In the words of Bob Dylan “Ya Gotta Serve Somebody”.  Extraordinary leaders in all walks of life embrace this principle.  They understand their role is to thoughtfully serve the needs (not wants) of others versus a self-centered agenda based on their own individual rights.

Bill Ford understood the underlying elegance of this train of thought when he commented at the 2006 Detroit Auto Show that one of the secrets to turning Ford around will be to build cars people want – really want.  In fact that is exactly what Ford is accomplishing and their revitalization (without a government bail out) has been remarkable.

Customers (whether they be tax payers, students, patients, consumers etc.) given the choice are simply not willing to have their needs ignored and given the opportunity will quickly switch their loyalty to an organization who can truly satisfy their real needs.  For proof I would offer examples as diverse as Apple Computer’s evangelical customer base or in reverse taxpayers who are no longer willing to tolerate high taxes in return for expensive uninspired service.

So as a Leader, what do I need to do?  One of the responsibilities of leadership is to uncover reality and to connect the team with it.  Uncovering reality however can be difficult as it is cloaked by false information, entrenched positions and your own paradigms.  But if as a Leader you can succeed in stripping away these preconceptions, and illuminate the dysfunction of the current reality, then an effectively led team will undertake what is required. This principle has been demonstrated to me over and over again both as a General Manager and within my consulting practice.

So as a Leader, how do I get started?  Leaders need to start by ensuring the team is awake to the reality of their current circumstances.  Who is it they are employed to serve?  What is it these Stakeholders need from the team?  How well is the team performing at satisfying these needs? What is the reality of the current business environment (financials, equipment, technology, competition etc)? The leader must have the insight (and skills) to assist their team through this process of discovery and the mindset (and skills) to encourage individual team members to do what is necessary to successfully serve their stakeholders. They need to work with the members of the team to ensure they understand the value of their contributions and the specific required behaviours to be successful.  In this context - this is not about serving personal agendas but rather about inspiring and enabling people to be of service.

Seeing leadership from this perspective will fundamentally redefine the operating dynamic of your group.  You will no longer be seen as someone to be obeyed - or worse tolerated - but rather as a Leader who is there to ensure that the needs of stakeholders are being honoured and satisfied. This perspective creates a new operating model for everyone involved with the organization.  It releases energy by infusing work with a sense of meaning.

Finally, this article ends as it began - an effective leader is someone who understands that “Ya Gotta Serve Somebody” and possesses the courage and conviction to enlist the minds and spirits of others in creating a better future based on satisfying the true needs of Stakeholders.

(by John Hebden)

At Fusion, we strive to deliver focus, confidence and bottom-line results for our clients. For myself, I’m focused on delivering those attributes to the Canadian financial planning industry and the purpose of this blog is to start a dialogue on the future focus of this important industry.

The events of the last four years have had a profound impact on the Canadian mutual fund market as wealth managers around the world were caught ill prepared for the ‘once in a life time’ event. If you listen to the pundits; active management, modern portfolio theory, asset allocation and even diversification have all apparently been discredited.

In their 2005 best seller Blue Ocean Strategy, authors Kim and Mauborgne would recognize the Canadian mutual fund industry as a “red ocean” where the players tweak business models built decades ago in the vain hope that momentum, mass and gravity will over come their competitors. The question confronting us in 2011 is “can this traditional approach still work in the years to come?” At Fusion, we’re convinced that under the surface, there are dangerous forces at play that represent game changing challenges for wealth management and financial planning in the Canadian market. We call them Tidal Forces and 2 of them include:

Shallow waters: Industry players addicted to scale need to feed a voracious thirst for ‘cash flow’ and yet the penetration of mutual fund investments into Canadian households peaked ten years ago. Five mutual fund companies garner 95% of net cash flows amongst long term funds and amongst Mutual Fund dealers a net cash flow of 2% of AUA sets the benchmark. We think the water levels are getting dangerously shallow - leading to increasingly aggressive tactics that chase market share changes measured in decimals.

Class 4 rapids: In Canada, there are over 2,000 mutual funds (6,000+ if you include fund series), over 20 segregated fund complexes and 60 plus ETF’s - all swimming in a pond (the TSX) with only has 3,900 listed companies! Globefund lists over 1,100 funds in it’s miscellaneous asset category alone. Investment product proliferation has led to commoditization, complexity and confusion. With mutual funds a commodity, what happens when Google becomes the investors primary advisor?

What does this mean for Canadian firms in the financial planning market? The answers obviously depend on your firms realities and strategies but, at this point, the most important thing may be to ensure we’re focused on the issue by asking the right questions. For example;

• Is my product shelf sufficiently broad to deliver effective choice to my advisors and their clients who are focused on optimizing portfolio outcomes rather than writing cheques?
• Are my advisors equipped with the right tools and reporting to provide effective portfolio analysis? Are they, at a minimum, better equipped and informed than their clients?
• In a world were product is a commodity, do I have sufficient support structures for my advisors? How do I know if they’re keeping up with the rapidly changing landscape?
• And if that task is daunting for my advisors, how do I ensure my management team, compliance officers and support staff are ahead of the curve as well?

Next time: Navigating turbulent waters - who’s at the helm?

Chuck Grace

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