/ by Don Connelly / Managing the Relationship / 0 comments
The widely studied field of behavioral finance has firmly established that many investors’ mistakes can be attributed to their emotions, which can cloud their judgment and overpower their patience and discipline. Ben Graham, arguably one of the best investors of all time, said, “The investor’s chief problem—even his worst enemy—is likely to be himself.”
Many financial advisors think their most important function is to devise financial strategies and help their clients allocate their assets to help them achieve their financial goals. Certainly, that’s important. But that’s what advisors study and train for. It’s what they do.
However, I would argue that the most essential function—the critical role advisors must fulfill—is that of a financial coach. Above all else, a financial or investment strategy rooted in sound practices and principles requires discipline and patience. However, when emotions cause a client to break from the strategy, you are the only person who can keep your clients anchored and coach them through the momentary instinct to act irrationally.
Addressing these behaviors proactively can help your clients stay on track and make sound decisions. Here are five common client behaviors that financial advisors should be prepared to address and strategies to manage them effectively.
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In this category you will find blog posts about clients relationship management – including but not limited to establishing trust, building a relationship, ending an advisor-client relationship, and more.
5 Client Behaviors Financial Advisors Must Put a Stop to and How
/ by Don Connelly / Managing the Relationship / 0 comments
The widely studied field of behavioral finance has firmly established that many investors’ mistakes can be attributed to their emotions, which can cloud their judgment and overpower their patience and discipline. Ben Graham, arguably one of the best investors of all time, said, “The investor’s chief problem—even his worst enemy—is likely to be himself.”
Many financial advisors think their most important function is to devise financial strategies and help their clients allocate their assets to help them achieve their financial goals. Certainly, that’s important. But that’s what advisors study and train for. It’s what they do.
However, I would argue that the most essential function—the critical role advisors must fulfill—is that of a financial coach. Above all else, a financial or investment strategy rooted in sound practices and principles requires discipline and patience. However, when emotions cause a client to break from the strategy, you are the only person who can keep your clients anchored and coach them through the momentary instinct to act irrationally.
Addressing these behaviors proactively can help your clients stay on track and make sound decisions. Here are five common client behaviors that financial advisors should be prepared to address and strategies to manage them effectively.
Read more
The Elevator Repair Story
/ by Don Connelly / Managing the Relationship, Prospecting / 0 comments
I met an Advisor at Merrill Lynch in Detroit who told me a very interesting story.
Listen to the audio episode or read the transcript below, adapted from the video, to learn an important lesson about client service.
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Explaining the Nature of the Relationship (Acapulco Cliff Divers Analogy)
/ by Don Connelly / Managing the Relationship / 0 comments
“Mr. and Mrs. Client, I want to give you a word of caution in the event we experience volatility and turbulence. Investing money can and often does feel counterintuitive. There will be times when I urge you to add money to your account when the market is going down. That’s not going to feel right to you even though that’s exactly the time we should be adding to your account. It’s important that you understand why I would do that. May I tell you a story?
Watch this video or read the transcript below, adapted from the video, to learn a great story and analogy to help cement the relationship with a client.
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Understanding Why Clients Might Seek a Second Opinion in Financial Planning and How to Avert It
/ by Don Connelly / Managing the Relationship / 0 comments
If you’ve been in this business long enough, you’re bound to encounter a client who wants to get a second opinion on some of your advice or a strategy you’ve developed. There’s no sugar-coating it—that can feel like a low blow—questioning your expertise and even your integrity.
While it might feel like a vote of no confidence, it’s often a symptom of a deeper need. Understanding these reasons and fostering a solid client relationship can help advisors minimize the need for external validation.
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5 Effective Ways Financial Advisors Can Educate Clients
/ by Don Connelly / Managing the Relationship / 0 comments
Even though overeducating your clients can intimidate or overwhelm them into analysis paralysis or lost trust, still, one of your critical roles as a financial advisor is empowering your clients to make informed decisions.
Financial advisors who prioritize client education foster trust and instill confidence in their clients. The more trust and confidence your clients have in you and your advice, the more enduring the advisory relationship will be. But you must walk the fine line between overeducating your clients and empowering them with the right amount and type of financial literacy.
Here are five of the most effective ways financial advisors can educate their clients:
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Decoding Doubt: 6 Non-Verbal Cues Clients Might Be Giving You That Signal a Trust Deficit
/ by Don Connelly / Managing the Relationship / 0 comments
Trust is the bedrock of any successful financial advisor-client relationship. But how do you know if a client truly trusts you, especially when they might not explicitly say it? Beyond the spoken word, clients often communicate their feelings through non-verbal cues. Learning to recognize these subtle signals can help advisors address underlying concerns and build stronger, more trusting relationships.
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Three Decisions People Make When Choosing an Advisor
/ by Don Connelly / Managing the Relationship / 0 comments
When mom and dad sit down with you for the first time, they want to get to know you. They want to do business with someone they like and trust and someone who is making the right suggestions. They don’t want to do business with the Mr. or Ms. Financial Advisor you. They want to do business with the real you.
Watch this video episode or read the transcript below to learn what people want to know when making the decision to work with you or move on.
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The Perils of Lacking Empathy: Why It Matters for Financial Advisors
/ by Don Connelly / Managing the Relationship / 0 comments
Nothing can form a human connection quite like the genuine expression of empathy. That human connection, which is the basis of trust in a relationship, is what clients want from their advisors. Failure to make that connection quickly can drive clients into the arms of a more empathic advisor.
Why empathy is so powerful
Empathy is the ability to see the world through someone else’s eyes, understand their emotions, and connect with them on a deeper level. But to your clients, it’s much more than that. When you express genuine empathy with a client, they feel like they are the most important person in your life at that moment. You took the time to step inside their shoes, walk around, and make them feel understood without judging them.
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Should FAs Allow Clients’ Political Opinions to Influence Their Investment Decisions?
/ by Don Connelly / Investing Wisdom, Managing the Relationship / 0 comments
Here we are again—another presidential election year. If it’s like the last couple of elections, financial advisors are sure to see some clients wringing their hands over which candidate will win the White House and how that will impact the financial markets and their investments. At the very least, you’re likely to get an earful of some clients’ political viewpoints—which is fine if they don’t try to correlate them with how they should invest their money.
For decades, investors have tried to find some correlation between elections and investment performance, hoping it will foretell how a particular outcome will impact their portfolio so they can adjust their investment strategy appropriately.
Of course, if you search far enough, you might be able to uncover data that supports such a link. But you’re not going to find any that decisively shows a causal relationship or enough of one to warrant serious consideration for changing investment strategies based on election results. Still, some clients have such strong political views that they see a connection in all aspects of their lives, including how they invest their money.
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Steps to Take When Ending a Client Relationship
/ by Don Connelly / Managing the Relationship / 0 comments
For everything it takes to secure a new client, it seems counterintuitive that a financial advisor would fire one. But, under certain circumstances, that’s precisely what you must do to keep your practice on the right growth trajectory while keeping your sanity.
Holding on to clients who stray outside your profile of an ideal client, or when they become too demanding or no longer follow your advice, can weigh you down. Your time is too valuable to spend it with clients who aren’t a good fit for you.
So, you need to fire them. But how? Ending a client relationship is a delicate process, but it doesn’t have to be awkward for you or the client when handled with care and professionalism. Much like a structured onboarding process, you should also have a clearly defined “deboarding” process to make it easier on everyone. Here are some steps to consider when ending a client relationship.
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