Winning the “Why Do I Need a Financial Advisor” Argument

Winning the Why Do I Need an Advisor Argument

Long before it became a field of academic study, legendary investor Benjamin Graham knew a thing or two about behavioral finance. Graham went on to say, “In the end, how your investments behave is much less important than how you behave.”

For financial advisors, understanding how emotional and intellectual processes combine to influence investors’ decisions offers the opportunity to help their clients avoid costly mistakes and optimize investment outcomes.

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How to Build Your Story-Benefit Matrix

How to Build Your Story-Benefit Matrix

Last week I blogged about a useful sales tool called a story-benefit matrix, and why you should develop one for your practice. Just going through the process is beneficial: It forces you to think through a number of different ways your prospective client will benefit by working with you – and gives you an opportunity to help tell an illustrative story that will cement that case.

It’s basic “soft-skills” at work.

But it’s helpful to understand how to build one yourself, so let me help you with that.

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Reasons Clients Need a Financial Advisor – Overcoming the Do-It-Yourself Objection

Reasons Clients Need a Financial Advisor – Overcoming the Do-It-Yourself Objection

We’ve all encountered them: The prospect or client who wants to go it alone. They want to manage their own portfolio.

Well, here’s one approach you can use:

First, ask the question, “Can I share something with you?” (I like this phrase because it’s non-confrontational. It doesn’t activate the prospect’s ego, leading to an argument you can’t win. It neutralizes it.

Then you can show them the latest DALBAR study.

It doesn’t matter much what year you use. The results for individual DIY investors are almost always dismal: According to the 2019 DALBAR Quantitative Analysis of Investor Behavior, the typical do-it-yourselfer achieved an annual real return of just 1.71%.

Compared with the S&P 500, do-it-yourself investors lagged the S&P 500 by huge margins:

• 4.35 percentage points, annualized, over five years;
• 3.46 percentage points, annualized, over 10 years;

The reason: Bad market timing decisions. People pile into the market at the wrong times, and then they panic and sell at the wrong times.

Why? Because people are irrational, and are hardwired to make sub-optimal decisions.

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