/ by Don Connelly / Managing the Relationship / 0 comments
We’ve frequently stressed the importance of building deep and trusting relationships with clients. Practically speaking, the stronger and more enduring your client relationships, the greater their lifetime value to you in terms of repeat business, growing assets under management, referrals, and family legacies. For financial advisors, the profit truly is in the relationship.
The most successful advisors seek to take the relationship even deeper—to the point where they become a trusted confidant of their clients. They want to be the first person their clients think of when any significant issue arises, be it a family milestone (i.e., birth, college graduation, engagement), family tragedy (i.e., divorce, death), career change, or any major family decision (i.e., new home purchase).
To some, that may seem like going above and beyond. After all, isn’t it enough to have the family’s trust to act in their best interests in helping them manage their money? Is it appropriate to try to insert ourselves into every aspect of their lives? What do we gain from that? What does the client gain? Why would a client want their financial advisor as a trusted confidant?
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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.
Get More from an Advisory Relationship with Client-Centric Investing
/ by Don Connelly / Managing the Relationship / 0 comments
With the 2008 global financial crisis fading in the rearview mirror, investors are slowly regaining their confidence in the stock market with a halting willingness to take on more risk. However, many still find it challenging to overcome the trust deficit created by financial advisors who view them as assets to be managed rather than people with life ambitions.
To those advisors, the market indices and benchmarks mattered most. However, to the client, it was all about their financial future. All too often, advisors focused on standard deviation, Monte Carlo analysis, and risk-return lose sight of the emotional characteristics that drive investor behavior. They then become perplexed when their clients decide to break from a perfectly good investment strategy to follow the herd over a cliff near a market bottom.
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Winning Over the Children of Wealthy Clients
/ by Don Connelly / Managing the Relationship / 0 comments
As evidenced by the great wealth transfer of $30 trillion currently underway from the baby boomers to the next generations, wealth is generational, with far-reaching impacts beyond any one client. For financial advisors, it could be an unprecedented opportunity to grow assets or the greatest threat to their survival.
Why the disparity in outlook? Because some advisors will be better positioned than others to capture the attention and trust of the next generations. Advisors who fail to connect with the children of their baby boomer clients stand a better than even chance they will lose the assets upon their transfer.
The failure to realize that, when working with a client, you are also working with everyone dependent on them leads to advisors losing an average of 70% to 80% of a client’s assets following their death.
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Prospect Red Flags Financial Advisors Shouldn’t Ignore
/ by Don Connelly / Managing the Relationship, Prospecting / 0 comments
Almost every financial advisor starts in the same place—with a lot of time on their hands and not many clients. That’s when the criteria for selecting which prospects to work with is at its broadest—essentially, anyone willing to pay me anything.
It’s not until your business expands, reaching the point when you’re servicing 50 or more randomly chosen clients, that your time starts to become much more valuable. Eventually, you reach your capacity for new clients, and your revenue stops growing. Worse, you’re not enjoying your work as much as you hoped.
That’s when you realize it shouldn’t be about the number of new clients you take on; it should be about the quality. It’s about saying ‘no’ to prospects who don’t meet your criteria for the type of client you want to work with, which isn’t easy if you’re still chasing growth. But ultimately, saying no to prospects who are not a solid fit is good for you and them.
Here are some major prospect red flags warning you to move on.
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How to Help Clients Through Their Financial Anxiety
/ by Don Connelly / Managing the Relationship / 0 comments
Who among us has never had worries about money? You can expect that many of your clients have experienced money worries from time to time. We know that clients can become stressed during periods of increasing market volatility or economic distress. And we’ve shared how financial advisors can help clients deal with that stress and confront fears to prevent their emotions from controlling their decisions.
But what about financial anxiety? Not only is that different from stress, but it can be much more debilitating to the psyche, causing mental paralysis in the face of important financial decisions. While stress is typically caused by external factors, such as a crashing market or rising unemployment, anxiety tends to rise internally over fears or unhealthy attitudes about the world around us.
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How to Become Your Client’s Trusted Confidant
/ by Don Connelly / Managing the Relationship / 0 comments
We’ve frequently stressed the importance of building deep and trusting relationships with clients. Practically speaking, the stronger and more enduring your client relationships, the greater their lifetime value to you in terms of repeat business, growing assets under management, referrals, and family legacies. For financial advisors, the profit truly is in the relationship.
The most successful advisors seek to take the relationship even deeper—to the point where they become a trusted confidant of their clients. They want to be the first person their clients think of when any significant issue arises, be it a family milestone (i.e., birth, college graduation, engagement), family tragedy (i.e., divorce, death), career change, or any major family decision (i.e., new home purchase).
To some, that may seem like going above and beyond. After all, isn’t it enough to have the family’s trust to act in their best interests in helping them manage their money? Is it appropriate to try to insert ourselves into every aspect of their lives? What do we gain from that? What does the client gain? Why would a client want their financial advisor as a trusted confidant?
Read more
How to Bring Back Face-to-Face Meetings with Clients
/ by Don Connelly / Managing the Relationship / 0 comments
A survey by YCharts in December 2019 found that clients didn’t feel engaged and wanted more personalized communications. We’ve posted several times that, pre- and post-pandemic, the frequency and style of advisors’ communication directly impact client trust and confidence in their advisor, financial plan, and their likelihood of keeping their advisor.
A more recent report, post-pandemic, found that, though virtual meetings had taken hold as a viable form of communication for advisors forced to limit in-person meetings, it’s likely that the decrease in face-to-face contact contributed to client feelings of reduced communication. That’s a direct threat to the strength of the advisor-client relationship.
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How to Regain the Trust of a Client After a Disagreement
/ by Don Connelly / Managing the Relationship / 0 comments
Can you think of any relationship that has never experienced conflict—where two people with the best of intentions fail to see eye to eye on an issue? Such is the nature of relationships, even where there is a track record of trust. You expect it in a marriage and even among colleagues—so why not between a financial advisor and their client?
It happens more than you might think. Financial advisors are wired to be analytical, while clients are often driven by emotion, which sets the stage for many “reality vs. perception” standoffs.
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Your Best Practices Checklist for Resolving Client Complaints
/ by Don Connelly / Managing the Relationship / 0 comments
Client complaints—it happens to the best of us. Some financial advisors go for years without receiving a client complaint. But it will happen, and when it does, it can seemingly come out of left field. Most client complaints are unexpected, which is why advisors must be able to quickly shift into rapid response gear or risk losing a client.
We’ve posted in the past about the importance of having a systematic communications strategy in developing solid, trusted, and enduring client relationships. As part of that strategy, advisors need a well-conceived, written process for responding to client complaints. The hope is that you will never need to use it, the same way pilots hope never to have to execute emergency landing procedures—but they know the procedure inside and out.
While losing a client’s trust is not nearly as consequential, it can be avoided, even strengthened, if you adhere to your own procedural checklist of best practices for effectively handling your next client complaint.
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The Significance of Ethical Practices in Maintaining Trust and Integrity
/ by Don Connelly / Managing the Relationship / 0 comments
Most financial advisors consciously try to do the right thing always. However, most people are sometimes prone to error, which is only human. The reality is that advisors, through no fault of their own, sometimes find themselves in situations where conflicts between ethical principles, client interests, and regulatory requirements can create ethical dilemmas.
The challenge for advisors is that they have to overcome a huge trust deficit with clients and prospects. To earn and keep their trust, they must constantly be hyper-aware of their actions and how they may be perceived, whether an ethical breach is intentional or not. That requires having a conscious and deliberate strategy to resolve any potential conflict.
Here are the most common ethical dilemmas faced by financial advisors.
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Addressing Communication Breakdowns: 5 Common Communication Challenges Financial Advisors Face Today
/ by Don Connelly / Managing the Relationship / 0 comments
We spend a lot of time and space here harping on the importance of client communications because, more than anything else you do in this business, it can make or break you.
We’ve discussed that 72% of clients who fire their financial advisors do so due to poor communication. We’ve pointed out studies that show clients value solid communications the most in an advisory relationship, yet many feel they’re not receiving it.
We’ve also outlined the reasons why it’s critical to build a systematic communications structure designed to keep your clients engaged, cultivate loyalty, and instill confidence in your advice and then provided a framework for building it.
Above all, we’ve stressed the importance of continuously working on your communication and requisite soft skills for building trust and solidifying your relationship.
However, all that will do you little good if you don’t recognize the communication challenges you face on a daily basis, especially the communication breakdowns that lead to conflicts, such as miscommunications, misunderstandings, and a lack of clarity.
Here are five of the most common communication challenges financial advisors must recognize and overcome to build and maintain solid client relationships:
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