The Case For Managing Financial Clients Rather Than Their Assets

Financial history is peppered with stock market crashes, property market booms and busts and a vast array of stories of individuals who have either made or lost fortunes, or even both. Irrespective of the past, a financial adviser deals with the here and now as well as the future, keeping one eye on clients possible expenditure requirements. In doing this, giving the right advice is a subjective process in terms of possible investment portfolio construction and asset mix or promoting beneficial financial habits. Irrespective of the type of client or their individual requirements, the advisers methodology in giving financial advice needs to be robust, easily understood and capable of consistent application.

In the investment arena, many clients find stock markets and matters such as asset allocation and volatility complex or even scary. A common experience of most investment advisers is that even when the client confirms verbally that they understood an investment concept that has just been explained to them, true understanding usually requires the explanation to be repeated several times before the issue is grasped.

In order to simplify matters, many investment advisers have, by and large, focused historically on fund selection and objective matching. While this is understandable to a certain extent, it is also dilutes the skill necessary to advise clients and risks falling into the trap of letting investment advice be led by the most convenient product or off the shelf fund being marketed by an investment manager. Hindsight is wonderful, but replicating the investment choices that have performed best in the recent past does not guarantee future success. This lemming-like behaviour has led to housing bubbles and the crash, to name but two. Simplification can also lead to oversights such as a failure to recognise the impact of inflation or the effect of taxation on investment growth.Financial Risk, Risk Profiling, Client Portfolio, Investment Risks

Any document dealing with investment risk needs to acknowledge the trade off between investment return and the possibility of loss together with ongoing volatility, especially with asset classes that experience wide variations in pricing. While the concept of the Efficient Frontier is a familiar one with experienced investment advisers, many clients interpret the drawing of such a graph as almost a guaranteed level of performance without realising that losses can and do occur.

Risk profiling is possibly the single most important regulatory issue facing investment advisers and financial institutions at this time, as the consequences of getting it wrong or even not doing it can be severe for both investor and adviser. Getting it right confers major benefits, for example, by allowing diversification to dilute risk or identifying when to stretch investors to go beyond their usual comfort zone and take slightly more risk needed to meet goals.

In recent years, especially in the UK, there has been a steady growth in advisers use of investor risk profiling tools provided by investment companies. These alone, however, are not silver bullets for defining risk, despite the encouragement by such companies who have a vested interest in providing the shortest possible route to a client selecting their investment funds. All of this assumes, of course, that these profiling systems have been constructed correctly and are properly validated.

The traditional understanding of risk is, however, only half the picture. By solely focusing on investment return, investors and their advisers ignore the reason for investment return, namely the satisfying of a need for capital growth. Such a need is based around a future requirement for expenses to be met, especially those that are based in the reality of current needs. This also means that a clients current financial behaviour needs to be addressed. Such behaviours include blind purchasing by clients of financial products other than investments as well as overreaching in borrowings. Similarly, spendthrift behaviour merely because cashflow is available is not a sustainable long term financial behaviour. Nevertheless, not only can clients lose the run of themselves but advisers who fail to advise these clients otherwise could lead to such behaviour being interpreted as acceptable and in some way a part of their future financial planning approach.

The spectre of financial risk is also present in the need to purchase life assurance, income protection or specified illness cover. Maintaining these safeguards requires that a person remain solvent and have access to cash, both of which can be influenced by arbitrary decisions on the part of the individual, many of which are emotionally driven.

The acknowledgement of risks other than the traditional views of investment risk is key to good financial planning. Even more important is the education of clients in such regard. Individuals can, and do, become blinded to the possibility of future financial loss due to steep rises in interest rates on large loan portfolios in periods of economic success. Similarly, a lifestyle that has been funded by the existence of easy credit through credit cards, overdrafts or interest-only borrowings has led, post-Lehmans and other similar circumstances, to personal financial destruction. If financial education is only acquired through personal losses in the troughs of economic cycles rather than through an understanding of these cycles and a long-term perspective, the possibility of financial recovery may be rather slim.

What financial planners need to recognise is that they are primarily investor managers as opposed to investment managers and client leaders rather than product sellers. Such leadership has been severely lacking as, in many instances in the past, advisers sought to take shortcuts to generate business income without necessarily examining the true emotional makeup of their clients and the financial impact of such clients natural preferences in dealing with money. This misdirected advice has, in turn, had serious consequences on the long-term relationship with the clients.

In fairness, the financial services industry has historically veered towards defining and managing risk as being investment related. Such an approach was easy to rationalise, and led to the design of easily marketable products which suited those businesses that relied on earnings from annual management charges from investment funds.

The realms of individual financial planning do not, unfortunately, fit easily into systemised investment marketing and, traditionally, what does not fit is usually ignored for the sake of profitable expediency. To be an excellent financial planner not only requires product knowledge and an ability to analyse but also a willingness to spend more time getting to know the client, which leads to an understanding of and empathy for the client, rather than focussing on the quick sale.

While knowing the client is a prerequisite by any financial regulatory code, too few advisers take the trouble to know the client from the inside out since to do so takes time and may create additional workload. Rather than looking at such work as a negative, it should be viewed as a key building block in not only providing the right understanding of the clients needs, financial and emotional, but also in establishing long term successful business relationships for the adviser. By understanding clients on a personal level rather than just viewing them in terms of a financial factfind or an investment profile, the relationship strengthens as does the likelihood that the client will respond positively to any advice given. This can only help to ensure that a long term business relationship will develop and thrive beyond any short term product sale.

This article is an extract from a White Paper on financial risk: Dealing with Financial Planning Risk ? Directing Porfolio Decisions or Navigating Behavior?

Do You Really Know What Lies Beneath the Surface of Your Clients?

7 to 17 seconds. According to many research studies that is how long it takes to form a first impression.

This first impression is based 55 percent on appearance, 7 percent on the words we use during course of our conversation and 38 percent on the tone of the voice.

So even before you get sufficient time to demonstrate your abilities, prospects and clients have formed their first impression and created labels (serious, fun, blunt, friendly, etc.) about your personality.

customer behavior discovery, who are your customers, understanding customer personalitiesThe same is true for you as you meet prospects and clients.

Why is it so important for you to prove (or disprove) these first impressions to understand who your customer really is deep beneath the surface?

Because it has major implications for three areas of your business:
1.?? ?Attracting new clients
2.?? ?Designing portfolios
3.?? ?Ongoing service

Attracting new clients is all about the ability for you to quickly build trust. This involves understanding not only your clients personality, but your own personality strengths and struggles.? Are you a natural listener?? Are you empathetic or more focused on outcomes?? If your style is matched with the prospects, you will build trust with less effort.

When designing a portfolio, many advisors neglect to plan for the financial personality risks. Some clients will envision themselves as bigger risk takers than what they project themselves to be with you.? Or, they may say they are a saver when their expense account proves the contrary.? Discussions on these subjects are very delicate because many clients do not want to admit (or even know) who they really are a deeper level.

Finally, how can you customize your client experience when you may not even know who your customer really is beneath the surface?? You have a lot of different personalities working with you in your office and each one may have to adjust their style to make the client feel truly cared for and understood.? Every marketing action should be tailored to the personality of your clients.? No need to send a long newsletter filled with market data and facts to your big picture clients.? Are you looking for more referrals?? Certain types of clients are much more likely to give them to you if you know their personality.

Is there a way you can know a customer within the first meeting, or even better beforehand?? Or, do you need to wait a year to observe whether their actions and words match to find out who they really are?

Dare to get beneath the surface with your clients. Discover practical and actionable behavioral solutions that you can use with your clients to uncover who they are to create unique customized experiences.

Learn more by visiting

Customer Engagement Planning with your Head in the Cloud

As the year ends and plans are in place for 2013 many companies will have focused heavily on where social media fits in their business and more importantly produced endless statistics to support (or not) reasons to invest in more social media stuff. The CMOs will be all for it; the CFO will only be interested in ROI; the CTOs will have their exclusive opinions.

Customer Engagement

I wonder where the strategic conversations will turn to How can we attract and/or retain customers?

By now the majority of companies will have some elements of a social media some of which will be integrated with their CRM. But what actually needs to shift significantly to effectively engage customers for the long term lies not in the whizziness of the latest social media investment but more importantly in getting to know your customers communication style and matching service, advisors, product to them.

Social media is changing customer loyalty; suddenly customers have access to faster, wider rages of choices than ever before. Having the ability to track customers behaviors and their preferred communication style could be the difference between keeping and losing a customer.

Click here to see how you can get ahead of the game.

5 Great Reasons for Understanding Customer Communication Styles

The landscape for businesses is becoming more fast-paced, high-tech and competitive with each year. Customers are expecting personalized offerings based on their interests, customized experiences based on their preferences and efficient service delivery on their terms. They want to resolve problems with a simple phone call… or by sending an email, starting a LinkedIn discussion, Tweeting or online chatting. Solutions should be available quickly and without the expense of much effort.

customer service experience, client engagementWhether it means expanding the social networking team to ensure every post on their Facebook page is responded to or taking a closer look at the User Experience to optimize navigation of their website, more and more businesses are putting processes in place to meet the increasingly high demands of customers. And theyre not only doing this to ensure business growth ? businesses are taking these steps to safeguard their survival. These businesses understand the importance of keeping customers happy. They know that serving the customer as the customer wants to be served produces a boost in brand appeal as well as the bottom line.

Reaching customers through the right channels and having a user friendly website may make it easier for the customer to connect with your business ? but how is your business doing once the customer actually connects; when interacting with the customer?

When the customer received a response to their support ticket did it make them feel relieved or stressed, and did the email campaign you just sent out provide just the right amount of information or discourage recipients with too much?

Unless you know the communication style of each customer you wont be able to answer these questions. Think about how technology can help you solve this problem by identifying the communication style of each customer and employee across the business to deliver an automated process for customizing the customer experience and increasing customer engagement.

The benefits of having this behavioral data about your customers are many, but here are some of my favorite reasons for understanding customer communication styles:

  1. Its makes customer segmentation simple. Knowing the communication style of customers allows for automatic segmentation of your lead and contact base. Some customers will want very detailed information while others will want a few bullet points. When you know which customers are which, you can split them into their appropriate groups and serve them accordingly.
  2. You can provide a customized experience. One size fits all may work sometimes but custom-fit is preferred always. When you know each customers communication style, you can easily structure your approach and message in a way that appeals to them. This will raise their level of interest and engagement.
  3. Customers will like talking to customer service. Now that you know the communication style of each customer and employee ? you can match them.? Imagine if each time a customer call or email came in, it was automatically routed to an employee with a similar communication style. The result is a more productive and comfortable conversation. This is a great way to make your customers feel more connected to your team and therefore your business.
  4. You can make workflow management work for each customer. Setting up workflow processes can be a guessing game. Should leads receive monthly calls from the sales team or a marketing email each week? When you know the service preferences of each customer you can say goodbye to guesswork because workflow guidelines for each of the 4 communication styles have already been defined. Allocate your time and money to the most effective strategies for each.
  5. You can market intelligently. As someone who is passionate about marketing and advertising, I have always had an appreciation for businesses that make an effort to truly understand their customers as the customer will be better served as a result.

    Communication DNA: Customize Your Messaging
    The more clarity you get on what matters to your customers, the easier it is to design, develop and position targeted marketing messages and advertising campaigns. So as you uncover behavioral information about your customers, systematically apply it to each level of your marketing programs. This includes simple segmentation for email campaign lists, customization of email templates and an overall measurable improvement in your marketing performance.

What are your top reasons for understanding customer communication styles?

To learn more about customer engagement with Communication DNA, click here. Contact us to get started at

If you are a current Salesforce CRM customer, Communication DNA is also available in the Salesforce Appexchange.

New Leadership Communication

The topic of employee engagement is getting increased focus, and this trend will intensify in the future. The rules for leadership communication have changed. Harvard Business School Research shows that 92% of companies agree that the practice of internal communication has undergone a lot of change in their organizations. To learn more visit HBR blog or read: Talk, Inc.: How Trusted Leaders Use Conversation to Power Their Organizations (HBR Press, 2012).

leadership performance, engaging customers, managing talent, improving busness performance

In todays world where results must be better balanced with relationships and emotional connection, top-down one way communication from the leadership does not work. Our corporate research is showing that out of touch and closed leadership is not accepted. So, what this means is that the communication has to become more customized to who each person is behaviorally. Further, the communication must be more open conversation style. Through all this the company message has to be told and repeated along with goal clarity. Reiterating, this must happen in the context of who each employee is. The leaders must adapt their style.

How do you do that? The key is the business must know the behavioral style of each employee and build that into its systems at all levels, and make open communication a culture.

Learn more about how you can engage your employees on their terms.

Mind the Gap: Patterns of Communication Directly Linked to Team Success

Why do some teams get excellent results while others seem to struggle? In order to answer that question, most leaders will focus on analyzing the metrics such as sales, number of office visits, average call handling time, and number of issues resolved, to understand the performance gap.? While the numbers can provide the bottom line story that CEOs want to hear, the how of getting to a high level of team performance might surprise you.
DNA Talent Management
Researchers at MITs Human Dynamics Laboratory found patterns of communication to be the most important predictor of a teams success.? Not only that, but they are as significant as all the other factors – individual intelligence, personality, skill, and the substance of discussions – combined!

The best predictors of productivity are a teams energy and engagement outside of formal meetings. Together, these two explained one-third of the variations in dollar productivity among groups!

What behavior performance gaps are holding back your sales team or service centers from increased revenue and productivity? How can you identify the communication styles of your team to guarantee more success?? Find out your communication style.