Eavesdropping on the Garrett retreat: A white-knuckle drive; why independents aren't winning assets as fast as they should be; and six steps to building client trust

Last week, the Garrett Financial Planning Network, the 10-year-old company that has made waves in the industry for establishing a business model that makes professional financial advice more affordable, held its annual retreat. Two presenters and a Network member sent blog entries for RIABiz’s Eavesdropping series, which has been covering the fall conference season with blog-style pieces.

Here’s a little background on the Network, which includes 310 advisors. Advisors pay upwards of $10,000 the first year to join the network, with lower fees for associate advisors, and continue paying annual fees that start at $1,200 a year and decline after that. In exchange, they get practice management support and the affiliation with the larger organization, which helps with marketing. In January, Garrett formed an alliance with the Motley Food whereby the big personal investing website endorsed Garrett planners and promotes the network on its site.

Garrett brings “affordable fiduciary advice to smaller investors,” says Knut Rostad, the chairman of the Committee for the Fiduciary Standard.

The worthwhile white-knuckle drive

Marie Swift, president and CEO of Impact Communications Inc.

The Garrett Planning Network (www.garrettplanningnetwork.com) held its 10th annual Retreat Oct 24-27, 2010 at a wonderful, small conference center in Eureka Springs, Arkansas. Having just attending several big conferences, this retreat was a breath of fresh air. Being able to walk from one end of the conference center to the other, up the paved hill lined on both sides with colorful Autumn forest, quickly to my room to grab forgotten-but-trusty Android, and back to the general session room where I would be presenting in less than five minutes is something totally out of the question at big venues such as FPA National.

“Share the Wisdom” has long been the theme of the Garrett annual retreats—and for good reason: This retreat (I’ve been to nine of the ten held so far) has an open, cordial sharing environments. It is also decidedly more casual than many of the conferences we attend year-to-year. While the retreat has all the traditional accutraments (name tags, registration table, conference binders, message boards, podiums, etc.), North Face jackets, jeans and sneakers were standard attire. Hugs were more common than handshakes. Late night poker games and conversations in small groups over a good glass of Cabernet were the norm. People came early to stroll around town, browse the small art galleries and clothing shops, take in the sites and float down the Buffalo National River.

Network founder Sheryl Garrett (@sherylgarrett on Twitter) hosted this special anniversary retreat in her hometown, knowing that some fall-off might occur due to the lack of a major airport and the extra driving time that would need to occur for people to make it to the venue. In spite of the travel challenges, 114 of the network’s 310 members made the trip. 175 people in all (including speakers, sponsors, staff and members) took the long and winding road to Eureka Springs. Normally, 60-70% of the membership attends the retreats which, until 2010, were held in Kansas City.

I arrived just in time—after a white-knuckle drive through Lake of the Ozarks twists and turns—to lead the “Rapid Fire” marketing ideas session on Tuesday night. Always a highlight at Garrett Retreats, nearly 50 Garrett members shared their success stories, positioning statements and top ideas, which are then judged. The five winning names were place in a hat, and one lucky Garrett Member will receive free hotel and airfare to next year’s retreat.

The following morning, I sat in on the Full Plate Roundtable, a session designed for members with 4+ years in business, profitable and earning a good salary, busy the majority of the year, and concerned with maximizing revenue, gaining efficiency and expansion. Lots of good ideas and info sharing there. The closing session, led by Sheryl Garrett and Dr. Ed Jacobson, was a touching and wonderful wrap-up. While I had to miss the first two days of the retreat due to other travel commitments (for a look at what you missed, visit https://www.garrettplanningnetwork.com/retreat), I was so very glad I’d made the five-hour drive from Kansas City, my hometown, to Eureka Springs.

Wall Street sells possibility … independents should, too

Margot Dorn, principal, Dorn Financial

At the Garrett Planning Network Retreat, I attended Rick Ferri’s presentation, “The Power of Passive Investing.” It was compelling and made me wonder, if passive investing is the best way to invest for financial security: Why doesn’t everybody do it? Also: If fee-only financial planning is the best way to plan, why are there not endless lines of people clamoring to work with a member of the Garrett Planning Network? (Editor’s note: Ferri is the founder of the low-cost investment management company Portfolio Solutions).

Suddenly I grasped one big reason we have not gained on Wall Street brokerages as much as we should: Possibility. Rick’s whole presentation showed convincingly that while there was a possibility that active management could outperform passive investing, the likelihood/probability was so slim … and the amount of potential gain so small … that no informed person would go the active management way.

However, POSSIBILITY is an extremely powerful concept. Why else would people gamble when they very well know how low the odds are? It is the possibility of a lucky break paying off far in excess of one’s investment that drives gambling activity. Wishing and hoping and trying to beat the odds seem to be an integral part of the human psyche.

That got me thinking about the partnership between the Garrett Planning Network and The Motley Fool. If the Garrett Planning Network stands for the probability and The Motley Fool for the possibility … can we marry these two concepts … combine the two to create synergy and a complimentary organization?

Can Probability and Possibility be a good match?

Even beyond that, how about incorporating in our marketing and strategic planning the one thing that Wall Street sells that most typical financial planners don’t: Possibility. Who says Wall Street folks get to be the only ones embodying the appeal of possibility? Financial planning practitioners can embody possibility in a more transparent and objective way by using The Motley Fool independent research and recommendations. If we only buy the market return (a.k.a., probability), we will not have the possibility (a.k.a., well-selected equities) to outperform. Rather than banishing the idea of individual stocks, can we embrace it and use it and its powerful pull to attract and keep a very large number of investors who are currently beholden to brokerages and Wall Street? Those of us who are not opposed to individual stocks (no annual management or marketing fees or loads plus the stock holder gets dividends), can use the The Motley Fool research to select and recommend stocks. If the client wishes to own stocks, we can allocate the appropriate portion of the portfolio, or we can let our clients select their own stocks with our guidance. Give it its proper place.

Conversely, we can work with the The Motley Fool investor and show that the probability of financial freedom lies primarily with an indexing strategy, as well as proper financial planning that involves much more than just picking stocks or investments. The Garrett Planning Network and The Motley Fool are, indeed, an unlikely pair but I can see the attraction. Garrett needs much broader exposure to attract both new practitioners and clients. The Motley Fool probably realizes that they cannot properly serve their members with just stock-picking advice; they need to offer the full financial planning advice menu and, for that the Garrett Planning Network is an almost perfect fit. Can this be a good match or would we be fools?

This type of inquisitive thinking happens quite often whenever I’m engaged in conversations through the Garrett Planning Network.

As responsible, progressive thinkers, we should (a) keep an open mind, (b) use trusted peers to dialog about new ideas, and© use data to test our hypotheses. Rational thinkers—and truly smart people—will not automatically confirm or dismiss new ideas. We need to keep thinking until the right answers become apparent.

A keynote that delivered six steps for establishing trust with your clients

Ed Jacobson, psychologist, business coach, consultant and public speaker

This was my fourth consecutive Garrett Planning Network Retreat, as presenter, facilitator and coach.

A particular highlight for me was Michael Knight’s keynote on “How to Connect with Clients to Build Stronger and Deeper Relationships.” (Knight is an RIA based in Libertyville, Ill., who was formerly a senior vice president of learning and development at Charles Schwab & Co. – ed.)

His presentation emphasized the greater-than-ever-importance of earning and keeping client trust, in view of the fallout for financial planners of the misdeeds of a small number of “financiers.” Michael’s survey of Garrett planners showed that 98% seek greater growth, and a majority sees retention and referrals as major challenges in this economy. He challenged us to recognize and address the fear that underlies personal finance decisions, and to provide clients with true leadership (“seeing what needs to be done and inspiring a commitment to take action”).

How to do this? He recommends (and personally exudes) authenticity (willingness to be an open book, freely sharing stories of your own experience), clarity of communications (I loved his phrase “Clarity is brevity”), and non-judgmental listening (easy to say, harder to do). Attendees paired up to practice clarity-brevity in telling each other why we decided to become a planner, what we value, and what inspires us. It was clear that brevity was in short supply, and that “keeping it clear and brief” is a worthwhile goal, one that requires practice.

Particularly valuable was Michael’s framework for establishing your competence and building trust with current and potential clients. He stressed six steps:

1. Creating a clear, compelling statement of purpose

2. Stating how your experience and training provide the basis for earning the client’s confidence

3. Experiencing and showing gratitude for the privilege of serving and benefiting clients

4. Understanding how and why clients may resist making changes that are entailed in financial plans

5. Identifying one’s personal motivations in recommending changes (how these recommendations reflect the planner’s deeply held values)

6. “Relevant vulnerability”, i.e., awareness of the limits of your own knowledge, being aware of personal obstacles, and being open to securing additional expert resources on the client’s behalf

From all indications, Michael’s audience “got it.” He was received with deep appreciation and often referred to after the presentation and throughout the remainder of the Garrett Retreat.

A few other Notable Names at the retreat

Kevin Keller, CEO, CFP Board; Tom Gardner, CEO and co-founder of The Motley Fool; Blaine Aikin, president and CEO of fi360, a fiduciary education company.

Who are RIABiz.com’s three contributors?

Marie Swift is president and CEO of Impact Communications, Inc., a full-service marketing communications and PR firm exclusively serving the financial services industry. She helped Sheryl Garrett found her network 10 years ago. Follow @marieswift on Twitter. Read her Best Practices in the Financial Services Industry blog at www.marieswift.com.

Margot M. Dorn is principal of Dorn Financial, a fee-only financial planning firm in San Diego, Calif.

Ed Jacobson, Ph.D., is a psychologist, business coach, consultant and public speaker based in Madison, Wis., who helped Sheryl Garrett deliver the closing session of the Garrett retreat. Ed works with individuals and organizations to help them to identify, plan for and achieve important goals that truly matter. He focuses his practice on serving the financial planning community; he believes that planners make a profound difference in the lives of their clients and the wider community, and he enjoys contributing to this “Heart’s Core” work. Contact Ed through his website: www.EdwardJacobson.com.