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Do You Really Know What’s Scaring Your Clients? Do They?

August 14, 2015

This week, we hear from Stein Olavsrud, portfolio manager at FBB Capital Partners, a wealth-advice firm in Bethesda, Md. Olavsrud tells of a client whose initial complaint turned out to be a bit of a red herring.

A few years ago, I met with a prospective client who was looking for a new advisor. I learned from her that she’d had a negative experience with a previous advisor and was looking for something quite different. She told me she was interviewing a number of advisors, looking for a better fit.

As I see it, those initial conversations serve a dual purpose. The prospect is trying to determine whether our firm is a good fit for her, while at the same time we are trying to figure out whether the client is a good match for us. In this case, I became concerned when the prospect began asking many questions about her portfolio’s performance.

Generally speaking, people who have a laser focus on performance aren’t a great fit for our firm. We offer so much more than just portfolio return, and our most fruitful client relationships tend to be with people who appreciate that. But instead of saying anything, I remained mostly quiet and let her lead the conversation.

In a short time, I realized that my initial impression of her had been mistaken. It wasn’t that she was obsessed with performance. Instead, her concerns were much broader. But because she wasn’t well versed in financial subjects, she didn’t know how to express broader concerns about her goals and needs.

Questioning her portfolio’s “performance” was actually just a shorthand way of saying her current advisor wasn’t communicating with her very well. Rather than explaining his decisions to her, he got defensive when she asked questions. That resulted in her feeling uncertain as to whether her portfolio was set up to meet her needs.

I try to practice the 70/30 principle — that is, let the client talk 70% of the time. That can be hard for advisors to do, especially when a client seems frustrated or confused. We want to provide answers and show off our expertise. But in order to truly help the client, we need to understand what her concerns really are. That requires letting the client express herself.

Sometimes clients themselves won’t even know how to articulate their underlying concerns or issues right away. By asking open-ended questions and letting them talk — and by truly listening, not just planning what you’re going to say next — you can better get to the bottom of what’s really going on.

This prospect indeed ended up becoming a client. We’ve had a fabulous relationship over the past few years — she’s even referred her sister and some friends to us. By listening to her in that first meeting, I took the first step to establishing trust and open communication. That turned out to be what she was really asking about when she brought up “performance.” But if I hadn’t been listening, I never would’ve known that.