Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
“Sorry, but I’ve decided to go in another direction.”
When I was a financial advisor and heard a prospect utter those words, it felt like a dagger in my heart.
It was particularly painful when I thought our meeting went well.
I remember thinking: How could that happen? What could I have done to change that outcome?
Now I know there are five reasons why prospects decide to choose someone else.
- Lack of personal connection
Every conference I attend focuses on improving the technical expertise of advisors. Many believe demonstrating advanced technical skills is critical to winning over prospects.
Yet there’s compelling evidence that clients value interpersonal skills and emotional intelligence over technical expertise. A survey by the Australia-based Association of Financial Advisors identified interpersonal skills (like listening and empathy) as defining traits of successful advisors.
Among the clients it surveyed, 82% ranked these skills as paramount. Only 4% elevated technical skills and experience.
Extensive research demonstrates that when you emotionally connect with a prospect, the payoff can be huge.
News flash: Discussing how to measure risk in a portfolio (and similar investing subjects) doesn’t make an emotional connection.
Here’s what builds a connection:
- Put aside your agenda.
- Elicit the agenda of the prospect.
- Show a genuine interest in the prospect.
- Don’t try to demonstrate that you are the most intelligent person in the room.
The easiest way to do this is to ask genuine, open-ended questions designed to empower the prospect to discuss any subject they choose. Then, ask relevant follow-up questions and let the conversation go wherever the prospect wants.
Make no effort to “steer” the discussion towards areas you wish to address.
- Failure to “read the room”
I wonder if many prospects ask advisors to lecture them for 45 minutes about their firm, their expertise, and the nuances of investing and financial planning.
If prospects want you to engage in this manner, trust them to ask. Until they do, keep the focus on them and away from you.
- Insecurity
Rick Ferri had this spot-on observation: “Complexity is advisor job security.”
Few advisors have the confidence to recommend portfolios that consist of only one to three index funds, ETFs, or passively managed funds. They are concerned that if they do, clients will question their fees.
The same insecurity may compel advisors to lapse into jargon (like “regression analysis” or “standard deviation”) in a misguided effort to demonstrate their technical skill.
If a prospect doesn’t understand you, they’re like to choose an advisor who explains financial issues in a simple, easy-to-comprehend manner.
- Lack of services
Some of the largest advisory firms offer all the financial services clients require under one roof. These services often include tax advice, tax-return preparation and filing, healthcare planning, and trusts and estates advice, including preparing legal documents by in-house attorneys.
It may not be enough to coordinate with a CPA or outside counsel.
I wrote this marketing copy for one of my clients, who is a CPA and a financial advisor: We don’t coordinate with your CPA. We are your CPA ... and your financial advisor.
Have you considered expanding the services you offer?
- Lack of candor
When lack of candor is discussed in the context of investment advisors, it almost always relates to fees.
The bar for transparency needs to be higher. Jeff Benjamin at Investment News believes it’s sufficient for advisors to “post advisory fees clearly on their websites in plain English, complete with fee calculations against various portfolio sizes.”
Many advisors don’t even meet this low standard.
I consider it the bare minimum.
What about giving investors the option to receive quarterly invoices for investment fees rather than having them quietly withdrawn from their investment accounts, which will impact their returns over time?
I am unaware of any advisor who does that.
Maybe the advisor your prospect chose instead of you demonstrated more trust in them.
Dan trains executives and employees in the lessons based on the research in his latest book, Ask: How to Relate to Anyone. His online course, Ask: Increase Your Sales. Deepen Your Relationships is currently available.
Read more articles by Dan Solin
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
