What Research Says About Likability, Client Compliance, and Your Value

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Dan's new book for millennials, Wealthier: A Field Guide to Financial Freedom, will be published in April 2024 and available on Amazon.

There’s a lot of discussion among advisors about why prospects hire you, why they don’t follow your advice, and the value you add.

Much of this discussion isn’t based on research, which is curious because there are studies on each subject.

Here’s a sampling of the studies.

When it’s not a fit

One study found that investors tend to ascribe greater authority to financial advisors whose recommendations confirm their opinions. This effect is driven by self-esteem, a desire to see one's biases as less pronounced, and the ease of processing information that aligns with existing beliefs, leading to higher trust in the advisor.

Since many clients hold investment beliefs not supported by academic evidence, this study explains why those clients might not decide to retain your services. If that happens, you would be better served by not entering into a relationship – and so would the investor.