When you first started your professional journey as a financial advisor, did you ever think that the success of your work will rely on far more intricate things than your extensive knowledge of the market? If you have been doing this for some time you probably have realized by now that the financial success of your clients relies not only on your performance but most importantly on your relationship with them.
If you have been spending time and efforts developing a trusting relationship in order to create a customized portfolio and financial plan for your clients, then you’ve been doing it right. The trust they place in you will govern your relationship and their financial success. But what if we told you that there is one particular component that you failed to consider. A component that could obliterate all your efforts in the blink of an eye.
How susceptible is your client to outside influence? How does watching financial talk shows, the evening news, or reading the negative financial headlines in newspapers and magazines affect them?
Do they take the information for what it is, not read much into it, then draw their own conclusion? Or would they actually believe in it and see an “obvious” and “direct” correlation with their financial plan and reach out to you for an understanding and compassionate shoulder to cry on?
Make no mistakes, no matter how irrational this might seem to you and unlikely to affect your work, nothing can be more concerning that a susceptible, impressionable, and fast reactive client who feels at liberty to change your entire scope of work and strategy because the news compelled them to do so.
Now imagine a couple arriving together for their first annual review with you. One of them is extremely concerned that the markets are fluctuating a lot. And, since it is so close to retirement they worry that if you continue with the portfolio you have designed, it will mean major cutbacks in lifestyle spending. The other feels comfortable with the portfolio but concerned about your fee structure given all the recent press on advisors charging too much and damaging returns on retirement plans.
How would you address this? Would you dive into technical and financial related explanations to try to appeal to their common sense and convince them that the direction you’ve been going is the most suitable to their needs and financial goals? Or would you take a moment to understand them better, understand their communication style, where their fear emanates from, and phrase your answers in a way they will understand?
You see, this is not the time for you to re-sell this couple on your strategy so they don’t lose faith in you or the commitment to the plan. This is the time for you to get to know your clients better.
Could you imagine how different the situation would be if you could identify during the on-boarding meeting with your clients those that are more emotional or whether they are attracted to the headlines? Your entire approach would change to be more client-centered to engage with them on their terms.
Don’t react. Be proactive and become a behaviorally smart advisor to build trusting relationships that will keep your “susceptible” clients engaged for life.