For the twenty-five year period, beginning in the mid 1970’s and ending in 1999, the financial markets basked in the sunshine of client trust. An entire generation lived constantly in a buy mode, dealing with whoever had the best story or the most exciting advertising. Solicitation was the game of the day. Sale techniques improved an individual’s chances in capturing a slice of the consumer’s spending. A person’s ability to sell was the most important hiring criteria. The industry had products to sell, after deregulation, and customers were willing to be sold. There was little need to know the client, sales were easy and only a few facts were required to open a new account. Because everything was advancing, the relationships looked sound, everyone was happy. The selling celebration ended in 1999. In the early years of the new millennium the American consumer had several shocks from which they have not yet recovered. First is the breach of faith by several of the large accounting, law firms, brokerage firms, and corporations in failing to disclose the truth of their circumstances. This breech of trust hit at the heart of information. Following the bankruptcies, embezzlements, fraud, and high-tech meltdown in 2000-2002, the four trusted advisor groups: accountants, lawyers, financial advisors, and corporate executives had each lost the trust that had been built over generations. Never in history have consumers lost faith with such a large sector of advice givers. Trust was assumed in the years prior to 2000, clients just wanted information so they could make better decisions. That has changed. I repeat for emphasis, that has changed.
Clients today are not willing to trust carte blanche, a firm or an advisor. The solicitation that worked so well over the last decades now meets resistance. The baby boom generation has read all of the sales books and knows that a fixed gaze and a firm handshake hide a hidden agenda of solicitation. They have come to view sales techniques as manipulative tools to get closer to their money faster, rather than getting to know them better. Peter Drucker continued to declare for over sixty years that we need to stop selling and really get to know our clients. He said, “the aim of marketing is to make selling superfluous; to know and understand the customer so well that the product or service fits [them] and sells itself.”
The business community has avoided for decades, the malpractice risks of the healthcare industry. As we become a more litigious society this escape will not continue. Too many advice givers have for too long, written prescriptions for their clients’ problems without proper examination and diagnosis. The financial service industry in particular, and all business in general, is at risk of being sucked into the vortex of litigation, if they do not immediately change.
We can eliminate malpractice as a concern, buy becoming competent advisors, understanding the difference between telling and listening, realize people learn more by what you do than what you say. We can reverse the impact of all the sales manuals of the last three decades that focus on getting to the close faster and have forgotten about the client along the way. We need to start with a proper focus on the customer and their needs. We can avoid the coming suits and litigation by not trying to force ourselves into their lives with sales techniques, we can build a relationship where they reach out and grab us and pull us into their lives as trusted advisors and confidants.
North American business is at a crucial turning point in history. The heart of marketing is a business’ ability to establish a trusting relationship with the customer. Without some degree of trust the consumer will look elsewhere for the product or service. Business is at risk. It is only a matter of who will be affected. In the coming weeks we will discuss how to make certain it is not you.
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