There's never been anything quite like the Obama phenomenon sweeping across the Democratic primary race south of the border. Tapping into fundamental dissatisfaction with the status quo and business as usual, his candidacy offers some instructive lessons about what consumers today are seeking - not just in the United States but in Canada as well and not just in political leadership but in other aspects of their lives also. Of particular interest is the strength of Obama's candidacy among the more affluent and better educated - precisely the kinds of clients most financial advisors work with.

Three essential forces are driving Obama's appeal among many Americans: First, a desire for a more optimistic vision of the future (in this he resembles Ronald Reagan); second a quest for change and new directions (reminiscent of JFK); and finally a search for character and "authenticity" in a leader, in other words someone who presents their views candidly, without pandering to the audience. For anyone who wants to get a better understanding of this, look no further than the "Yes We Can" video currently drawing hundreds of thousands of views daily on You Tube - the link is below.

http://www.youtube.com/watch?v=jjXyqcx-mYY

Of interest, the desire for change and authenticity is not limited to Democrats - it's precisely these attributes which have fueled the success of John McCain and his "Straight Talk Express" campaign.

As we consider the direction to take our businesses , particularly in light of many clients disgruntled by recent markets and the status quo, it's worth considering how to build the attributes driving Obama's success into our business - having clients see us as an optimistic voice, as someone on the leading edge of change and as being absolutely honest with them about market prospects and their circumstances.

On the issue of having a positive view, this doesn't mean being blindly optimistic - being seen as a cheerleader undermines our credibility rather than enhances it. In talking to clients, by all means address the negatives and concerns before us. At the same time, be sure to communicate a balanced view, maintaining as upbeat a tone as possible (no one wants to talk with someone who constantly brings them down) and focusing on the good things happening - as evidenced by no less an authority than Warren Buffett in his recent remarks to the Toronto Board of Trade on the positive outlook for the U.S. economy. In talking to clients, seek out opportunities to reinforce that their plan (perhaps with modifications as circumstances warrant) will still take them to the goals they have set out, despite setbacks along the way.

With regard to change, we have to tread the fine line between avoiding fads and change for the sake of change on the one hand and being seen as resistant to innovative thinking and new ideas on the other. Being perceived as married to the past is the kiss of death - clients want to feel that their advisor is constantly evaluating new and different ideas that can pay off for them. They may well want an advisor who is conservative in orientation - but not someone closed to new approaches.

You need to be able to talk intelligently with clients about the things you're evaluating to ensure you're bringing the very best research and contemporary thinking to their portfolios - whether it's looking at some of the initiatives taking place in the institutional arena around "130 - 30" investment strategies (in which portfolios go long 130% and short 30%) or exploring the breakthrough work being done by David Swensen at Yale's endowment fund (which leads American university endowment funds over the past decade with an average return of 18% - you can read about Swensen's work in his book "Pioneering Portfolio Management".)

The third lesson from Barack Obama's campaign is the power of authenticity - being seen as someone who provides frank and candid advice, even if it's not what clients want to hear. That doesn't mean being the voice of doom and gloom (which of course contradicts the first desire for an optimistic, hopeful message). But it does mean being seen as someone who clients can rely on to be honest at all times.

There is lots of evidence that clients are willing to accept bad news and respect the person who delivers it- whether it be having to accept more short term volatility and uncertainty than they'd like, selling a stock or fund they've fallen in love with and buying one which is beaten down instead, diversifying away from a sector they're comfortable in or having to change expectations on how much they need to save and can afford to spend or the age at which they hope to retire.

When he balanced the Canadian federal budget in the 90's, Paul Martin showed the formula to have people accept unwelcome news - first, you need to demonstrate that what you're recommending is necessary and that there is no alternative to accepting a painful decision. And then you have to show clients what the payoff will be. No one wants to sign on for perpetual pain - you need to demonstrate the long term benefit of taking a short term difficult course of action.

One successful advisor put it well: "I advise clients from the get-go that my job is to tell them what they need to hear, not what they want to hear. I remind them of that every time I give them advice they're not going to like - and while I may have lost the odd client because of my honesty, generally I've found that clients respect me for that. In fact I've have had referrals say that the reason they came to me was because their friends told them that they could count on me to give them the straight goods."

It appears that Barack Obama and John McCain are reshaping the U.S. political landscape about what Americans seek in their political leadership. As we look forward, advisors may want to consider whether there will be a similar groundshift in what Canadian investors look for in their financial advisors - and how to position themselves to capitalize on that change.