Client Engagement

Find Your Financial Advisor Soul Mate Don't Settle for Less

Find Your Financial Advisor Soul Mate

People have unique financial needs; no two situations are ever exactly the same. Finding a financial advisor who really understands us and can deliver advice tailored to the specific situation can make a significant difference in helping us accomplish our life and financial goals.

It takes a special kind of person to be able to unlock deeply held information at the first meeting. It gets progressively more difficult if that first meeting is not conducive to our communication style. Fortunately, some advisors have Behavioral Finance tools available to ensure they are meeting your needs.

So many of us settle for second best when it comes to engaging a Financial Advisor. Yet how much more could be achieved, if the Financial Advisor we chose not only fully understood investments, but also knew how to uncover your goals and behavioral biases that may be a blockage to achieving those goals?

I wonder why we prolong a relationship with our Financial Advisor when it’s clear we are settling for second best. I want someone smart, trustworthy, and dependable and who cares about my future and my financial wellbeing by making sure they really understand me and are not giving me a generic portfolio that they prefer. Joanna Cleaver writing for US Money puts it like this.

You stay because breaking up is hard to do.

I want my Financial Advisor to see their self as a financial soul mate. I want them to understand I have a bias for Newness – giving more weight to something new and exciting, rather than because it made logical sense to do otherwise. I want them to partner with me as I manage my Mental Accounting bias – needing to allocate my finances into specific buckets for explicit purposes, rather than for long term goals.

Maybe this sounds radical, but why can’t I have a Financial Advisor who understands my communication style? I need time to understand and dwell on what they are saying. I need information delivered to me in a relaxed environment. Wouldn’t this achieve a greater likelihood that I would remain with the same Financial Advisor for years?

Many years ago, I wanted to invest in an exciting start up. Something about this entrepreneur and his ideas excited me. My financial advisor wouldn’t even discuss the opportunity referring to me as a ‘novice’ in terms of investing and to the entrepreneur as a ’7-day wonder’. The advisor had no idea about me, my plans for my life and indeed I think saw me as an amateur.

As I am reminded of that incident many years ago, I wonder if the advisor (long since out of my life) remembers the conversation as he watches the multi-billion dollar empire this young man went on to build.

All it would have taken for this story to have been different was an advisor who understood that I don’t take risks, but that I am very savvy when I see an opportunity, and that at that time I could well afford the amount I wished to invest.

Its time for Financial Advisors to approach us as our financial advisory soulmate. They need to take time to match us with advisors based upon communication style and understanding our behavioral biases. With a validated behavioral and communication process, I believe I can find my financial advisor soulmate. It isn’t just a need, but I believe it is their responsibility to ensure my financial and life goals are met.

It’s time for your advisor to learn more about Behavioral Biases that get in the way of making sound financial decisions and to use available tools and training to better support achieving life and financial goals

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The Four Words You Never Want to Hear

I’m afraid of you.

According to a recent survey (McAdam LLC and Harris Poll 2015) of more than 2000 Americans, 71% said some aspect of meeting with a financial advisor scared them. The most common reasons cited were costs, trust and the inability of an advisor to help them with their financial situation.

However, a majority of CFP professionals feel having the CFP designation increases the trust and confidence levels for clients, according to a survey by the CFP Board of Standards Inc. and Aite Group.

What accounts for the disconnect? The Financial Services industry has traditionally lead with a left-brain approach: research, analytical and factual. But at least 50% of your clients lead with a right-brain approach that is based on feelings and relationships.

With the current market volatility, the fact that you have educated your pre-retirees on withdrawals in a declining stock market means very little when facing hard choices about retiring triggers your clients emotions. They are scared about having to work longer, potentially cutback the “dream lifestyle” or just having to live with the uncertainty of it all.

This fear can be mitigated by one powerful emotion: TRUST

But is trust a “skill” you can sharpen? While I believe each person has a certain inherent trustability, there are ways you can get beneath the surface of a client to get past their fear factor.

1. Let the client choose how to proceed.

They want to feel like a partner, not being controlled. While you have a formal agenda for each meeting, you might begin the session with a simple question: “At the end of today’s meeting, what would be a good outcome for you?”

2. Stay present and open to not knowing exactly what turn the client might take in your meeting.

Be curious as to the “threads” your client may be unraveling. In your enthusiasm to talk about the carefully crafted portfolio you have designed and the safe withdrawal strategies, your client may be wondering, “What impact will all these uncertainties have on my lifestyle?” It would be best to acknowledge that fear and go down that path to demonstrate a deeper level of awareness.

3. Listen for and carefully observe energy or tone shifts.

This type of intuition is not always an advisor’s strong suit. Your client will give you cues: voice level, eye contact, and pauses. But when you listen to the “what” (fixed income in retirement) and are able to move to the “who” (no longer having income from a job, uncertainty of what’s next), you will build trust as you get at the client’s real fears and help them discover their next best action steps.

Focus on the one skill that will have the greatest impact on your relationships with both prospects and clients: TRUST. And, in return, your clients will face these uncertainties with greater confidence.

Advisors Fooled By Own Biases

Advisors Fooled By Own Biases

Some advisors have told me that they will not use a tool because of a warped belief they can read people better. The fact is, we all have personal blind spots and behavioral biases which stem from the overuse of our strengths. The right assessment process built with scientific foundations provides a huge amount of objectivity, which can help an advisor not fall into the trap of being fooled by their perception and own natural biases.

However, criticism of traditional risk questionnaires is right, as Carl Richards points out in his blog. The typical risk questionnaire is not inherently accurate and is relied upon without properly engaging the client. But if used as a starting point, success can be achieved by the advisor using it to engage the client in -a goals-based planning process.

With a reliability factor of 91% (and having been completed by over 800,000 people,) the Financial DNA Discovery Process is an independently-validated, psychometric assessment used to measure a person’s complete financial personality (including risk). So while basic, situational “questionnaires” should be out, scientifically validated processes which are accurate and engaging should ALWAYS be used so long as they are part of a more in-depth conversation.

Robo 2.0

Robo 2.0, Your Torrid Behavioral Finance Fantasy Comes True

Yesterday, my friend shared a link to a new artificially intelligent personal assistant that can communicate independently with clients. Her name is Amy and she is superwoman compared to Siri. Unlike Siri, Amy can work independently, multi-task, make her own decisions and can even teach herself to emotionally connect with others based on their digital footprint. The scary thing is robots are having more engaging conversations over email than we are (talking about interests like the Atlanta Falcons, paddle boarding or the BCS Championship). This evolution will cause ripples in the financial services industry, hold advisors to higher engagement standards and dramatically shift the traditional advisor’s role. Are your ready for Robo 2.0?

The Financial Advisor will be held to higher client engagement standards with Robo 2.0 in order to remain valuable in the client’s eyes. Superficial conversations are “out” and deeper wealth mentoring relationships are “in.” Are you Robo 2.0 ready?

Robo 2.0

With “robots” entering Fintech with robo-advice platforms (Robo 1.0) our industry is going through a major shift. Are you prepared for the next round of enhancements? I am predicting that Robo 2.0 will bring an army of “Amys” to advisor’s offices handling all previously manual tasks like answering client email, booking appointments, superficial “checking in emails”, documenting client meetings, building portfolios and lead gen. Amys will assist in nearly every facet of financial planning except for the actual meeting with clients and managing their behavioral biases.

Many have speculated that an advisor’s role in the future will be akin to a pharmacist equipped with an automatic pill dispenser, a check and balance in the financial planning process. I disagree. This is inefficient and not the best use of advisor’s talents. In Robo 2.0, firms will review and prepare all portfolios centrally and deploy their advisors to be the firm’s face and voice. The advisors will be the shoulders to cry on during a death or divorce, a counselor for health and wealth, and a gladiator for the client’s goals. Robo 2.0 advisors will be pushed to non-traditional work hours to keep up with the demands of their clients and the reality of the 24/7 capabilities of their Amys and the diverse services being offered. Not all Robo 1.0 advisors are suited for 2.0.

Higher client engagement standards.

The main advantage that a robot has over the human is that they fully prepare before a meeting. In a research study, we recently completed, advisors will not emotionally engage 40% of prospective clients. The way that they approach them in their first interactions will be a complete turn off (whether it be too pushy, too salesy, or just a personality mismatch). Robo 2.0 platforms will be able to reduce this mismatch by drawing on data from data.com, behavioral science, and demographic databases to know exactly to whom they are talking, their interests, their personality, their likely needs and key demographics and the ability to change their pitch accordingly.

In order to be competitive, advisors must emotionally connect to their clients, quicker and more reliably, by better understanding their financial personality and how to provide the type of personalized support each person needs.

So You Think You Are A Good Communicator

So You Think You Are A Good Communicator?

How many people who call themselves “good communicators” use the below logic to justify their claims:

  • “I know how to read people”
  • “I know people like them, they all work the same”
  • “I’m good at reading body language”
  • “I know this stuff so well I can teach it to anyone”

Would you describe yourself as a good communicator? Research shows that you will naturally connect with only 30% of the clients you meet. That leaves the overwhelming majority of people in the category of needing to adjust your behavior to meet their needs. But, how do you do that?

  • Does your client need concrete examples (Information) or just the big picture (Goal-Setting)
  • Will they want to know what other people are doing (Lifestyle) or do they want research to support a decision (Information)
  • Do they need help and support to get comfortable so that it feels like the right decision (Stability Style) or do they just need the rational bullet points (Goal-Setting)

While it is entirely possible for some people to really connect and engage with anyone they meet, they are the definition of “few and far between.” This brings up the question of “Why?” Through the use of behavioral science, you can better understand the natural tendencies of your clients, which will allow you to be a proactive manager of your clients’ needs. The use of a behavioral tool has also been proven to show a return of 150 bps to your AUM (Source:The Advisors Alpha: Putting a Value on Your Value, Vanguard 2015). So, adding a tool to your resources gives you a new differentiator between you and your competitors.

If there is a proven method available to ensure you can connect with absolutely every type of person, why wouldn’t you use it? Behavioral Science can help you accomplish your goals by giving you easy tips on how to engage different styles by making small adjustments to tailor your communication with your clients and prospects. Having this tool can turn you into someone with the ability to communicate with anyone, regardless of whether it comes to you naturally, or not.

What’s your communication style?

Are your couple clients at risk of leaving your Financial Advisory Firm-

Do You Have “At Risk” Clients?

Do you know which of your clients are at risk for:

  • Leaving your practice?
  • Becoming a compliance nightmare?
  • Sabotaging their financial plan?

You may have more than you think since customer experience is the internal andsubjective response your clients have to any direct or indirect contact with your firm.

The two key words that should have you concerned are internal and subjective because you cant measure or control these aspects of your client.

According to the 2014 EY Global Insurance Survey, 89% of clients want more frequent, meaningful and personalized communications from their advisor. And in fact, 35% of clients leave to find an advisor who is better at communicating.

In order to retain your clients, you need to have an objective process to uncover a clients financial personality. As intuitive as an advisor might be, they can no longer afford to rely on subjective observations and open-ended questions. Using technology-based tools will soon be the new normal in the industry.

The combination of your baby boomer clients nearing retirement and the market volatility can easily lead to some unforeseen compliance nightmares. Why? Because emotions are heightened and clients who appeared risk tolerant and told you they were risk tolerant can suddenly change their mind. They were fine as long as the market was going up (or even down a bit) and retirement was years away. Now as they start to create their cash flows and realize they are in the withdrawal stage of life, market performance can make or break their golden years.

In addition, the stress and considerable psychological changes that your clients are going through as they near retirement may cause them to unknowingly sabotage your carefully created financial plan. You may have more difficult conversations with couples as the husband might have visions of expensive vacations while the wife is content on cutting back expenses.

What if you had this behavioral information at your fingertips from the very start of your relationship? Imagine a world where, in times of market volatility, you could pull up a list of all your clients, see their level of trust and have the customized communication step you should take at that moment. Youd find client retention increases, your compliance challenges stopped before they are given a chance to start and clients that commit to sticking to their financial plan.