‘Effective Communication’ Archive
Stop Educating Clients
This idea that the purpose of financial advisors is to educate their clients is a fundamental error in our industry. As a financial professional, you need to focus on getting them results, not information.
Would most people you know rather pay for education or results?
We now have a house with a pool, and there’s a fellow we’ve hired to take care of the water and cleaning and other pool maintenance. If something is wrong, I just leave him a note about whatever I’ve noticed that needs to be fixed. Can you imagine if he were to knock on the sliding glass door to my office, which overlooks the pool, and say, “Hey, Bill! Come on out here and let me show you what I’m doing. I want to explain how I’m going to balance the chlorine in the water.”
Why would I want to know that? I just want my pool to be clean, safe, and comfortable for swimming whenever I or guests decide to get in it. I don’t want to think about chemistry, much less spend time getting “educated” by my pool guy on something that I couldn’t care less about.
This is not unlike those people who try to “add value” by explaining Modern Portfolio Theory or any number of other technical aspects of financial planning to clients or prospective clients. Can I really compare being a financial advisor to the pool guy? Yes, absolutely. You’re just more highly compensated because you do a more important job. But it’s the same in concept.
What value do you really provide?
Consider this. I cycle with a recently retired professor who’s made a name for himself as the author of college textbooks. He’s written more than 20 bestsellers on subjects such as personal financial planning, fundamentals of investing, corporate finance, and so on.
In fact, he gave me a few of his books not too long ago. They’re impressive tomes, complete with software and website support. The books are filled with theory, practice, case studies, study guides, plus comprehension and retention tests.
My point? If you were going to really educate someone about financial planning, you’d be using a textbook like this. This is where serious students go to learn. Serious students aren’t learning about finance from Money magazine and chats with their financial professionals. (Incidentally, the financial media aren’t in the business of educating, either; they’re in the business of marketing magazines.)
I’ve been in this business for my entire career, and I’ve never seen anybody who advocates educating clients actually test for retention. So let’s call it what it really is: It’s education used as a sales tool. Let’s call it “edu-sell.” If we were really going to educate people, we’d be using textbooks, testing, and the rest.
Just so we’re clear: The book my professor friend wrote on financial planning is 685 pages, printed in small type on ultra-thin paper. That book is heavy! How many of your clients do you think would like to haul this book around in a backpack, study it for hours on end, and take all the tests? (Now, that’s just personal financial planning. Next up: Let’s talk about investing! This book, with similar typestyle and kind of paper is 718 pages.)
The beauty of a relationship with a financial advisor is that without having to read all this, learn it, pass the tests, and then implement it, your clients can get the benefit of all this knowledge.
You may be reading this and thinking, “Well, how are they getting the benefit? Cuz I don’t know all that stuff, either.”
How do I know that? I’ve spent my life with financial advisors, and I’m well aware of how little we know. What do we know about investing? Definitely not as much as a professional money manger. They’re the ones who, when they were in college, actually liked the classes with these monster textbooks. They’re the reason you don’t have to know all of it, either.
However, I do suggest you buy these books. Go to www.swlearning.com, and acquire at least the ones on personal financial planning and investing. And here’s how you may want to use them: If you have a client who insists on being educated, you produce the book and say, “This is the best-selling college textbook on personal financial planning, and you can’t have my copy; however, I invite you to buy your own, read it, study it, and take the tests. About the time you’re ready to retire, you should have learned what you need to know to start implementing this stuff.”
You can do this seriously, or do it like I would, with a little levity: “Oh, and by the way, when you’re done with that one, here’s what you’ll need to know to handle your investing.” Produce the 718-page volume with a flourish.
Then pull out the CCHs for taxes and drop them on the desk. Boom! “You’ll need to keep up with this every year because it changes all the time. And this is what you’ll need to know about long-term care. Here’s the book on disability … homeowner’s … long-term care … Or you can harness through me all the experts who know what you need to do because they’ve already learned all this stuff.”
The point is that you’re in the business of helping people get results. If it’s education they want, then they should go to school. If it’s results they want, they can get that through you. That’s the purpose of a financial professional. That’s how you help your clients.
Don’t be a salesperson. Be a Trusted Advisor.
3 Ways to Earn Your Clients’ Trust (Part 3 of 3)
3. Tell the Hard Truth
If your clients don’t defer to your authority and expertise, there’s a good reason, and it’s not them. Chances are, it’s because you’re behaving like a salesperson. Instead of communicating with conviction and earning your clients’ respect, you’re following the old “customer is always right” mentality. Even though your clients may have little or no financial expertise, you defer to them rather than take the chance of upsetting them and jeopardizing your insurance or mutual fund sale.
I spend a lot of time coaching my Trusted Advisors to tell the truth and be direct. At first, many argue, “I’m afraid of how clients will respond if I tell the truth.” I understand that. However, if you want to be a Trusted Advisor, you have to tell the truth—even when the consequences are less than desirable. Think about it this way: If you tell people the truth and they respond poorly, do you really want them as clients? Most people appreciate and respond positively to the truth; honest communication is a cornerstone for building trust.
3 Ways to Earn Your Clients’ Trust (Part 2 of 3)
2. Ask Better Questions
Have you ever noticed that most people would rather talk about themselves than listen to you talk about yourself? If you want to build a high-trust relationship, shallow chitchat or talking about your credentials won’t do it. You need to talk about what’s meaningful, important, significant, and compelling to that person. One of the best things you can do to prepare for that kind of conversation is to gather information in advance. Anytime someone refers a potential new client to you, ask the referring person questions that will lead to meaningful, important, significant, and compelling information. Find out as much as you can about your prospects: What are their values, interests, passions, and goals? What do they do for fun? Who do they care about most? When clients or prospects see the connection between the value you bring and what’s most important to them, they tend to respond positively. In the process, you lay the foundation for a long-lasting, high-trust relationship with the people you truly want as clients.
3 Ways to Earn Your Clients’ Trust (Part 1 of 3)
How do you become a Trusted Advisor? You start by earning people’s trust, which you can easily do by following these three steps: Communicate with conviction, ask better questions, and tell the hard truth.
1. Communicate with Conviction
Have you earned the right to expect people to follow your advice and respond to your authority? No one will give you that authority unless you first believe you deserve it. If you show up in the marketplace assuming that you’re not going to be trusted and people aren’t going to respond to your authority or advice, it becomes a self-fulfilling prophecy. The result is a collaborative environment where the client directs you instead of following your advice.
I often see clients or prospects who strongly believe that they know what they’re doing. Others think, “It’s my money, so I should be in charge.” There’s certainly some truth in that, but unless they’ve dedicated themselves to becoming financial experts, they should find somebody smarter than themselves and defer to that person’s expertise. Unfortunately, many financial advisors don’t convey the impression that they really are more competent or knowledgeable than their potential clients and prospects. Therefore, people don’t defer to them.
To become a Trusted Advisor and have people defer their financial decisions to you, your clients need to think, “I trust you and I believe you have my best interests at heart. I also trust that you’re competent enough and, between the two of us, you know better.” There’s nothing wrong with a client questioning your authority, but at some point all clients want to find an advisor they can trust. Deep down inside, they want you to tell them what to do. If they can trust you, they’ll do it. If they can’t trust you, they’ll find someone else. That’s why so many people have more than one advisor—they don’t completely trust any of them. Communicate with conviction, and you’ll earn your clients’ trust as well as all of their business.
Just tell the truth.
What should you tell the client who wants to be educated or wants to dictate how the relationship should work instead of trusting you to do your job?
Just tell the truth.
Tell the client, “That’s not the basis of our relationship. There are a dozen people who are going to contribute to your financial plan and I can’t possibly be expected to know everything they know. The basis of our relationship is for me to understand YOU. It’s my job to understand your current financial situation, your goals, and what is truly important to you (your core values). Then I orchestrate the creation of a comprehensive financial plan that involves the collective wisdom and expertise of an entire team of professionals. This brings to bear virtually hundreds of years of experience to develop the best advice for you. Then it’s my job to hold you accountable to implement this advice over time, which will give you the highest probability to achieve your goals for the reasons that are important to you. We’ll meet once per quarter to provide you with progress updates, make appropriate adjustments so you achieve your goals, and ensure that you are doing your part to get where you want to be. Is this the kind of relationship you’d like to have with a financial advisor and his or her team?”
Fiduciary Standard?
The headline reads: “Wall Street wins big as Dodd drops fiduciary provision.” And the first line of that article is “Chalk it up as a win for the securities and insurance industries.” How do the securities and insurance industries win when the client loses? It’s a fascinating way to view the world, but not surprising. Here’s my translation: “the lower the standards the easier it is for us to manage our advisors, salespeople, and agents.” It’s the usual product-oriented, fear-based thinking from our industry at-large and it proves, once again, that you have a competitive advantage as an individual Trusted Advisor who chooses to put the client first. Can you believe what you just read; you have a competitive advantage by putting the client first? Yes, you do. Doesn’t everyone put the client first? Apparently not. Amazingly enough, our industry considers it a win when they don’t have to adopt the highest standard of care for their clients. Wow.
Here’s what Wikipedia has to say about Fiduciary:
“A fiduciary duty is a legal or ethical relationship of confidence or trust between two or more parties, most commonly a fiduciary and a principal. In a fiduciary relation, one person, in a position of vulnerability, justifiably reposes confidence, good faith, reliance and trust in another whose aid, advice or protection is sought in some matter. In such a relation good conscience requires one to act at all times for the sole benefit and interests of another, with loyalty to those interests.
A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.
A fiduciary duty is the highest standard of care at either equity or law. A fiduciary is expected to be extremely loyal to the person to whom he owes the duty (the ‘principal’): he must not put his personal interests before the duty, and must not profit from his position as a fiduciary, unless the principal consents. The word itself comes originally from the Latin fides, meaning faith, and fiducia, trust.”
Sounds like the perfect standard for the kind of advisor you are choosing to be. What do you think?
What's new in building high-trust client relationships?
Over the years, 20+ now, I’ve studied a lot, taught a lot, and written a lot about building high-trust client relationships. Lately I’ve found myself saying to our core group of committed advisors who implement the Values-Based Financial Planning™ turn-key business model that, “trust is not the objective, trust is a by-product of the other things that you do, like your behavior, your communication, and the quality of your work.”
I’ve come to believe that if gaining your clients trust is your objective then the focus is on the wrong place: you. When, of course, the focus should be on them. When your goal is to establish trust it might be to further your agenda, like, “I have to get them to trust me… so they hire me… so they give me assets… so they buy my product or idea, etc, etc. etc.”
Consider this point of view instead: “I am going to show up relaxed, be authentic, behave with an extremely high level of professionalism, skillfully execute my process for creating a great client interview experience or progress meeting experience, ask great questions, listen with empathy, be well-organized , be respectful of their time by not bragging about myself or my company or boring them with over-explanations of financial concepts and ideas, and be selective about only letting the truly right-fit people join my community of Ideal Clients. And if, in the process of behaving this way, they trust me and hire me, fine. If not, that’s okay too.”
Some advisors try to force things to happen with everyone they meet by using sales, influence, or persuasion tactics to “close the deal.” This is akin to a woman desperately seeking a husband because her “biological clock is ticking” instead of looking for the right partner with similar goals and values who is best suited for the two them to create a life together of happiness and fulfillment.
I’m in the business of helping successful advisors double-quadruple their business revenue in 4 years or less, so what I’m writing about here is not purely altruistic. You may be concerned that “relaxing” or abandoning a more intense sales focus will diminish your results. Actually, the contrary is true. Which “way of being” do you think is more likely to attract successful people to want to become your clients, the relaxed Trusted Advisor or the intense salesperson? Relaxed doesn’t mean wishy-washy or lacking in passion for helping people make smart choices about their money. It means that you don’t show up with what we used to call “commission breath.”
Think of each client relationship more like a professional marriage. The objectives are for them to have the best possible experience, whether they become a client or not, and for only the “right-fits” to become clients.
Here are a few time-tested ideas for behaving in ways that create the by-product of trust and a few thoughts about not-to-do behaviors that erode trust.
1 Look for “right fit” people to join your client community versus a “they have money therefore I want them” mentality. Create an Ideal Client Profile where the personality element of the people you meet is equally important to the money element in order for them to earn an invitation to join your client community. Notice the difference in how it feels to think of inviting people to do business with you versus “closing the deal.”
2 Ask good questions.
- Values (What’s important about money to you?)
- Goals (What are your tangible goals that require money and planning to achieve? How much do you want to have for that goal? By when? What are two or three words that describe what you are thinking and feeling once you have achieved that goal?)
- Does the idea of having a comprehensive financial plan which gives you a higher probability of achieving your goals and fulfilling your values appeal to you?
- Would you like to join our client community and have us do this work for you?
3 Listen with empathy. The tendency, especially during an initial client interview with people you may have never met face-to-face, is to think more about what you are going to say next while they are answering your questions. When you do this you don’t really hear what they said, therefore it’s hard to be empathetic to things you weren’t fully present, mentally, to hear. The solution is to have your questions memorized so you don’t have to think about what you are going to ask next, thus allowing you to be fully present and a much more empathic listener.
4 Record your client meetings, especially the initial client interview. I’ve written in this magazine before about recording client meetings and to save you the trouble of searching back issues here’s a script for introducing the recorder. “I appreciate the investment of time and effort you made to be here today. The fact that you have done so tells me that you must be serious about your money, is that true? (pause for answer) You’ll notice that I’ll ask many relevant questions, take copious notes, and I also record the meeting. (refer to the recorder and pause) The reason I record is because I’m very thorough. (pause) Do you know how you can watch a movie a second or third time and see things you missed the first time?” (Nice long pause for them to respond.) “Well giving you advice about your money so you can achieve your goals is obviously much more important than a movie, so I want to make sure our advice is right for you. If we choose to work together, I’ll listen to this recording at least one more time to make sure to get it right. ” (pause) Ask your first question. (See “ask good questions” above)
5 Give advice with conviction. Salespeople tend to offer alternatives and let the prospect or client choose. Trusted Advisors gather all the information they need, consult with other experts where appropriate, and give the best advice for the client… with conviction. There may be more than one way to achieve a goal, but there is only one best way. Find the best way and give advice with conviction.
6 Tell the truth even if doing so jeopardizes the relationship. Serious and successful people don’t want to pay good money for a rubber-stamp, yes-person kissing their butts and telling them only what they want to hear. It’s your job to tell the truth, especially when it’s what they need to hear and not what they want to hear.
7 Avoid direct statements or indirect implications that you can do the impossible. Ie: beat the market. The primary determinant of a person achieving their goals is their own behavior. Your job is much more about managing your clients’ choices and actions than it is about managing their money. The bottom line is that there is no guarantee of anything. The best you can do is to help people get their entire financial house in order, make the best choices possible at the time, and be in the strongest position possible to adapt to whatever non-controllable events occur. The less you play the predict-the-future game the more credible you are.
8 Be inspiring. Focus on helping clients and prospective clients create a compelling vision for their future and become their bridge to make it happen. Being a future vision creator is much more trust-building than being a problem-solver.
9 Avoid the use of the old-school greed appeal: “work with me and you’ll get a better return because our guru has a better beat the market black box.”
10 Avoid the use of the old-school fear tactic: “buy gold (or whatever) now because the big deficits and weak dollar mean inevitable inflation coming to erode your buying power! You could outlive your money and end up a burden to your family, living off community hand-outs, or on the government dole. How would that make you feel?”
11 Be a comprehensive financial professional. It’s interesting that most financial advisors claim to be comprehensive. But what does that really mean? What is “comprehensive financial services?” At the very least, comprehensive implies “everything.” Do you really help your clients take care of everything related to their money? How many things is that? I know of one advisor who has done such a great job of defining comprehensive financial services that many advisors look to him for leadership on this subject. Check out www.trustedadvisortoolkit.com for the best information I know of about delivering truly comprehensive financial services.
12 Put the client first. Duh. I know. It sounds almost silly and certainly cliché. And yet there is a lot of discussion and controversy by the regulators and industry leaders about the fiduciary standard. Am I the only one who finds it absurd that legislation is necessary for our industry to step up and adopt a fiduciary standard? Isn’t that simply always, in all situations, and under all circumstances putting your client’s needs ahead of your own? Isn’t that what you already do? Do you really need a law about that? Apparently the industry does. The good news is that your competition needs somebody else to define integrity for them. And speaking of integrity…
13 Have no conflicts of interest. Notice I didn’t say “disclose conflicts of interest.” Run your business without any conflicts of interest. Why should there be any conflicts of interest to disclose?
Keep in mind that these are not “tactics” to build trust. These are the powerful behaviors of financial professionals who are very good at what they do and who genuinely care about helping people get their financial house in order, achieve their goals, and fulfill their values. By behaving at this very high level of professionalism trust is the by-product of that behavior.
The bottom line is that you can’t “technique” your way to trust. You earn it by who you are and what you do.
How to earn more money and lead a simpler life – Part 2
In the previous blog, I mentioned that I have identified 12 clear choices that are turning points in the careers of virtually every financial professional. Every producer makes these choices either deliberately or by default. Six of these are best presented as positive choices that consistently lead to greater success (these were mentioned in the previous blog) and six of these choices are best presented as commonly unmade choices that lead to failure, or worse: mediocrity.
Here are the 6 choices never made or not made soon enough:
1. Failure to recognize that what got you from where you were to where you are today may not be the best way to get from where you are today to where you want to be in the future. (Failure to change.)
Do you believe that the industry legends would do the same things they did in the 40s, 50s, 60s, 70s, or 80s today? Their genius was not in what they did then. Their genius was their ability to figure out what worked at whatever time they needed it.
2. Failure to implement well.
Will Rogers once said, “Even if you’re on the right track you will still get run over if you just sit there.” There are no secrets in business.
3. Failure to master the referral interview. (Training your clients to do all your sales and marketing.)
All prospecting and marketing other than referrals should be temporary. Prospecting and marketing is what some people who have no clients or no natural market have to do to get started. Unfortunately, some producers get so good at it that they just keep doing it forever.
4. Failure to master the art of delegation.
My mentor said, “I’m very good at what I do because I only do what I am very good at?” If you are only going to do what you are very good at then you have to hire people who are very good at the other things. Hiring well and delegating is a skill that all serious business people must develop.
5. Failure to align your choices and your target market with your values.
I am not a teacher of target marketing, but I have been a pretty good student. One of the key decisions that I believe was instrumental to the success I enjoy today was the choice to make the financial services industries my exclusive target market. It wasn’t an easy decision to be industry-specific, but it was one of my best.
6. Failure to write your book.
Are you currently writing a book? Have you ever thought it would be a good idea? Have you ever read a book on money or insurance and said, “I could have written that?”
Simply rate yourself on a scale of 1-10 in each of the 6 areas above and then begin to make incremental improvements. Be honest with yourself and make a commitment to make the choices that will propel you to your highest level of success.
"Talking the Talk"
Bob Veres commented on Bill’s November article in FA Magazine: “Bachrach says that the important part of the communication process is not the data, it is the validation of the individual client sitting across the desk from you. Those communication skills are the key to whether clients or prospects trust you and whether they follow your advice. From there, he offers some quotes from communication gurus.” Bert Decker, author of You’ve Got To Be Believed To Be Heard, says that the quality of your communication determines the quality of your life. Patricia Fripp says that “Specificity leads to credibility.” (In other words, don’t use words like “stuff” for the actual word you’re searching for, or words like “kinda” and “sorta.” Motivational speaker Giovanni LIvera says “When you connect people to their heart, you connect them to you.”
Dianna Booher, author of Voices of Authority and Communicate With Confidence says that the truth, the whole truth, and nothing but the truth should not be three separate things. The truth should not include spin, hype, exaggeration or embellishment.
“Bachrach suggests that you review the script for your meetings (do you have a script?), and see if you’re asking purposeful questions and listening with empathy. Is the conversation valuable for the client? He says the most successful communicators will record their meetings with clients with digital hand-held recorders.” (Financial Advisor Magazine, November 2009 issue – p. 48)
To read the article: “Talking the Talk” published in the Financial Advisor, November 2009, go to:
http://www.fa-mag.com/component/content/article/4618.html?issue=115&magazineID=1&Itemid=73
Is a Picture Worth a Thousand Words?
Larry is early in his Values-Based Financial Planning™ Journey building his Ideal Client Community and he wanted my point of view about the benefits for clients or potential clients in creating their Financial Road Map®. Whether you are new to the Values-Based Financial Planning™ journey or a veteran you will appreciate my response to Larry.
First, for the clients, they LOVE the Financial Road Map®! It’s big, colorful, and visual. Yes, a picture is worth a thousand words… maybe more. The Financial Road Map® takes what’s most important to them and puts it on one single piece of paper in a way that is aligned with the flow of time. Husbands and wives see their values side-by-side on the values staircases, their goals are clearly defined with target dates, specific amounts of money, and the positive reasons these goals are a priority have been expressed. Also, there is simple summary of their current financial reality.
Once equipped with a Financial Road Map®, most people feel as though they have never been better equipped to make smart choices about their money so they can achieve their goals and fulfill their values.
A visual tool, like the Financial Road Map®, is very important because most Financial Advisors are much too linear and tend to way, way… WAY over-explain financial concepts, financial products, and financial services. The Financial Road Map® makes the whole idea of having a financial plan and a relationship with a Trusted Advisor, to create and implement that plan, much easier to understand —- for the client.
When I wrote the Values-Based Financial Planning™ book I asked the practitioners of Values-Based Financial Planning™ to ask their clients to describe their experience with the Financial Road Map®, some of which were published in the book. Comments like this one from Jerry Mercer were common, “The Financial Road Map® concept is ideal for the serious investor. Being able to compare our holdings with our needs has led my wife, Ruth, and I to a financial plan that gives us peace of mind and maximum control of our funds. Our Financial Road Map® is a terrific tool for managing our future.”
The clients love the Financial Road Map® and so do Advisors who learn to facilitate the quality experience described above. What’s in it for you?
Delivering the Financial Road Map® experience gives you a process to make a strong human connection in less than an hour. During the Financial Road Map® interview your prospective clients talk for most of that hour giving you the opportunity to make an intelligent choice about whether or not you want to invite them to join your Ideal Client Community. Done properly, they learn that you really care about them as humans and that you are trustworthy.
This is very important because a huge career mistake made by most Financial Advisors is not being more discriminating about who they accept as clients in the first place. Most Financial Advisors end up, after years of working hard to build a business, with only a handful of truly Ideal Clients. We call this a dumb business. Look at the cold hard facts of life for most Financial Advisors, even before the recent economic problems: they work too many hours, for not enough money, with too much liability for the reward. This is at the root of why so many who enter the financial services business fail and most who “make it” past the first several years look a lot more like mediocrity than success.
How much more successful would you be if you were skilled at conducting an interview where, in less than an hour, people hire you to write a plan, want you to be their Advisor for all of their financial affairs, entrust you with all of their money, act on your advice, and refer you to others for the same service?
That’s the impact the Financial Road Map® is having for other Financial Advisors and it can do the same for you.
Using the Financial Road Map® and building an Ideal Client Community by referral only on the Values-Based Financial Planning™ platform will enable you to have your Ideal Life in 4 years or less. It’s the ultimate client-centered win / win and it’s how we train Financial Advisors to build an Ideal Client Community by referral only in 4 years or less.
If you have not done so already, contact us to schedule your complimentary Success Road Map interview with one of our Accountability Coaches today.
Remember, it’s a great time to be a Financial Advisor!
