Client Engagement

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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.

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Is Your Client a Stormtrooper, a Wookie, Or an Ewok?

For Financial Advisors on the Dark Side, there is one truth…All Storm Troopers are alike. They all wear white plastic helmets and are lousy shots. However, I am guessing you are a Financial Advisor for the Rebellion. The unfortunate side of working with the Greater Good of the Force is no Wookie, Human or Jaba the Hut are alike. Yoda would tell us “handle the same, all clients I would not”. And, as we learned in the latest episode (no spoilers), even those Storm Troopers can get out of line.

How can you communicate with all of these species with different needs and outlooks on their investing? It is amazing in the movie to see that every race communicates in English, or at least understands it. That DOES NOT happen in real life.

Since the galaxy isn’t a perfect place, not all Rakatas are the same and we do not get to choose just one species to work with; how you connect with a Chiss, as opposed to a Sith, is not an easy task. This is where DNA Behavior becomes invaluable to you. Every Gran & Gungan needs a good retirement plan; especially if you were NOT asked back to be in the next installment. (Yes, we are looking at you Jar Jar Binks.) The ultimate question is, do I need a CP30 unit to communicate with these people? The answer is NO. Just have them take a 12-question Communication DNA Discovery. Easy for you, easy for them.

Matrix

When talking with new Rebel Advisors, I get more questions and apprehension on what this crazy looking matrix is and what it means. How does this matrix help me? Quite simply, this image is one of the easiest keys to read and understand who will be matched up most easily. If a new Jawa (columns) is a Community Builder, but their advisor (rows) is an Initiator, will they be a good fit for each other? With one easy look at this matrix, (no lightsaber or X-wing needed) you can see that they will not have an easy time connecting. But, if there is another advisor in that office who is an Engager & fluent in Javanese, they will likely have an easier time matching their natural behaviors to each other. We know this matrix does not create a bromance like Chewy & Han Solo. It just helps you to understand where your client wants to retire: a swamp on Dagobah with Yoda or a beautiful forest with the Ewoks on Endor.

For more information, please visit http://financialdna.com/reports/ to find out how DNA Behaviors reports can help your teams client engagement strategies.