/ 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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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
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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3 Soft Skills Advisors Need to Refine for an Immediate Connection with Prospects
/ by Don Connelly / Managing the Relationship / 0 comments
Not to diminish the hard work, effort, and time that goes into becoming a financial advisor—few professions are as demanding—but the essential skill advisors must acquire is the ability to sell. Perhaps a more acceptable term would be “the art of persuasion.” Whichever way you want to frame it, if you have difficulty persuading or convincing people to take action, you stand little chance of success.
Of course, that’s true of just about any profession that requires changing or influencing people’s behavior. It just happens to be more challenging when selling financial advice and expecting to get paid for it. Advisors must understand that buying an intangible service requiring people to trust that the advisor can deliver that intangible value is scary for most people. It’s far less threatening to stay with the status quo and do nothing.
The trouble is, if you can’t convince people to follow you or your advice, you aren’t accomplishing anything. To overcome the inherent trust deficit and open prospects’ minds, financial advisors must constantly refine three critical soft skills, or they will have fewer chances to demonstrate their highly trained competencies.
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How Financial Advisors Should Manage Emotional Clients
/ by Don Connelly / Managing the Relationship / 0 comments
People aren’t rational. We’re all creatures of emotion. Good salespeople bear that in mind. Whatever your training and education, as financial advisors, we’re not engineers. We’re not technicians. Not in the sales interview.
We deal with people first.
Not numbers. Not machines.
Advisors who understand this are going to do better than advisors who don’t.
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Bear Market: What You Do Will Make or Break Your Financial Advisor Career
/ by Don Connelly / Best Practices / 0 comments
Every advisor gets just a few great career-building opportunities: Times when they can really establish themselves as experts, build long-term credibility, and differentiate themselves from the competition – most of whom are hiding from their clients because they don’t know how to guide them through the bear market.
What do the real pros do when things are scariest? When your clients are calling you scared witless, and they want to go to cash?
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Emotional Intelligence Enables Us to Manage The Emotions of Others
/ by Don Connelly / Managing the Relationship / 0 comments
You and I like to think of ourselves as objective thinkers. We try to put our emotions aside. We live in a world of research and numbers. Our recommendations are black and white. Investment results are there for all to see. Our advice is either good or bad. The plans we recommend either work or they don’t. Clients say yes or no. We open the account or we don’t.
Our clients, on the other hand, are subjective thinkers.
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