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When you’re looking for ways to better communicate ...

December 29, 2017

When you want to build stronger relationships with your clients, communication is key. Here’s our 2017 top tips for better communication, written by your peers.

When clients head down the wrong path …

… how do you steer them back? Martin Buchanan of Buchanan Capital Management, once had a client issue come back to haunt him — and it convinced him to take a stronger tack with certain clients going forward.

He’d recommended that a recently divorced client roll her share of her ex’s 401(k) into an IRA and start making monthly contributions to reach the maximum allowable contribution. But she made it clear she preferred the money in her pocket, and Buchanan was reluctant to press; he was young and didn’t want to lose the account. Buchanan resigned himself to managing her IRA as a lump-sum investment.

For many years the client would not contribute to her IRA – during which Buchanan had moved to a HNW firm and couldn’t bring her along as a client. Eventually, after she had returned to Buchanan as a client for a few years, she became concerned about her financial position. Another divorce was imminent and she wanted to ensure her assets were in line with her retirement goals.

After running the reports, it was apparent she wasn’t in the financial shape she had hoped, and told Buchanan she was disappointed he hadn’t been more persistent about IRA contributions.

“She was blaming me for her disappointing financial situation,” says Buchanan.

There had been large blocks of time when she wasn’t his client but she insisted she should have started contributing years ago, when Buchanan had first met her.

“It stung to admit, but she was right,” says Buchanan.

Going through that experience changed his practice forever. He never wanted such a situation to happen again.

Martin Buchanan

“I realized I should have asked her some tough questions about why she refused to discuss her IRA and pushed back on her desire to forgo funding.”

It’s not easy to confront clients with uncomfortable truths, and it’s not easy pressing them for information. For whatever reasons, some clients are reluctant to divulge all pertinent information about their finances. But that doesn’t cut it, says Buchanan. He learned that to fully support his clients, he needed not only to ask the tough questions, but also to push for actual answers. “I’ve come to realize that when clients are reticent to share all information, they may not believe it is necessary — which presents an opportunity for education — or they may not fully trust me yet — which is an opportunity for some relationship building.”

Don’t be shy telling clients what you expect from them …

… if they’re not willing to follow your advice, you won’t be a good fit for them, says Larry Ginsburg, owner of Ginsburg Financial Advisors.

When Ginsburg first started out as an advisor, he says he’d take anyone on as a client. When he once heard an advisor talk about her process for firing clients, he was stunned.

But 17 years later Ginsburg had some clients who made work difficult, and he decided to evaluate his entire book for clients unpleasant to work with.

Some of Ginsburg’s most difficult clients had a lot of money under management with him, but they also took up a lot of resources.

“My evaluation showed they were 9% of my revenue but used 60% of my service time,” so Ginsburg called each one and arranged to find another home for their accounts.

When one client – who had a tendency to nitpick everything the FA did but was nonetheless a good client – asked if he was being kept, Ginsburg responded flippantly, “Well, there are really only two criteria for keeping my clients. The first one is that clients need to be good to me, and good to my staff. The second, they have to do what I tell them.”

Ginsburg was surprised by the client’s response: “Am I doing enough of what you want?”

The client cared about meeting Ginsburg’s expectations just as much as Ginsburg cared about meeting his client's expectations.

Larry Ginsburg

“Even though I had had some difficulties with this client before, I had never sat him down and had a frank, direct conversation about it,” says Ginsburg. “At that moment I realized I had made a huge mistake by not being more direct with my clients about their end of the relationship. I hadn’t been telling them what they needed to hear when they needed to hear it, whether they liked it or not.”

From then on, Ginsburg’s “flippant” comment became the positioning he used to talk about his work with prospective clients: “Now I tell prospects that we have only one rule in our business: We are going to tell you what you need to hear, whether you like it or not. Our job is to help you make good decisions, and if you’re not willing to follow our advice, then we’re not going to be a good fit for you.”

Tell your clients what they’re doing right …

… focus on what’s already good, not just what needs improvement, recommends independent financial planner Catherine Hawley.

Earlier this year Hawley met with a couple for the first time. They were in their late thirties with two children. One of the first things they told her was that they had been so busy with their lives and careers they hadn’t really explored investment opportunities. They had a small 401(k) but had just chosen the default option. They felt behind schedule.

Their lack of investments was clearly a point of discomfort for them; Hawley could tell from their body language they felt some tension even bringing it up. But when she reviewed the other aspects of their financial lives Hawley saw they were in much better shape than they thought. Especially compared to many people with significant mortgage or debt payments, they were actually ahead in many respects.

“When I told them this I could see them both visibly relax,” says Hawley. “After I had taken the time to point out what they had done right, the rest of the conversation proceeded smoothly.”

Catherine Hawley

As advisors, it’s easy to get caught up in telling clients what they can do to improve their financial lives – that’s where an advisor’s value-add comes from, after all.

“We want our clients to make better decisions with our help. But this experience made me realize that when we only focus on what could be better, we miss an opportunity to connect with our clients by telling them what they’re already doing right,” says Hawley. “Since then, I’ve made a point to talk to clients not only about areas that need improvement or important action steps for us to take, but also to find something they’re already doing right.”

Finally, talk less …

… and listen more, insists Irene Dabanian, principal of IJD Evergreen Financial Services, who has learned to bite her tongue and let clients talk about what matters most to them.

In 2003, not long after she started out as an advisor, Dabanian met with a potential client who was facing a lot of financial stress. The prospect was a single woman in her forties who’d recently switched jobs, making less than she used to but hadn’t adjusted her spending to fit. She also had a lot of consumer debt.

“It was clear to me she needed to make a big change. So, I blurted out that she needed to sell her house. Pretty much right away,” says Dabanian.

The prospect didn’t respond well to this suggestion, telling Dabanian that selling the house wasn’t an option.

“But when I tried to explore other options with her she was reluctant to discuss those as well,” says Dabanian. “It was clear I’d overstepped a boundary in her eyes, and she ended up choosing another advisor.”

Afterward, Dabanian reflected on the interaction. What Dabanian had told the prospect wasn’t false.

“Where I had gone wrong was in failing to allow her to come to that conclusion with me. From her perspective, I was a stranger ordering her to do something painful. It was no wonder she didn’t want to work with me,” says Dabanian, who promised herself that from then on, when she met prospects for the first time, she’d do more listening and let clients reveal their stories at their own pace.

Irene Dabanian

Not everyone will share intimate details of their lives right after you meet them, but if you ask questions and give them a chance, they’re a lot more likely to open up.

“The way to earn their trust is to listen to what they tell you in a nonjudgmental way,” says Dabanian. “Then, when you feel comfortable with each other, you can start to have discussions about making big decisions — whether that means selling their house or creating an estate plan that benefits their grandchildren.”