Create a Non-Transactional Relationship

In this type of relationship, the advisor seeks to understand the client's personal values, goals, and preferences and delivers tailored services to meet their unique needs.

It’s a collaborative relationship based on mutual respect and trust.

How does it compare to a transactional one?

A transactional relationship is based solely on exchanging services for payment. It tends to be a short-term relationship where the advisor delivers services to the client in exchange for a fee, without much personal connection or consideration for the client's unique needs and circumstances.

Conveying non-transactional to prospects

You and your prospect don’t know each other. Mutual trust hasn’t been established.

How do you convey that, if retained, your relationship will be non-transactional?

Form CRS relationship summary

You are required to deliver a relationship summary to each retail investor. It provides vital information about the advisor-client relationship, including the nature and scope of services offered, fees, conflicts of interest, and whether you have a fiduciary duty.

Provide this document upfront. The key points demonstrate your commitment to transparency and a client-centric approach.

Because it’s SEC-mandated, it has high credibility.

Comprehensive financial planning

One of the most effective ways to convey a non-transactional approach is by emphasizing your commitment to comprehensive financial planning. Financial advisors offering services beyond investment management are seen as more holistic and client-focused.

Mention that your firm provides strategies for retirement planning, tax optimization, estate and healthcare planning, and more. This showcases your dedication to helping clients achieve their financial goals beyond simple transactions.

Value over transactions

In communicating with prospects, shift the focus from transactions to the value you bring to their financial lives. Explain how your advisory services are designed to improve their financial well-being, provide peace of mind, and address their unique needs and goals.

Fee- versus transaction-based

Tell prospects your firm is fee-based (or preferably fee-only). Explain that fee-based advisors earn a fee for managing clients' assets, which aligns your interests with theirs rather than relying on commissions from transactions.

Discuss the benefits of this model, like reduced conflicts of interest and a focus on long-term investment strategies.

Code of ethics and standards of conduct

Adherence to a robust code of ethics reinforces your commitment to a non-transactional relationship.

Organizations like the Certified Financial Planner Board of Standards (CFP Board) have established codes of ethics and standards of conduct for financial advisors. These standards emphasize acting in clients' best interests and avoiding conflicts of interest.

Highlight your commitment to those ethical principles to reassure prospects that their financial well-being is your top priority.

Client testimonials and case studies

Sharing success stories through client testimonials and case studies can be a powerful way to demonstrate your non-transactional approach.

When prospects see how you've helped others achieve their financial goals and navigate complex financial situations, it instills confidence in your ability to provide valuable advice and build lasting relationships.

Straightforward fee structure

Be transparent about your fee structure. Clearly explain any fees, including management fees, advisory fees, and other charges associated with your services.

Transparency regarding compensation builds trust.

Here’s what Jeff Benjamin wrote about fee transparency in InvestmentNews in August 2022:

... I know there are advisers out there presenting fees with super transparency. My favorites are those firms that post advisory fees clearly on their websites in plain English, complete with fee calculations against various portfolio sizes.

Regular reviews and updates

Highlight your practice of conducting periodic reviews and updates with clients. Regular communication reinforces the ongoing, non-transactional nature of your relationship.

By emphasizing these factors in your communications with prospects, you convey that a relationship with you and your firm will be a long-term, meaningful, and non-transactional one.

Dan coaches evidence-based financial advisors on how to convert more prospects into clients. His digital marketing firm is a leading provider of SEO, website design, branding, content marketing, and video production services to financial advisors worldwide.

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