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The Guiding Star for Your Best Year Ever

You are wasting your time.

That sentence might resonate with you, even if you are successful, especially when you are stuck on a plateau. That’s likely because of the Pareto Principle. You might not know the Pareto Principle by name, but you will likely recognize it as the 80/20 rule: 80 percent of your business is generated by 20 percent of your activity.

Duncan MacPherson has long been fascinated by that equation, and he sees it show up consistently in the success of a business. Time and again, producers focus on the 80 percent of the business that consumes their time but contributes only 20 percent to the bottom line. Duncan, along with David Miller, built Pareto Systems to help individuals and businesses lift off their plateau and find more fulfilling success.

We’ve all heard about the 80/20 rule, but how do you find that 20 percent and grow from that group? This is where the guiding STAR comes in. In this interview with InsuranceNewsNet publisher Paul Feldman, Duncan reveals how to find that STAR and follow it.

FELDMAN: Have you seen insurance agencies make a difference with processes?

MacPHERSON: The breakthroughs were staggering with the deployment of a really substantial plan with a process for implementation. When somebody in the insurance space, for example, decides to get into wealth management, that’s not something you can really dabble with. That’s something you have to get right.

FELDMAN: Why are a plan and a process so important? Why not just take the opportunities as they come?

MacPHERSON: If you do business with me for insurance, that’s how you perceive me. You have somebody else who manages your investments. So, if I’m going to ask you to leave your current advisor and empower somebody you see as providing insurance with your entire portfolio, that’s not easy. It has to be predictable. It has to be precise. If you don’t have a process in place, it can unravel like a cheap sweater.

FELDMAN: How should an insurance or financial professional use your system to create and implement a business plan for the next year?

MacPHERSON: The key with the plan is that it serves as a guidance system as the year unfolds. A lot of people create a plan and when they’re done, that’s it. They got it out of their head and on paper, but it’s not acting as a road map or GPS. So that’s the first distinction. The second is to be very panoramic about what goes into the plan.

FELDMAN: What’s the structure for that?

MacPHERSON: The acronym for the structure is STAR, representing the four components of the framework.

The first step in creating a plan is to do a strategic analysis, which is designed to reveal two things: your untapped opportunities and your overlooked vulnerabilities. We go into this with the assumption that the person is doing reasonably well, but might have plateaued. This is the first step to ensure that they’re not working harder or working more hours but being more efficient in identifying these issues.

FELDMAN: How do you find your untapped opportunities and overlooked vulnerabilities?

MacPHERSON: For client acquisition, you focus on the concept of MVP, your most valuable prospect.

MVPs are friends and family members of existing clients. Your clients will have more persuasive impact on their friends than you ever will. So the first thing we have to identify is a way of improving referability.

The second MVP is an existing relationship that’s only dabbling with the agent or advisor, and this is where we see the big difference between a prospect and a suspect. This is also the difference between a customer and a client. A customer does some business with me but also does business with somebody else. A client empowers me fully but never sends referrals. Advocates are the dream clients. They’re fiercely loyal. They’re a joy to work with, and they shine a light on me whenever they get a chance.

When I ask people how many clients they have, they say 300 clients. Here’s what they really have: 150 customers, 140 clients and 10 advocates.

You don’t need more clients. You need to convert customers to clients to advocates. The number of relationships you manage might not even change, but the amount of business you generate will change. The first step is to move people up the loyalty ladder and get them to “advocate” status. If somebody has 10 advocates, our objective is to create 50 advocates in 12 months, and that’s a process.

FELDMAN: What is the process of converting clients into advocates?

MacPHERSON: It’s a communication service model – how you communicate with clients and how frequently.

The clients with the most potential will receive some communication as often as 24 times a year, between a phone call, review meeting, email update, birthday cards, holiday cards, value adds – anywhere between 20 and 24 touches.

We tell people not to ask for referrals, because it makes them look needy. It’s like begging, and it’s not very attractive, especially from somebody who wants to go from insurance to full-service wealth management.

They can’t use salesmanship; they have to use stewardship. That means they don’t ask you to buy things from them. They ask you to buy into a relationship with them. It’s a profound distinction between how those two types of people – salespeople and consultants – conduct themselves.

The bottom line is, do you deserve referrals? We remind people that the word “deserve” stems from the Latin words “to serve.” They have to have a service model in place in order to be referable. But then they have to communicate the concept of referrals. This is the difference. Most people position the concept of a referral as a favor they’re asking of their clients.

We tell our clients to position the referral as a service they’re providing to their client. This changes everything.

Here is the difference between these two approaches. I could say, “I’m trying to grow my business. I’m looking for some new clients. Is there anyone else you know who you think can use me?” Or, “I just wanted to remind you that as a value-added service to my clients, I make myself available to be a sounding board to friends and family members. I’m not asking you to think about it right now, but if somebody ever asks you about me or you feel compelled to introduce someone to me, I have a process where I will make myself available. They don’t need to become a client. The bottom line is if they’re important to you, they’re important to me. I’ll make myself available.”

Do you see the difference?

FELDMAN: The second approach is certainly stronger. In fact, when I get asked for referrals, I always tell them I don’t know anybody.

MacPHERSON: That’s just it. It’s not what you say; it’s what they hear.

If you say you are looking for new clients, you sound desperate, and that’s of no value to you. You are asking a favor or imposing an obligation. You’re saying I’ve served you well, so you owe me referrals, reciprocity. That’s brutally flawed.

Tell people that you got into this business to help people make informed decisions, that it’s the most important thing you do. Then you can go into more detail about whom you focus on.

I can say to you, “Paul, on occasion I meet with a friend of a client and we really hit it off. Let me tell you who those people are.”

Then I proceed to describe my ideal client to you from the standpoint of fit and professionalism. Now what’s happening is I’m not only improving my referability, but the likelihood you’re going to steer somebody to me whose needs are perfectly aligned with my skills also goes up dramatically. I don’t want to get into this pattern of referring anybody who can fog a mirror to me. Ideally, I want you to introduce people to me who at least have an alignment of interest with me.

FELDMAN: What are the overlooked vulnerabilities you see advisors facing?

MacPHERSON: Overlooked vulnerabilities are what undermine the individual in terms of inefficiencies, breaking through the plateau. The process to resolve those revolves around the four Cs: credentials, consistency, congruency and chemistry. These are the sneaky little issues that prevent the individual from achieving full potential.

Credentials are pretty straightforward. The bottom line is professionals have to have the goods, the skill sets and the knowledge, especially if they want to go into full-service wealth management.

Consistency – the world craves consistency. Do you follow a process? It’s funny. I’ll ask people, “What would happen if you took a month off, starting tomorrow? What happens to your business?”

FELDMAN: Most people would be in trouble.

MacPHERSON: That’s because the entire business is in their head. The even more important question is, what would happen if your assistant took a month off starting tomorrow? It’s just as bad.

We’ve seen so many people who have had team members walk out with their business in their heads. These team members are  talented, they’re professional, but they’re mavericks and their processes are in their heads. Not only is that not proprietary for the business, but it’s also not consistent. Things get missed. Things fall through the cracks. This is where we talk about the importance of a playbook.

FELDMAN: What should be in that playbook?

MacPHERSON: When you meet with a prospective client, what’s your process? Do you use the same process every time? Do you use an agenda for the meeting? Do you send out an introductory kit prior to the meeting? How do you onboard a client? Is it the same process? Do you have a welcome process, a fast-track process? Step by step, just add water.

Are you consistent in the type of client you’re trying to attract? What’s your ideal client profile? Then when you start making connections at this point, is your ideal client profile connected to your service model?

This is where we’re peeling back some serious layers. We’re saying if 80 percent of your business comes from 20 percent of your clients, do you spend 80 percent of your time on that 20 percent? Almost never. It’s common sense, but it’s not common practice.

That’s why they hit a plateau. That’s why they don’t get many referrals from their best clients.

FELDMAN: It seems businesses can get distracted from working with their best clients this way and prevent themselves from getting to the next level.

MacPHERSON: Yes. This is where we get into a lot of detail about what’s undermining their ability to achieve a breakthrough. The next issue we talk about is congruency. This means if you say you’re a consultant, do you act like a consultant? People might have “financial consultant” on their business card, but they conduct themselves as financial salespeople, so they’re not congruent.

It undermines their referability, their ability to get fully empowered and their ability to competitor proof clients. People naturally are not going to be as loyal to a salesperson as they are to a consultant. So we spend a lot of time on that congruency.

FELDMAN: Where do you see people falling short on congruency?

MacPHERSON: Here’s one. Let’s say you’re about to meet me for the first time. We had a nice chat on the phone. We made a good connection. You’re coming to meet with me for the first time.

Most people who meet a prospect for the first time try to convince that person to become a client. The irony is that prospects know that’s about to happen and they might look forward to the meeting, but they are still guarded. There’s some anticipation and apprehension.

We suggest that when you meet with prospects for the first time, use an agenda, but have no hidden agenda. Don’t try to sell them.

FELDMAN: I like that. You come with an agenda, but you don’t have a hidden agenda. How does that perspective relieve a client’s natural apprehension when they first meet you?

MacPHERSON: I’m going to start off the conversation by saying, “I really appreciate that you made the time to be here. I know you’re busy, and I know you came to get to know me and to talk through some of your issues. This is what I want to accomplish in this initial meeting: I want to get to know you and understand your situation and help determine whether  we might be a good fit. Because this is so important to both of us, just so you know, at the end of our meeting, nobody has to make any decisions. When we’re done, I want you to absorb what we’ve discussed. I’m also going to assess the situation, really think it through and contact you in 48 hours. We’ll talk about how we feel and establish whether we think we’re going to be a good fit. I think that’s fair.”

You know what you’re going to say? “Perfectly fair. It sounds great.” Your apprehension is melting away. I have an agenda, but you’re not fearful of what I’m going to spring at you at the end.

You know what the irony is? Many people in this business using this approach tell me that at the end of their meetings the prospect tries to close the advisor. They say, “I don’t need to think about this. I’m good to go right now.” The difference is how I started the relationship. I’m not chasing. I’m attracting. That’s a perfect example of congruency.

FELDMAN: How does chemistry fit into the equation?

MacPHERSON: Chemistry speaks to a really important distinction. The products, the firm and services that I would sell as a financial consultant are the message, but I am the messenger. The message is not proprietary but the relationship I have as a messenger and what I know about my clients are proprietary.

As our relationship unfolds, I’m going to get to know you better. You’re going to tell me things about yourself that you’re not going to tell someone who’s cold-calling. It’s going to strengthen our relationship and build chemistry. There’s an old saying that it’s more important to be interested than interesting. Be interested in clients’ lives, holistically, don’t try to be interesting as a consultant.

FELDMAN: Once you have analyzed your strategy, it makes sense that you can move to your next step of establishing targets and goals. How does an advisor go about that?

MacPHERSON: The key here is to take a panoramic view in terms of what the individual is trying to accomplish, because everybody has different goals. The idea is to get it out of your head, put it on paper, and create a beacon that will become the focal point to see past the work that’s involved and any adversity along the way.

We want the view to be panoramic because a lot of people just talk about money-oriented goals. That’s definitely an important piece of the puzzle, but for some people, their goal might be to sell their business at some point. We want people to make meaningful and measurable progress in a reasonable period.

FELDMAN: How do you use targets and goals in relation to client acquisition?

MacPHERSON: Targets and goals relate to the ideal client, and for that we use triple As. A panoramic view of ideal clients involves understanding their assets, their attitudinal qualities and their predisposition to advocacy.

We tell financial advisors or professionals to strive to attract only triple-A clients. Don’t be all things to all people. Be all things to some people. Create an aspirational environment where people desire to work with this advisor. That’s the one issue; then the other issue is, where do the individuals see themselves in the future? What are their goals? What’s their vision for the future?

FELDMAN: If clients don’t fit into these targets, do you recommend firing them or passing them off to someone else?

MacPHERSON: Well, not to get into semantics, but we never tell somebody to fire a client. The last thing this business needs is people literally getting to a point where they’re elitist or disrespectful.

But, if you become a B client of mine, you’re somebody else’s A client, so I’m doing a disservice by keeping you, and I need to respectfully disassociate. This is a very important issue, because a lot of advisors and professionals in this business hit a plateau because of their natural capacity. There are only 24 hours in a day.

If you don’t do this, people start to believe they’re compensating you for your time, not for your skills. There’s a big difference.

FELDMAN: You made a really good point earlier about money-oriented goals. It seems many people often have just numbers in their heads, but they don’t think about why and what they ultimately want to do. When it’s just money-related, reaching that goal can be a little bit anticlimactic. The next one, which is arguably the most important, is your activities, right?

MacPHERSON: Activities are rooted in cause and effect and habitual deployment. What’s the best use of your time based on the uniqueness of your business? What activities can you repeatedly do over an extended period of time, habits and rituals as opposed to random activities? This is designed to be process-driven and consistent, moving in the direction of the targets and goals they’ve established.

This also speaks to their strengths. Somebody’s good at presenting and they want to do events and seminars, that’s fine. I know somebody up in Canada whose Trojan horse for creating insurance and wealth clients is travel insurance, because a lot of his clients are snowbirds, and if you go to the States, you have to buy insurance so if you get sick down in the States, you’re covered. You don’t have to fly home. You can go to the hospital and you’re covered. So he does seminars with travel agents.

That’s his Trojan horse, because the travel insurance isn’t all that lucrative, but based on this demographic target market, it’s the thin end of the wedge that gets the business. Over time, he develops a relationship with these clients, which leads to wealth management and insurance products. So that’s an activity that he does consistently at a certain period of time, and it serves him unbelievably well, but not everybody wants to do that or is good at that.

FELDMAN: How do you focus your activities?

MacPHERSON: The key there is to remember the 80/20 rule, the Pareto Principle, that 80 percent of people’s productivity stems from about 20 percent of their activity. We want them to identify what those activities are, then create a plan that enables them to deploy those activities consistently and not get faked out in terms of just being busy.

A lot of people confuse motion with action. It’s got to be from a business development perspective. Most people make about 80 percent of their income every day in about an hour. So we want them to have mastery of what goes into that hour, then let that activity compound over time. They’re not just busy. They focus on what they get paid to do.

FELDMAN: What are some good activities versus some bad activities for an insurance professional?

MacPHERSON: It depends on what the focal point is, but when it comes to client acquisition, it comes back to developing what you have. I’d much rather see somebody contact an existing client and have meaningful conversation to strengthen that relationship, as opposed to cold-calling any suspect with a pulse. It takes the same amount of time, but the only problem with the call with the current client is that it’s not always going to move the needle right away.

It’s a lot easier to measure the cold-calling activity, but here’s the mantra: Don’t try to convince new people. Work with the people who are already convinced, then show them how to convince people on your behalf. That is very, very effective.

FELDMAN: The R is the reality check.

MacPHERSON: That really brings it full circle to accountability. Many people create a plan, identify a bunch of good ideas and the whole exercise has the lasting value of a Red Bull. It’s so temporary. The ideas just go to their head to die, then nothing happens and nothing changes. The reality check is basically a process that we use just to get the individual thinking in terms of accountability. The mantra on this is “For things to change, I have to change.” You have to refine, optimize, look for the gaps, make sure you’re focused and keep going from there.

FELDMAN: What do you ask yourself in the reality check?

MacPHERSON: “What kind of person do you need to become to make this plan a reality?” That means what kind of skills, resources and commitment do you need to apply so that the odds are in your favor, that this is actually going to get done? By building the answer into the plan, it becomes more accountable and motivational.

Eventually, this entire process will make you stand out in contrast with other advisors, and clients will see a clear difference that overcomes the inertia to change.

But it takes patience. A very common mistake people make is meeting with a prospect and springing a plan on them and being disappointed when nothing happens. That’s a one-and-done, taking a stab at it. You have to be more methodical and patient. It’s not like you’re selling an extended warranty on a car. You’re asking people to trust you with their financial future.

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