/ 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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To Better Understand Your Client’s Goals, Listen Carefully to How They Express Them
/ by Don Connelly / Managing the Relationship / 0 comments
A critical aspect of advising clients is to ascertain their financial goals correctly. If you or your clients don’t genuinely understand the goal, your advice could be dangerously off base, and you could lose your client’s confidence.
Clients typically come to financial advisors with various goals, but they might articulate them in nuanced ways, reflecting their concerns, values, and life circumstances. Your role as a financial advisor is to listen carefully, ask probing questions, and translate these expressions into actionable plans created around their biggest concerns, preferences, and priorities.
Here are five common financial goals clients have and how they might express them differently:
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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
Financial Planning Challenges for Financial Advisors
/ by Don Connelly / Best Practices / 0 comments
In today’s saturated market, financial advisors must offer holistic financial planning for several reasons: It’s a sure way to differentiate themselves from those who only offer investment management. It can build deeper, more trusting relationships with clients, and it leads to better financial outcomes for clients. It can also attract a broader client base and retain those who might otherwise seek these services elsewhere.
Financial planning should unquestionably be a cornerstone service offered by financial advisors. However, performing the service is not without its challenges, particularly as it relates to communication and relationship skills. Awareness of and overcoming these challenges through focus, practice, and sound execution is critical to providing effective guidance and building enduring relationships with your clients.
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A Guide to Securing Second Meetings with Prospects: Turning First Impressions into Lasting Partnerships
/ by Don Connelly / Best Practices / 0 comments
It’s no exaggeration to say that the initial meeting with a prospective client is a make-or-break moment that sets the tone for the relationship and determines whether it will continue in a second meeting. The initial meeting is a crucial dance between the advisor and a naturally skeptical prospect who wants to know why they should work with you.
In a crowded field of financial advisors, the initial meeting presents a critical opportunity to differentiate yourself. Prospects are likely to meet with multiple advisors. You must make the prospect feel they’re making the right choice in working with you and that they should expect an advisory experience with you that they can’t get from anyone else. That’s a tall order.
But if you’re organized, practiced, and have the end in mind—a second meeting with the prospect—you can make each initial meeting a success.
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5 Relatable Analogies to Explain the Perils of Market Timing to Clients
/ by Don Connelly / Investing Wisdom, Storytelling, analogies and power phrases / 0 comments
Let’s face it: Most people are lousy timers. Think about the last time you switched to the shortest line at the grocery checkout. That feeling of smugness turns to scorn when the line crawls to a halt while the longer lines churn through.
Or, when you constantly switch to the fast-moving lane on the freeway only to watch a long river of red brake lights stretch out in front of you. The actual cost, in terms of time, frustration, and dignity, almost invariably exceeds any possible gain you might have achieved by making the switch.
The stakes for investors seeking bigger gains or cutting losses by timing the market are much higher.
Financial advisors know that few people, if any, are adept at picking winners or predicting the market’s direction. Yet many still try, often driven by the powerful emotions of fear and greed.
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The Paradox of Financial Education: How Too Much Knowledge Can Cost You Clients
/ by Don Connelly / Best Practices / 0 comments
Financial advisors constantly walk a tightrope between empowering clients and overwhelming them. While financial literacy is crucial for informed decision-making, overeducating prospects and clients can backfire, resulting in the loss of an account. This phenomenon can be better understood by examining the psychology of financial decision-making and the delicate advisor-client relationship.
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Current Events Are White Noise
/ by Don Connelly / Investing Wisdom / 0 comments
Seemingly each day, the media hysteria heightens. You’d think nobody would want a steady diet of bad news, but you and I know that it’s not going to stop. Why? Because bad news sells.
Do you ever wonder why bad news sells? Do you ever wonder why we focus on what’s wrong in the world? We do that because we’re concerned about anything that threatens our sense of wellbeing.
Watch this video or read the transcript below to learn why we do that and what you and your clients should focus on.
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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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To Win More Prospects, Show Them You Are the Goals-centric Advisor Clients Want
/ by Don Connelly / Marketing Yourself / 0 comments
As a financial advisor, you have one job and one job only—to help your clients achieve their financial goals. At least, that’s how your clients see it. That’s according to a research study by Morningstar, which revealed what clients value most in an advisor. Advisors would be well-served to keep that in mind in their efforts to win over more prospects.
Next on the list of what clients value most from an advisor is “skills and knowledge,” followed by “maximizing returns.” Unquestionably those are essential attributes. However, the study indicates that prospects may put less weight on them if you fail to check off the one they deem most important—helping them to achieve their goals.
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