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FAs Urged to Treat Client Interactions Like Negotiations

July 20, 2016

Almost every interaction between financial advisors and their clients is a negotiation, an alternative dispute resolution specialist tells ThinkAdvisor.

Mastering techniques of negotiation, he says, can gain advisors their clients’ trust and increase their powers of persuasion, according to the web publication.

But the key to successful negotiation is a collaborative approach, Raphael Lapin, a Harvard-trained communications expert and former rabbi, tells ThinkAdvisor.

An advisor’s power arises from treating clients as partners rather than just trying to pitch at them and getting to the root of the clients’ goals and concerns, according to Lapin.

Lapin also warns advisors against prematurely proposing investments before getting to know the client because such behavior may cause what he calls “reactive devaluation” on the part of the client. Pitching clients before adequately knowing them has the potential to derail the trust advisors should be able to establish if they build a relationship first, ThinkAdvisor writes.

To achieve the appropriate level of trust, advisors need to probe deeply and then demonstrate their understanding of the client’s concerns, continually checking for accuracy and in turn ensuring the client is receptive when it’s time to make and fine-tune a proposal, Lapin tells the publication.

Asking pointed questions about the client’s frustrations and anxieties helps both the advisor and the client focus on objectives, he says. The key is “good questions and active listening,” he tells ThinkAdvisor.

Advisors also need to make room to understand a client’s emotions, even though – or especially because – emotions can be a barrier to productive negotiation, Lapin tells the web publication. Expressing emotions and voicing concerns and reservations are “crucial” for a working relationship, he says. Without acknowledging emotions, they’re going to get in the way, Lapin tells ThinkAdvisor.

But if a client starts rambling, Lapin says an advisor needs to change strategies by using closed-ended questions – questions that can only return a yes or no answer — to interrupt the rambling and take the conversation in a productive direction again, the web publication writes.

By Alex Padalka
  • To read the ThinkAdvisor article cited in this story, click here.