Carson: Advisors Failing Clients

In their new book, The Sustainable Edge: 15 Minutes a Week to a Richer Entrepreneurial Life, released this week, top advisors Ron Carson and Scott Ford share their disciplines and career successes to help business owners achieve a better work-life balance. But the book also takes shots at the advisory industry, calling for increased transparency, more responsible profit margins, fewer shortcuts in planning and better communication with clients.

Carson, CEO of Carson Wealth Management Group and founder of coaching firm Peak Advisor Alliance, spoke with about the new book, which took two years to complete, and what advisors should be doing differently. What inspired you to write this book?

Ron Carson: There’s conventional wisdom out there that you can’t have it all, and I tell you in the book, you can have it all. I’ve learned this in my 30-plus career. I grew up with a task-master workaholic dad on a farm, and he taught me, as most of society does, you either work for a living or you play and you don’t amount to anything. And I believed that. For the first 15 years of my career, I had no balance; I had no life; all I did was work. When I took a step back and actually realized that the balance of things I loved in my life helped me grow, and the growth gave me the ability to have balance, it was a very virtuous, positive cycle that literally fed one another. You don’t have to make choices.

I open up the book with the ultimate question—You’ve got one life to live, and do you want to say you’re glad you did, or you wish you had at the end of it? And then I walk readers through key steps that are very easily implementable, because what I’ve learned in my coaching program, if it’s not easy to understand, if it’s not easy to implement, and if you don’t see immediate results, people give up very quickly. So I developed a thing called “The IQ Grower Process,” and I asked readers to commit to 15 minutes a week. In what ways does the book take shots at the advisory profession?

RC: We’ve not added value beyond a doubt for the consumer. I think we need to be more transparent. We owe it to our internal stakeholders—which other people call employees or staff, we owe it to our external stakeholders—which also think of as clients—that we make a responsible profit margin not too high, not too low. If it’s too low, you risk going out of business and you can’t keep internal stakeholders gainfully employed. If it’s too high, someone’s getting shorted—either the client or your internal stakeholders. What should advisors be doing to add value?

We’ve seen the blowup of Nick Schorsch’s empire. You can’t have products that have those kind of commissions and fees, yet the industry sold it to the consumer as a no-load, you’re not paying anything. Even though advisors claim that they disclose all that stuff to their clients, they really don’t. Clients have no clue as to what they’re really paying. We as a profession have to be way more transparent.

The other thing is, don’t take shortcuts on doing real planning for clients. A lot of advisors are failing their clients because they’ve sold themselves as the next Warren Buffett, and they’re not. Most of them don’t even have the training. Investment management’s fast becoming a commodity. You’ve got to be conscious of fees, and you’ve got to allocate properly based on the client’s risk tolerance. But the planning is really where the emotional decisions and mistakes can be eliminated if true planning is being done up front.

Third, it’s a highly communicative process, meaning that people get uncomfortable when they don’t understand, ‘OK, you did a plan; you talked to me about the risk that we’re taking. Overcommunicate with me, especially during times of high volatility so I don’t do the wrong thing at the wrong time, which can destroy the value and what we’ve created.’ Admit who you are. As advisors, we’re tremendous relationship people. We can really influence people to make better decisions, but if I’m doing that and then behind the scenes, I’m doing things I’m not competent at, which is a big percentage of our profession, then the client is set up not to do well over the long term. Understand what you’re good at; delegate or build around yourself those other capabilities. Any advice for how advisors should be communicating with clients during this volatile time in the markets?

RC: Be proactive. When we have something crazy going on, we will write something that day and get it out. Put yourself in the position of the client. You can’t do it one at a time. Do a webinar; do a conference call.

Anticipate their questions and concerns. You know what it is in your gut of guts. And not calling them and not having a conversation with them means that someone else is going to, and someone else is going to take your client away. Can you explain the IQ Grower Process? What should advisors be doing 15 minutes a week?

RC: It’s a one-page form, and each day you list the four things that you value the most. The second step is, identify what activities are most meaningful to you. And a lot of times there’s a real misalignment between what I’m valuing and how I’m actually allocating my time. People will throw up their hands and say, ‘Wait a minute. I have a job; I can’t do that.’ We recognize that. We have to have a game plan of moving you to where you get to spend all your time on your top four meaningful activities. Step three is simply list what you’re grateful for. This dramatically improves your psyche. Then the fourth step is, you list the vital one. What’s the thing you’ve got to get done today and is it connected to your one-year goal? Then we list the six essential items to get done in order of priority. To go through this exercise, it on average takes somebody 90 seconds a day.

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