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The Three Hidden Fears of Clients

USA Today recently reported that many people suffer from financial advisor anxiety?nervousness that makes them reluctant to share the intimate and important details of their finances with an advisor.

Whats behind this anxiety?? Fears that are so deep-rooted that it can take years before you get to fully know and understand your client. Since fears can keep your client from providing the right information to build a trusting relationship, another important question must be explored.

What makes a prospect or new client divulge the necessary information in a relatively short period of time? Trust.

So while you are building trust by asking all the right open-ended questions with the prospect, they are assessing you to see if your answers address their fears.

The Three Hidden Fears of Clients are:

  1. Does the advisor really care about me?
    Interestingly enough, this has a lot to do with both trust and instincts.? As an advisor, if you are not innately a trusting person, that will come across unless you are behaviorally aware and can modify your style. Overlay that with the clients innate level of trust and depending on the conversation, you could have an uphill battle to win over the trust of the prospect.
  2. Am I good enough? Will the advisor think I am a failure or not making the right decisions?
    Prospects that are very goal and task driven will be acutely sensitive to this. But on the surface, they can come across as very decisive and successful individuals. Vulnerability and giving away control will come very slowly with this type of person.
  3. Does the advisor have enough experience both technically and with people like me?
    They can ask you about degrees and designations but they might be looking to speak with current clients. Prospects that are much more outgoing and relationship driven can seem to be only interested in the people side of the business, but dont be fooled. They can have an even blend and quickly turn to your technical competency.

Dont forget that while you are choosing the prospect to be a client, they are choosing you as well. You need a quick, well-crafted system to capture a clients personality from the first time they meet with you.

Its only when a client can get past their fears and share all their financial details, goals and dreams that you can create a financial plan and relationship that your clients will be committed to for life. As an advisor, awareness of these client fears will lead to better, trusting, and long-term relationships with your clients.

Three Hidden Fears to Address

What it Takes to Sustain A Client Centered Practice

I am sure all of you think that you have a client centered practice. But, how far do you go in consistently executing on that objective? How ingrained is it into the culture of your business? I think a lot of it comes down to why are you in the business.

Is it all about the client and unlocking their life and financial potential, or is it about your financial reward?

The test is when it comes to making a tough decision do you act for the client or in your interests? To be client centered you must be ALL about the client and put their interests first ahead of your financial gain.

financial planning process, client confidence, advisor trustI believe many practices are more advisor centric than they realize. But this is probably why many firms do not grow to their maximum potential or even sustain themselves. The regulatory changes that are coming worldwide and also the societal shift in what people expect will drive you to change. You cannot have sustainable client relationships if you act for you ahead of the client.? Please think about what you can do to become more client centric.

Roy Diliberto shares some great points in his recent Financial Advisor Magazine article, “Why Clients Fire Advisors” – click here to read the article.

Start considering what it is like to be a client. How do you feel when you are a client of another professional advisor or financial advisor? What do you expect? How would you feel if you were a client of your own services?

An area you will also have to address is how you charge fees. Hidden transaction fees do not work. I would also say that charging AUM is not always in the clients best interests either, particularly if you are doing more than pure investment management. Your fees must be aligned to the clients best interests and what you deliver. When I had my own practice I charged retainer fees and AUM in proportions to best reflect what I did for the client. Reflect on your fee charging model that will be best for the client foremost and yet sustain profitability.

To learn more about sustaining a client-centered practice, please visit the Financial DNA website.


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Why Helping Your Clients Know Their Number is an Old School Approach

Have you ever had a client tell you their number? You know, the net worth number that will make them happy. Or that number they ask you to calculate so theyll know theyll be okay?

Focusing on this number is outdated, a mistake and I contend will actually hurt someones chances of reaching their long term goals. Heres why:

You are encouraging your client to focus on the wrong thing. When someone focuses on a future number they arent focusing on what they need to do to get there. Unless they are planning for a short term liquidity event, such as selling a business or winning the lottery, having a big number in their head doesnt do anything to move them toward the goal.

Helping Clients Know Their Number is an Old School ApproachClients may very well use this number to gauge their progress. One of the positive impacts of goals is that they give us a target to move towards. One of the negatives is that when we dont hit them we feel as if weve failed. When we put our attention on missing a goal, our energy is on the failing as opposed to the achieving of the goal.? For example, if your goal is to drive to Denver and you hit a detour and find yourself in Birmingham it doesnt get you to Denver any more quickly by feeling badly youre in Alabama. Instead, if you get a map or use your GPS to guide you to your preferred destination youll have a much easier time actually getting there.

In his Psychology Today blog Ray Williams surveys various research articles looking at how goal setting doesnt work. He quotes L.A. King and C.M. Burton in an article entitled, The Hazards of Goal Pursuit, for the American Psychological Association. They argue that goals should be used only in the narrowest of circumstances: “The optimally striving individual ought to endeavor to achieve and approach goals that only slightly implicate the self; that are only moderately important, fairly easy, and moderately abstract; that do not conflict with each other, and that concern the accomplishment of something other than financial gain.”

Williams continues:? There is an addiction in our culture to getting more, the going for the goals hype is disconnected from peoples’ authentic selves, and their values.there are psychological manifestations of not achieving goals that may be more damaging that not having any goals at all. The process sets up desires that are removed from everyday reality. Whenever we desire things that we don’t have, we set our brain’s nervous system to produce negative emotions. Second, highly aspirational goals require us to develop new competencies, some of which may be beyond current capabilities. As we develop these competencies, we are likely to experience failures, which then become de-motivational. Thirdly, goal setting sets up an either-or polarity of success. The only true measure can either be 100% attainment or perfection, or 99% and less, which is failure. We can then excessively focus on the missing or incomplete part of our efforts, ignoring the successful parts. Fourthly, goal setting doesn’t take into account random forces of chance. You can’t control all the environmental variables to guarantee 100% success.

If youre not buying the danger of goal setting argument, then consider that making the number the goal is the wrong goal. People think that having a money goal will motivate them to achieve it. Actually, they are focusing on the wrong incentive. People may think they are motivated by money or advisors may think clients are, but really people are motivated by what they money will do for them. The money might help them leave a job they hate, pursue a hobby they enjoy, give to causes they believe in, etc.

Build better relationships with clients and do a better job supporting them in getting to where they want to go.The number is a meaningless moving target. I had a client who told me at our first meeting that his number was $5,000,000. When he got to $5 million he said, Oh, I guess that number doesnt really make me feel like Im there. I think its really $10 million that would have me feeling okay. Guess what, $100 million might not make him feel okay. The feeling of security or knowing that well be okay isnt typically related to the number, but rather our beliefs about what okay is.

As advisors, many of us create financial plans for our clients, run projections, make assumptions etc. We help our clients create a road map for their financial futures. Anyone who has been in business over the past ten years knows that our projections are just that, projections. The world often changes in ways we cant anticipate. What we are really doing for our clients by creating a financial plan is to provide them with a plan that satisfies their logical minds and really serves to ease their concerns about the future. When we can calm our clients worries we help them to make much better decisions with their money.

There are real benefits from the financial planning process. As advisors we need to expand our views about all the benefits a plan provides. When we move past the left brain logical benefits and expand our focus to the more right brain behavioral benefits well build better relationships with our clients and do a better job supporting them in getting to where they want to go.

As a 21st century advisor make sure you understand your clients well enough to know:

  • What they want their retirement to look and feel like.
  • The most important people in your clients lives and how they want to be involved with them in the future.
  • The causes important to your clients and what impact, if any, they would like to have on these causes.
  • How strong their internal barometer is for making adjustments in their financial lives based upon whats happening in the world.
  • What they really need from you to make solid financial decisions.

Helping clients to tap into their motivation behind their number will allow us to be much more effective in helping them get to where they want to go. People are motivated by avoiding pain and moving toward their passions. To succeed as an advisor in the coming years it will be crucial to expand the conversation from just the numbers to instead, focusing on intentions and passions. This is what it will take to truly move people closer to their desired outcomes.

Ellen Rogin, CPA, CFP
is the co-author of Great with Money: 6 Steps to Lifetime Success and Prosperity. She speaks and consults to the financial services industry on business building strategies and working successfully in the women’s market. To learn more and to sign up for Prosperity Tips visit www.ellenrogin.com.

The Importance of People Centered Leadership in the Financial Industry

Our leaders are too involved in understanding/unraveling complex regulatory issues to spend time leading…

In many parts of the world financial regulators are placing more and more constraints on the industry. From improving record keeping in terms of recording advisor/client conversations to alerting the industry about the need to understand client behavior over and above tolerance to risk; and many other change requirements in between. Add to this a far savvier client base and leadership may well find itself with no time to support advisors or even navigate the business through these complicated seasons.

But – the financial landscape is shifting – it’s all about communication and understanding advisor and client behavior. Today’s leaders are crafting a new and innovative direction for the financial industry.

Jackson was looking for something different in the financial industry; something edgier, something to raise his passion for the business

At this current interview he was asked to complete a behavioral discovery process (profile) customized for financial services. When completed the interview panel openly shared the outcomes in their behavioral reports with Jackson and the interview process began.Leadership in the Financial Industry

No reference was made to his credentials, his previous experiences, his challenges. All of that information could be found in his resume. The questions the panelists asked were customized to his behavioral style and pointed to his hopes of his future, how he would expect the leadership to serve him in terms of fulfilling his expectations for his career path.

They clearly knew from his behavioral report that he was strategic, driven and would undoubtedly have plans for his career path.

Jackson found himself fully engaged in what was now a conversation focused on what they as a business could do for him rather than what he could do for them.

As the interview process drew to a close the panel asked Jackson to comment on the way they had conducted the discussion. He responded that it was very different and he found himself responding to their questions by opening up areas of his life, his future plans, his preferred style of communication and so much more than he had ever intended.

The panel concluded by telling Jackson that this approach mirrored the way the company provided financial advice to their clients.? This approach was all about understanding the clients hopes, dreams, plans for their future in terms of their finances and then lining up advice and support that worked in partnership with them to achieve these goals.?? This approach set a platform to ask revealing questions to uncover and deliver real insight into the advisor/client relationship.

The leadership of the company did not believe in containing creativity and initiative with their advisors; they believed in harnessing behaviors and talents and matching them with clients so that relationships could be formed that not only lasted but also provided well targeted advice that delivered outcomes, built trust and formed strong client/advisor partnerships.? They also saw this approach as one that would deliver the advisors vision for future and thus ensure they retain high quality staff.

Not surprisingly Jackson chose to work for this company.? The leadership had crafted a meaningful vision; one he knew lined up with his own personal passions.? Six months later and Jackson has fully embraced this style of working with clients. His clients see completing a profile as a useful “icebreaker” and feedback has demonstrated their support for the process and their belief that the advice they are being given genuinely focuses on their personal strategies for their future and how best to create wealth to deliver these plans.

Learn more about adopting a people centered leadership approach – click here.

What Do Clients Want From Their Advisor?

Often we think that clients want higher investment returns from their advisor, and therefore that defines the role of the advisor. However, research shows that clients want a relationship. This has actually been the case for a long time but the research is becoming clearly stronger all over the world in the need for advisors to develop stronger interpersonal skills and emotional intelligence.

What Clients Want from AdvisorsRecent Trusted Advisor Research by Professional Planner magazine in Australia demonstrates that an advisors interpersonal skills and emotional intelligence are most important by 82% of the survey participants who were clients of Advisors of the Year.

Refer to the full article at: http://www.professionalplanner.com.au/research/afa-study-shows-eq-pays

There is no doubt developing your interpersonal skills grows the bottom line. In advisory business relationships are the key to revenue sustainability.

Many advisors are naturally results orientated in behavioral style and therefore naturally lower on relationships. But, the interpersonal skills can be learned with sustained effort, focus and investment. The starting point is behavioral awareness.

So, the question becomes why isnt there more sustained investment in developing the interpersonal skills and EQ of advisors? It seems there is still a strong over weighting towards technical training. When we see this change, trust in the industry will grow.

Our firm has recently been working with Advisors Ahead to deliver this type of training to financial planning students and young advisors. This is an important starting point but needs to go much further.

To learn more about how you can grow to become a behaviorally smart advisor, please visit the Financial DNA website.

Whats Certain is Uncertainty

As a financial advisor, you have done a good job of helping your pre-retired clients dream, define their ideal goals and manage a portfolio to achieve those goals. But that may or may not have anything to do with their reality. Why?? Because so much of retirement requires managing the mental, social and physical aspects and each of your clients is a unique individual.financial personality, behavioral management, retirement planning

Helping your clients plan for retirement requires you to use a whole brain approach to financial planning.? Consider these facts recently released by the Employee Benefit Research Institute: 57% of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes.? 28% of Americans have no confidence they will have enough money to retire comfortably.

Beginning with the left-brain side of the business, you are already starting with a deficit: a lack of money and confidence.? Pre-retired couples assemble their budgets and that action alone can bring on a lot of uncertainty. Like the markets, people dont like uncertainty. How does it feel to live on the withdrawal side when your clients have always lived in the accumulation phase?? What about the possibility of another Great Recession?? Are health care costs really that high?? How do I know how much to plan for home repairs?

That left-brain conversation can take a sharp turn into the right-brain hemisphere.? A client may confide in you that even though they never liked their job, at least it gives them a sense of purpose. The reality is that when people don’t feel they are doing something meaningful, they become bored and pessimistic. Failure to address things like how much time they will spend together, changes in household responsibilities if one retires before the other, or how their golden years will be affected by financial issues such as supporting an aging parent can quickly remove the luster and shine from their golden years. Couples can, and probably will, have different priorities and attitudes about retirement and that identifying those differences is critically important to their compatibility, and success in retirement.

The emotional side of retirement coupled with the numbers side can add up to stressful conversations during your meetings with pre-retired clients.

So how do you continue to create a priceless unique experience for your pre-retired clients?

By understanding where to focus the conversation depending on the type of client sitting in front of you.? If your client is primarily a goal-setter, then helping them with ideas to redirect their time, energy and talents into new ventures will help reduce the tension.? An information seeker will need more details and research on retirement ideas and will probably be more at ease with identifying and following detailed cash flow projections.? Your client who is more lifestyle oriented would do better with you telling stories about your other retired clients who have successfully made that transition. And, finally, a security seeking clients mind will be at ease when you combine both their feelings and very concrete, specific ideas about retirement.

financial planning process, client confidence, advisor trustHelping your clients prepare for retirement requires you to move from the clients outer world to their inner world with grace and ease.? Instilling confidence and a sense of certainty in these uncertain times is your number one priority.? And to do that, you need to have a heightened self -awareness to show both your logical, and emotional side.? Your payoff is loyal clients who will stay with you and provide referrals for life.

For more information on how you can determine the financial personality of your clients to guide them in all financial planning conversations, visit the Financial DNA website.