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The Dangers of Not Individualizing Client Advice

By Crucial Clips     April 10, 2019
The following text is a transcript of a portion of a speaker's presentation made at an industry conference or during an interview. This transcript solely represents the view of the individual who spoke, and not the view of Financial Advisor IQ or any other group.
Source: FAIQ Schwab Impact Conference, Oct. 30, 2018 

GARRETT KEYES: My name is Garrett Keyes. I’m a reporter for Financial Advisor IQ, and I’m here today at the Schwab Impact Conference with Mike Van Wyk, Vice President of Customer Research for Capital Group.

What dangers exist for advisors that don’t individualize their advice for generations, and just kind of broadly treat all clients as the same?

MIKE VAN WYK: I think one of the biggest dangers is that secrets start to emerge, and it isn’t something that an investor would necessary think of as a secret. It’s just something that’s not getting expressed within the relationship. Examples would be an investor who is looking to make investment choices by themselves, and increasingly exploring their own investing expertise by putting what would initially start as small portions of money onto personal investing platforms to see how well they can do it by themselves, and then not talking with their advisors about it.

A lot of times they’re just doing that to experiment, and they’re doing that to test their own skills. And they would offer it up if the advisor asked, but the advisors aren’t necessarily probing on how their interests have changed and therefore it’s not coming up. And it can create a risk over time if that investor continues to experiment on their own and begin to think that maybe they can do this entirely on their own, and then start to distance themselves from the relationship.

GARRETT KEYES: So are you saying that advisors should work to cut out the secrets between themselves and their clients?

MIKE VAN WYK: Yes, for sure. And again, what I’d say is, it’s not necessarily seen on the part of investor that they’re holding secrets. It’s just that they haven’t been asked to share some of the things that are happening and changing in terms their own motivations, and in terms of their own needs. So what I would suggest that the advisors do is simply ask what their goals are. I’ve actually phrased it a specific way: 'What are your goals for the relationship that we have together as we work to meet your financial needs?' And give them that context into which the investor can share openly some of the goals that they have, and how they’re approaching those goals in whatever stage of life they’re in.

GARRETT KEYES: Thank you for speaking with me today, Mike, I appreciate it.

MIKE VAN WYK: Thank you for having me.