed or not thought through properly.

Focus on Behaviours as well as the Numbers

Again (and for the last time!), as covered in the previous article, don’t just set quantitative goals. Behaviours drive activity, which drive results. So focus goals on behaviours, as well as on the numbers.

Create effective goals

Easier said than done? Well maybe… Goal setting does take time but it is time very well spent. Effective goals will help to drive effective behaviours, giving a better chance of better results. I don’t think that you can go far wrong if you check that each of the goals you set display SMART characteristics. SMART goals are ones that are;

  • Specific – The goal must be clear to the individual and not ambiguous at all – they must clearly understand what is expected of them.
  • Measurable – The goal must be capable of being measured fairly so that the individual can clearly see the progress they are making in achieving the goal.
  • Attainable – The goal must be realistic and fair. If it is completely unachievable, the individual is unlikely to be motivated to achieve the goal.
  • Relevant – The goal must make sense in terms of the “bigger picture”. The individual should be able to clearly understand the purpose and reason behind the goal.
  • Time-bound – There should be a specific time period (often the calendar year) in which the goal should be achieved. It can’t just be left open-ended.

Involve the individuals in setting their goals

In a previous organisation that I worked in, the employees themselves developed the first draft of the goals. This was a very effective method as it created an immediate level of buy-in to the goals. That’s not to say that the manager immediately accepted them though! There was inevitably a level of negotiation involved in finalising the goals, but the initial buy-in remained.

Set the goals in time

A gripe of mine again based on prior experience… Many organisations don’t take goal setting seriously or don’t give it the priority that it deserves. This results in delays in getting the goals finalised – I’ve seen calendar year goals getting finalised in May or June, when the year is half over!

Don’t set too many goals

It’s important of course to set goals that will help the individual to deliver the behaviours that you are seeking and of course the results that your business is striving for. But don’t get over-enthusiastic and start getting lots of goals to cover every base. If someone has too many goals or too many different measures feeding into their goals, the whole process can become too daunting for the employee as they feel they are juggling too many balls in the air. A good rule of thumb is to set no more than 5 goals.

Don’t try and be too clever!

I’ve also seen situations in the past where goals are set that try to cover every base – remember Specific in SMART goals. I’ve seen single goals that have been constructed as “…achieve €x in income from y group of clients while ensuring z% retention levels in business from that group and overall profitability of xx%!” Is that 2 or 3 goals rather than a single goal? The employee in this case will probably feel that they’ve very little chance of achieving the goal, as there are so many hurdles to be negotiated.

Don’t be afraid to change them!

This can be a tricky one but sometimes a review of goals is the only sensible option. However this needs to be a two way street… If goals are set at the beginning of the year and the company subsequently changes direction, the goals may no longer make sense. So don’t be afraid to review them. You’re better off with updated goals that make sense and a newly motivated employee, than a disgruntled employee who has no hope of achieving his/her goals as a result of factors that are not of their own making.

And finally, reviewing goals together regularly throughout the year is an important part of the process. It also can be very motivational for the employee, who will see you “pulling” for them, helping them to achieve their goals. Remember if the goals are well aligned, everyone will be a winner if the goals are achieved!

5 Sales Tips to ignore in Quarter 4

Quarter 4 is here, the year is coming to a close. You’re running out of time to turn a good year into a great year or a bad year into a good one. You’re probably hearing a barrage of ideas to help you this quarter, so I’m going to swim against the tide a bit. Here are 5 ideas that you might hear that I suggest you ignore in Quarter 4! Hopefully these will help you and your team of advisers achieve the results you’re looking for.


“Focus on driving your strugglers up to the benchmark”

It happens every year… A few of your “stars” shoot the lights out yet again, a big group in the middle will be there or there about and a (hopefully) small group of your team are really struggling and quite a bit off the pace. The usual reaction is to spend time focusing on them, analysing why they are struggling and then hopefully helping them to make the changes and turn their year around.

However this is often done at the expense of the rest of the team, who are left to continue under their own steam. Does this make sense? If through your intervention you are going to achieve (say) a 10% uplift in performance, the impact on your overall number will be bigger if this comes from your stars, rather than your strugglers. The time to work with your strugglers is throughout the year before it becomes a problem.


“Fill that vacancy immediately at all costs”

You’ve a gap in your sales team, it’s really hurting you in one area of the country and you’re struggling to get the right person – a problem faced by many financial advice firms today. A potential candidate emerges but you know in your heart they are not the right person… but they might just deliver some short-term results. Be very careful. This situation can be very difficult to undo as this person builds up relationships inside your organisation and more importantly with your customers. If they have negative traits, these potentially can rub off on other members of the team and as the saying goes; bad breath is worse than no breath…


“It’s all about getting sales in the door”

Well yes it is, but is this not the case throughout the year? Unfortunately what often happens in Quarter 4 is that thinking gets very short-term. Money starts getting diverted from marketing budgets which are building up long-term engagement and brand equity into shorter term and one-off sales enhancements – incentives, pricing campaigns etc. While these undoubtedly have a place in the overall marketing mix, they shouldn’t be introduced out of desperation. They should be part of an overall well-thought out sales strategy.

The downside of these short-term initiatives is that sales seem (naturally) harder to come by when they are removed and also if your longer-term marketing initiatives have been undermined, you might find the start to the following year has been made even more difficult by your short-term thinking in the past.


“See more customers, your internal work can wait”

This is one that raises its head quite frequently. The boss wants the sales team out seeing more customers. The sales team complain about the amount of internal work that needs to be done such as keeping the CRM system updated etc. To deal with it, the boss agrees to temporarily turn a blind eye to the system being updated. Now you’re on the slippery slope! Wait until you try and turn this back on again, get ready for a struggle! Sales people want to spend their time out with customers and as a result will begrudge having to carry out this “internal” work. I suggest if you get the team engaged in doing this important work, never let this slip! I’ll be watching my back with all the broker consultants in the country after this point!


“Pick up the 1:1 meetings again in the New Year”

In the same vein as the above point, another activity that is often let slide as the pressure mounts is 1:1 meetings as everyone tries to stay busy, out chasing up every tree. However this is a time for clear leadership and direction for your sales team. The experience and capability of a manager to stand back and survey the situation, and then being in a position to influence and tweak the activities of the sale person is invaluable. The 1:1 meeting is the best opportunity to display that cool head and influence your team and it is really important that these happen regularly and consistently throughout the year, in good times and difficult times.

Is there any other advice that you’ve got that you think has been very important to ignore? Please leave your comments below.


by Eamonn Twomey

Building a Rock Star Sales Team!

A number of businesses that I’ve been dealing with have identified clearly the value of having really excellent people in their sales team. They’ve seen quite significant differences in the performance of their most successful people as opposed to their weaker people. They’ve also noticed that these performances tend to get repeated, pretty much year after year. So what can you do to build a rock star sales team that will help you exceed your sales goals, year after year?

Know your team – scientifically!

Yes, I know it sounds very obvious but how well do you really know your sales team and do you judge them fairly? Or are your “best” sales people seen as such by reputation only, or as a result of long held beliefs that you’ve had in relation to their talent? Yes, reputations and your own gut feeling count for a lot, but on their own they are not enough.

If you are going to trust your brand to your sales team, you’ve got to make sure that they have the competencies and attributes to carry this out, every bit as well as you would do it yourself. So spend time working out what are these attributes (drive, professionalism, integrity, resilience etc.) and competencies (relationship building skills, advice approach, technical knowledge, writing / presentation skills etc.) that you value.

Once you have these identified, score all your sales team against these factors. In addition, you cannot ignore both their previous results and also the quality of their clientbase / territory – these should be brought into your analysis too.

Finally and most importantly, seek out the views of others. Get colleagues who also know the team well to score them too. Also, if possible, talk to some of your key customers. It’s quite probable that both of these other insights will throw up some surprises for you. Maybe they’ll uncover a “blind spot” you’ve had, which has resulted in you consistently under-rating / over-rating some individuals and maybe, just maybe it’s you who has to change!

Once you’ve done this exercise, you can be pretty confident that you’ve a solid view of your team and can recognise its strong and weak points.

Increase the number of winners

Winners need to be rewarded and with more than just money. Yes, money is very important but is usually not enough on it’s own. Winners like recognition; they like to be celebrated, both inside and outside your company. They also like to be listened to – properly. They’re successful for a reason so their views and insights should be heeded and where appropriate, acted upon. Winners also like to see where their success is going to take them over the longer term. So think about their career paths and future opportunities – before they take this decision out of your hands….

There will be quite a large group of people “in the middle” who are doing a competent job but probably not consistently shooting the lights out. These are the people that you need to challenge to move into the top tier. A mixture of setting appropriate goals for them, creating personal development plans that will increase their skills and driving the team harder in some cases will achieve this! Also let your stars demonstrate to these people how they are getting their great results. Your stars may help you raise the performance of some of these middle tier players.

Unfortunately you’ve got to be equally assertive in dealing with the serial under-performers who are also lacking in the attributes and competencies that you require. Remember when it comes to sales, “bad breath is worse than no breath” as these people run the risk of irreparably damaging relationships with some of your clients. So find new roles for these people or move them on. Get them out of your sales team. You’ll also gain more respect from the wider sales team for your willingness to act in relation to underperformance.

What happens when a rock star leaves the band?

That dreaded moment. Your best sales person comes to you saying, “Can I just have a minute” and you know what’s coming… So what do you do?

Do you try and stop them leaving? Yes unless the price is too high, you’re going to be a hostage to them in the future, their head is already gone out the door or by clinging on to them, you will completely unsettle the rest of the team to try a similar move!

You then need to consider how replaceable they actually are – internally or externally. If you have a strong “bench” of support people waiting for a sales opportunity, then maybe you just wish your star performer well. Also if you have a clear external recruitment plan for this very scenario ready to go, well then maybe it’s time to implement this now.

And of course, don’t forget your clients in all of this. Make sure you reassure them completely that your organisation will continue to meet and exceed their needs going forwards, even without this important sales person.

So, get really clear on the strengths and weaknesses of your team, have different approaches for your different players and remember, when the star leaves, it’s not necessarily the end of the world!


Have you any more thoughts on how to build an excellent sales team… or even what’s your favourite ACDC song! All comments welcome below.