Finances are a very scary part of life for many investors, and with this fear also comes the hesitation to make change. In many cases, investors are always ”on the brink” of switching financial advisors. Perhaps they’ve had multiple conversations with other financial professionals, but have yet garnered up the courage to actually move on.
As a financial advisor, you're probably very familiar with scenarios in which investors are not fully aware of their financial pictures. You probably frequently hear woeful stories about advisors people have worked with in the past, or are currently working with now, who don’t give them a sense of understanding or security about their financial pictures. Even though these investors seem convinced that every advisor relationship will be the same, this is actually an opportunity for you to turn potential clients onto the idea of what a good advisor should do, and correct a common misconception about financial services.
If you are ever presented with this scenario—either at a networking event, an expo, or even in a social situation—offer to meet with the investor at another time, and do the following:
Don’t be pushy or salesy, be sympathetic: Show the potential client that you relate to his or her personal situation, and have an open conversation about their finances. If you are concerned that you are investing your time without any guarantee of return, remember that it’s often from these conversations that the best referral sources are born. Even if the potential client doesn’t end up switching advisors, they could very well be in your corner in other ways. In the event that they are skeptical about your willingness to help them, be open about the fact that this is how your business works: You advise clients with the hope that they will see the value in what you provide, learn from it, and share their experience with someone else, even if they don’t personally choose to move over to you.
Explain to them what they should be experiencing: From your professional perspective, explain to these investors how you feel an advisor who is giving them the time and attention they deserve should address their concerns. Ask if they’ve had open conversations with their current advisor about these concerns. Unfortunately, there is a large portion of advisors who mistakenly believe they are protecting their industry knowledge or proprietary process by not disclosing all their information to clients. At ClientWise, we believe in an open communication policy between client and advisor in which nothing is left off the table. So much so, that we encourage advisors to create processes around their client engagement, to ensure that they are being as informative as possible and communicating with clients at every turn.
Help them figure out how to approach their current advisor: Often these clients are in a bad situation with their current advisors because they have an unclear understanding of what is happening with their accounts and why. This is often more the fault of the advisor than the client, though the client never perceives it as such. Give investors some reassurance that they should feel comfortable enough to be proactive in communicating with their financial advisors, but that the responsibility shouldn’t rest on them to do so. Their advisor should be an active partner in helping them understand what they need to know, and where they can become more involved, should they choose to do so.
Provide them with the right questions to ask: As an advisor you are very clear on the kinds of questions your clients should be asking you and why. In conversations you have with prospective clients, give them the knowledge and the language to ask the right questions about their financial situation from their current advisors. You might fear you're "giving away the farm," but doing so will provide these investors with a sense of empowerment and peace of mind, and you will be the one with whom they associate these feelings. Even when (if) they are provided with the information they need from their current advisors, it won't bring with it the trust that comes from being given that information up front.
Finally, you don't want to (and shouldn't) bad-mouth the other advisor in the process: Talk about what YOU do, emphasizing the positive, not what the other advisor shouldn't do. Speaking negatively of your peers only perpetuates the stereotype that all advisors are competing for clients’ money, rather than highlighting that they are there to provide support through planning and investment advice. Remember, you are in the business of providing financial advice to investors in need, not of poaching clients from your advisor peers.
The truth is that any conversation with a potential client gives you an opportunity to show your true colors as an advisor to really get at the human element of what you do. This is doubly true if you are also helping them avoid advice that has the potential to damage their financial situation or their impression of financial advisors and the industry overall. It also gives you an opportunity to hear directly from your potential client base about what struggles they are dealing with in the market; information which you can then use to tailor your services to better serve the marketplace.
Coaching questions from this article:
1. What are the common concerns you hear from investors about their relationships with advisors or other financial professionals?
2. How is your business making a point to SHOW potential clients that these are concerns your team addresses up front?
3. What processes do you have in place with current clients to ensure they are getting the information they need, even if it's something they may be uncomfortable asking?
4. What can you draw from the disappointing experiences other investors have had with their advisors to improve upon your own services and client relationships?