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Connecting with Clients Who Aren’t Tech Savvy

Many of us tend to stereotype clients of a certain age as “too old” to be tech savvy. After all, the average age in terms of tech savviness gets younger every day. But what if you take a different perspective? Perhaps clients are never too old. Indeed, maybe they would even welcome the opportunity to step up their use of technology!

Let’s start with this scenario: You want your clients to be knowledgeable and comfortable using technology for a review meeting. That way, if they relocate to a warmer climate or are no longer physically able to come to the office, for example, you can still stay connected. Plus, you may believe (as some planners do) that technology-based review meetings are not only more concise but also higher quality. So, what does it take to prepare clients who may not seem tech savvy for a technology-based review meeting?

Beta Best Practices

A good place to start is with a beta approach. Here, there are a few best practices to keep in mind. First, brainstorm a list of two to five clients who you think would be good candidates for a beta test. Reach out to them, explaining to each one the value of conducting a remote review meeting using technology. Then, simply ask them if they would like to participate. If no, end of story. If yes, it’s time to get started.

For this example, we’ll use the iPad as our technology of choice, although there are certainly other options that could work. You’ll need to set up your iPads using the appropriate links so they provide a secure connection. Remember, less is more. The goal is to make it easy for clients by having only the essentials available on the iPad.

Once the iPads have everything they need for clients to connect to a meeting, send them to beta users for the sole purpose of the review meeting. To help familiarize clients with how to use it, include easy-to-understand instructions either with the iPad or directly on it. You might also schedule a phone call to provide a short training session. Now, it’s time to put it to the test.

Try the iPads for one meeting shortly after the training—maybe even the next day. Ask for feedback! If your clients like it, plan on using the iPad for the next review meeting. If not? Simply have them return the iPads to you.

Hidden Benefits and Risks

Of course, there are some clients who don’t even own a computer. You might find that these individuals are the ones who may ask you to talk with their tech-savvy kids. That’s a good thing—and a great opportunity. The kids may see you as taking a novel approach to supporting their parents. On the other hand, what if this strategy is so wildly successful that clients start contacting you 10 times a day? As mentioned above, be sure to establish that the iPad is for review meetings only. Any communication in between meetings can be handled the traditional way—a phone call.

Finally, what if your clients talk to others about how they have reviews with their planner via iPad and from the comfort of their own homes? Positive word of mouth is always a good thing. Plus, innovation presents your firm as young and vital.

Technology Supports Human Connection

Individuals born with technology in hand will be more sophisticated than those who adopt it in their 40s. But millennials are actually the ones who have the most to gain from ideas like this. Who knows where the concept of providing an iPad could lead? What would it mean for clients who adopt this idea to be reminded of you with a beautiful photo, a joke of the day or an inspirational quote? These simple reminders can support the human connection if the foundation is properly laid—in this case—by using an iPad as an enhancement to human relationships.

Now, I know this particular approach won’t be for everyone. If not, what novel idea can you try that can help you stay connected to—and show how much you care about—your clients?

Joni Youngwirth_2014 for web

Joni Youngwirth is managing principal of practice management at Commonwealth Financial Network in Waltham, Mass.


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The Science of Service

In our industry, it can sometimes be easy to lose sight of the primary purpose of our business, which is to service the financial needs of our clients. Personal, professional and even corporate goals may lead some of the best financial planners to occasionally place their focus in a direction that isn’t in the client’s best interest but in theirs. When this happens, it goes against the “science of service.”

In the short-term, this shift of focus may help the planner accomplish a goal but typically in the long-run it can only be counterproductive because it goes against what should be all about a planner’s integrity. Once this “line” is crossed it is that much easier to cross it again because a planner’s definition of what that “line” is becomes blurred by excuses.

Mahatma Gandhi said it best when he said, “The best way to find yourself is to lose yourself in the service of others.” I believe this is very true. However, that begs the question of, “What constitutes service?”

Understanding the Science of Service

Most planners and agents think that the definition of service is to answer incoming client calls, hear what they need, drop everything and attend to their requests. However, that is a very reactive client servicing system. And, while this type of servicing is obviously necessary at times, it isn’t the only thing that clients need.

Step 1: Have a High Level of Integrity

Over twenty years ago, I asked John M., the most seasoned financial planner in the office a simple question, “Can you run a financial advisory practice with integrity and still make a great living?” He simply smiled and said, “You will make more money than you could ever imagine as long as you continue to do the right thing.”

Unfortunately, we have all met prospects who owned products that were inappropriate for them. Instead, the planner who sold them these types of products probably did so because they were thinking of their own best interests.

Ironically, the science of servicing begins even before a prospect becomes a client because recommending an inappropriate product(s) is doing the prospect and yourself a disservice.

A level of impeccable integrity must continue when they do become a client.

Step 2: Have a High Level of Product and Market Knowledge

Clients entrust their hard-earned money to you because they believe you not only have their best interest at heart but that you fully understand the right investment strategies for them. That’s why it’s so important to take the time to keep abreast of your product and market knowledge.

An example of this is Paul C., a financial planner client of mine who spends at least 30 minutes each morning reading something related to the stock market, the economy and/or various products that he recommends to his clients. He says that by doing so he feels well-versed to answer any questions that his clients or prospects have.

Step 3: Have a Proactive Client Servicing System

Most financial planners want to service their clients in the best way possible, but many fail to understand how to service clients effectively because they don’t understand what great service means.

David P., another client of mine, was putting out fires all day long which made him feel exhausted more often than not. That is until we designed a proactive client servicing system by segmenting his book, clearly defining his client servicing levels, systematizing his client servicing activities and delegating many of the day-to-day interruptions to his staff. It didn’t take long before David felt back in control of his day.

Why Servicing is Not an Art

Hopefully by now you can relate to the planners in each one of the examples and realize that what they’re doing is not subjective. To John M., integrity is the cornerstone of service; to Paul C., knowledge is imperative to keeping his clients informed and having the right investments; and to David P., having a proactive client servicing system gives his clients and himself peace of mind. To these planners, their activities are not open to interpretation. Instead, they have adopted a “science of service” mindset.

If you are ready to take your business to the next level, schedule a complimentary 30-minute coaching session with me by emailing Melissa Denham, director of client servicing.

Dan Finley
Daniel C. Finley is the president and co-founder of Advisor Solutions, a business consulting and coaching service dedicated to helping advisers build a better business.


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Learning the Language of the Layman

It’s been said that people won’t buy what they don’t understand. Most confused prospects and clients won’t admit that they’re befuddled. Why? Because they don’t want to look foolish.

Planners who like to dazzle prospects and clients using industry specific terminology may be creating a real disconnect with them.

For these planners, learning the “language of the layman” isn’t so much about dumbing down their recommendations as it is about simplifying the message. Let’s take a look at some simple ways to make the translation.

The following is a step-by-step process to help you make a great connection.

Step 1: Help them Understand Why to Buy

Most planners want to begin an appointment by selling their recommendations because they are so adamant about what they are recommending. Unfortunately, people hate to be sold to but they love to buy. For them to want to buy, they have to understand why they need what you’re recommending. To get them to that place, you must first ask questions.

Some examples of questions that I’ve used while prospecting are around taking too much risk: Do you know what percentage of your portfolio is in stocks? Why do you have so much money in just a few companies? If the market pulls back, what happens to your portfolio? Since you are already retired, what do you think is the best course of action for you?

The natural rebuttal is, “We shouldn’t be taking that much risk.”

Step 2: Find out What They Know

In the aforementioned example, it doesn’t take a prospect very long to start understanding that there is a challenge. In this case, that they have a large percentage of their portfolio in just a few stocks and that they need to diversify. The next step is to find out what they know. The following are just a few examples of questions that I have used to find out what prospects know about mutual funds:

“Have you ever owned mutual funds? How long have you owned them? Has anyone ever explained to you what mutual funds are?”

I asked these questions of a couple in their late sixties. Although he knew what mutual funds were, she informed me that they have owned mutual funds for over 40 years and nobody has ever fully explained them to her.

Step 3: Tell Them a Story

The final step to speak layman’s language is to tell or share a story. Clients and prospects alike connect with a great story because they understand your products and services better when they can relate it to something that is familiar to them. The following illustrates my point:

A mutual fund portfolio is like a grocery bag. When you go to the grocery store, you buy products that you know that are made by companies that you are familiar with such as Coca- Cola, Kellogg’s and General Electric. If you bought a piece of these companies you would be buying a stock.

When you go to check out of the grocery store, the bagger puts your products into a grocery bag. A mutual fund portfolio is grocery bag of stocks and/or bonds.

What I have done is created the grocery cart or a portfolio of six mutual funds that complement each other and are right for someone who is retired. Each grocery bag, or mutual fund, will have two hundred or more positions.

Can you see why having a portfolio of six mutual funds made up of over 1,200 positions will reduce your risk?

Connection, Not Correction

After I told the preceding story, my client thanked me for taking the time to explain and both saw the value in reducing their risk. The reason why they bought my recommendations was because I did not try and correct them, rather I tried to connect with them to help them do what was in their best interests.

If you are ready to take your business to the next level, schedule a complimentary 30-minute coaching session me by emailing Melissa Denham, director of client servicing.

Dan Finley
Daniel C. Finley is the president and co-founder of Advisor Solutions, a business consulting and coaching service dedicated to helping advisers build a better business.

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Wealth Transfer: Family Philanthropy as a Conversation

Your clients have a dream.

Longtime clients Jack and Sheri are also longtime animal lovers. Over the years, they’ve shared with you their dream of starting a dog rescue for senior canine citizens. As you’ve guided Jack and Sheri in making important decisions about their investment portfolio, you’ve also discussed how a portion of their wealth could be directed toward realizing their lifelong desire to help homeless older dogs.

But are Jack and Sheri’s children, Alex and Alyssa, clued in to their parents’ animal aspirations? And—just as important—do they support them?

Maybe. But more likely, maybe not. That’s because conversations about family wealth and its disposition following a triggering life event can be, well, uncomfortable.

Here’s your opportunity to demonstrate your concern—and your expertise. By bringing Jack and Sheri’s kids into the family conversation about philanthropic giving, you not only enhance your value in the eyes of the parents but also set the stage for developing a relationship with Alex and Alyssa, which could eventually lead them to sign on as clients as well. Considering that most heirs switch advisers after their parents pass, connecting early and often with potential second-generation clients could be the lifeblood of your practice.

A Conversation Starter

As a trusted adviser to a family, you can highlight the true value of your relationship by helping them prepare for the challenging decisions surrounding wealth transfer. While discussions about family wealth can be fraught with emotion, using philanthropy to start the dialogue may help diffuse tension and open the door to a meaningful exchange.

An annual family meeting offers an ideal opportunity to broach the subject of philanthropic giving. Prior to your inaugural meeting, which should include your couple clients and their children only, you should:

  • Educate families on the importance of legacy conversations in ensuring a successful wealth transfer to the next generation. Your goal is to help them articulate their individual and shared goals for their wealth, as unique as those goals may be.
  • Have each partner complete a questionnaire that probes for answers about family success stories, the family’s values and views about philanthropy and family giving.
  • Discuss the couple’s responses in a follow-up meeting and use them as a basis for developing an agenda for the initial family meeting.

Aligning Family Values with Giving

This first meeting provides a forum for parents to communicate information to the next generation—and for the next generation to ask questions about this information. You’ll want to facilitate family dialogue by encouraging the parents to share their success stories, which will highlight their family values. In turn, those family values will naturally lead to a conversation about how they can express their beliefs through philanthropic giving.

Discussing family philanthropy introduces the subject of wealth transfer in a way that will make talking about money more comfortable. It’s also a great tool for children to learn about finance and investing. To further engage their children, the parents may want to task them with identifying and researching some charitable organizations to consider supporting. At the next family meeting, family members can continue this conversation and decide where they may want to gift a small donation provided by the parents.

To read more, visit Janus Henderson’s Wealth Management resources.

Matt Sommer

Matt Sommer is Vice President and leads the Defined Contribution and Wealth Advisor Services team at Janus Henderson. In this role, he provides advice and consultation to financial advisers surrounding some of today’s most complex retirement issues. His expertise covers a number of areas including regulatory and legislative trends, practitioner best practices and financial and retirement planning strategies for high-net-worth clients. 


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Guided Mastery: Helping Your Clients Find (or Re-Discover) Investing Confidence

As you’re scrolling through your daily videos (we all do it), you may come across an Olympic-level skier falling right out of the gate, an accomplished stage actor flubbing his lines or a famous crooner forgetting the words to the National Anthem on live TV. Besides the fact that, for some reason, many of us are unable to stop watching these types of videos, one thing unites each incident: a crisis of confidence.

Confidence is a fickle, erratic thing. It can take years of hard work to gain, and only seconds to lose. In the world of investing, confidence can be one of the most important pieces of the puzzle when it comes to staying on track toward our goals, and yet it doesn’t receive nearly the same amount of coverage as topics like becoming a successful investor.

How do we help our clients go about getting, or re-discovering, the self-assurance we need to get to our goals?

The Root Cause: What Are We Really Afraid Of?

Money remains the single top stressor for Americans. In fact, according to the American Psychological Association, money has been our top concern since 2007, the first year the organization ran the Stress in America survey. It comes as no surprise that money was on the minds of many in late 2007 (and still is) given the market environment during that time.

On October 1, 2007, the S&P 500 closed at a level of 1,549.38, a high at that time. From there, things went steadily downhill, with the index bottoming out at 735.09 on February 1, 2009. This brutal bear market likely took a toll on the confidence of all investors.

David Kelley, international influencer and co-founder of innovative design firm IDEO, believes that a loss of confidence is often comes from our fear of judgment.

In his popular TED Talk “How to Build Your Creative Confidence,” Kelley discusses a situation in his third-grade classroom where his friend Brian was making a horse out of clay. A girl sitting at Brian’s table leaned over and said, “That’s terrible. That doesn’t look anything like a horse.” Brian’s shoulders sank, and he threw the clay back into the bin, never to use it again.

I have a similar story involving struggling with multiplication tables when I was a child, and I still vividly remember how many years it took to feel even remotely confident in anything that requires math (I still ask my wife to double-check tips at restaurants). According to Kelley, these types of stories are common, resulting in many of us growing into adulthood feeling like we’re “not creative,” “not good at math” or “not the investing type.”

Kelley dug deeper into the issue of confidence loss to try to find a solution. He began working with Albert Bandura, a renowned psychologist and innovator in the field of phobias. Specifically, Bandura pioneered a process he terms “guided mastery,” in which, by taking small steps, a person can move from debilitating fear to complete confidence (or “self-efficacy”). To illustrate the “guided mastery” process, Kelley described Bandura’s experiment with ophidiophobia, or the abnormal fear of snakes where Bandura guided a group of people terrified of snakes from refusing to go into a room with a snake to holding the snake in their laps.

If you’ve ever known anyone with a crippling fear of snakes, you can understand how amazing this truly is.

While Kelley’s point is about creative confidence, I believe the process of “guided mastery” has interesting parallels and potential applications to the world of investing.

In many ways—especially for those who are exposed only to the constant stream of negative retirement savings statistics, scare tactics designed to initiate sales conversations and forecasts of another impending financial crisis—investing in the markets can be a truly scary proposition.

If you use the parallel to a phobia, one false move can be enough to make us lose our confidence, possibly for good. Kelley and Bandura show us that, through small steps and minor victories, even the most powerful phobias can be overcome. Here are a few tips to help clients get started.

1.) Recommend Clients Make a List of What They Don’t Know

When it comes to finding a place to start in building investing confidence, it might make sense to have clients start with what they know they don’t know.

By encouraging clients to make a list of the top five or 10 things they know they want or need to know about finance or investing, you have provided them with an all-important foundation. From that list, you can work together to come up with search terms to put into Google or their search engine of choice.

Once they’ve read a few articles and/or watched a few videos, they will be able to check a few of the basic items off their list, and will also begin to understand what type of educational content works best for them. The more they consume, the more they understand what they like and what truly helps them build knowledge and confidence.

The rise of the do-it-yourself culture, powered by video platforms like YouTube, has made learning the basics of almost any skill and/or industry more accessible than ever before. In addition to holding an amazing library of educational content, YouTube is also the second-largest search engine in the world by volume, and thus can provide a great place to start checking items off of their list.

As you help clients move through their list, I think you will find that you’re able to help them add new questions and topics to a larger list as you go. Not only will they be able to dip their toes into more advanced ideas as they move forward, but they will also be able to connect the original terms they learned with new terms, which will lead to a wider understanding of the topics themselves.

2.) Encourage Clients to Celebrate the Small Things

As you work toward helping clients gain knowledge and build confidence, don’t forget to encourage them to celebrate the small successes along the way. Yes, it’s a cliché, but I believe there’s quite a bit of truth behind the common platitude for a couple of reasons.

First, the road to investing confidence can be long, and focusing solely on the ultimate goal can be overwhelming. While a focus on the finish line is certainly important, adding a few horizon lines along each step of the journey can make the goal seem more achievable. Our brains are actually not wired to hone in on the distant future, so maintaining short-term benchmarks is generally a more effective way of staying on track.

Second, never underestimate the power of positive reinforcement. Because saving and investing success generally happens over the long term, it can be difficult for clients to see how much of an impact their hard work and diligence is making from month to month. Celebrating the fact that they saved 10 percent of their paycheck over a three-month period or that they made it through a whole year without taking any money out of their retirement savings can help them maintain perspective beyond what the numbers are showing over the short term.

3.) Help Your Clients Avoid Dwelling on Their Mistakes

Investing over a lifetime is a marathon, and it’s natural to make mistakes along the way. As you well know from your daily meetings, when investors do make an error or miss an opportunity, it is often magnified by the fact that they are forced to watch constant coverage of the teenage billionaire who went right when they chose to go left. It’s not a great feeling, but few things can hurt our confidence more than attempting to compare our situations to others. It’s certainly easier said than done, but it can pay to take a moment to remind our clients (and help them come to the same conclusion), for the most important things at least, that they are the best judge of their own success.

As it pertains to investing and the financial markets, clients have to give themselves a break when it comes to a tough week or month in the market. I encourage you to help clients take it to the next level and to completely get away from thinking about the markets in terms of “winning and losing.” The potential to win or lose implies a game, and it shouldn’t be a game when it comes to their hard-earned money.

Instead, help clients think of each bump in the road as the next step toward confidence. When I was first starting out and knew very little about investing basics, when I saw or heard something telling me I was behind in some way, I committed to making sure I understood exactly what that meant.

If you can help train your clients to either do the research on their own or come directly to you when they receive an email telling them about a decision they must make right away, see a term they don’t understand or come to a crossroads at which they struggle to make a decision, you can serve as that calming element that makes each mistake or stumble a lesson.

4.) Help Prospects Know That Expert Help Is Available

Each of us has instant access to an unbelievable amount of information on almost every topic imaginable. Like anything else, it’s up to every investor to decide if they want to go it alone, or enlist expert support.

It’s certainly open to interpretation, but in my opinion, the concept of guided mastery can work both ways in the investing world. Whether an investor chooses to work with a financial professional or not, the creation of a plan, the diligence to stick with it and the commitment to build knowledge one step at a time are all important parts of the process. There are, of course, pros and cons to both strategies, and the decision all comes down to each investor’s specific needs, goals, and unique financial situation.

Because the world of investing is so vast and complex, I truly believe financial confidence and even skill require a commitment beyond simply mastering the nuts, bolts and basics. At some point, most investors will reach the point where they can no longer manage their financial landscape on their own. From a prospecting standpoint, this is why creating (or at least sharing educational content) can be so important. When that investor reaches the point of wanting or needing help, I believe they are more likely to go with someone who has already provided them some value along the way.

All else being equal, I believe that, at the very least, investing confidence is something that is attainable for us all. Just as Kelley encourages those who have lost their creative confidence, through a series of small steps and successes, you can be the guide who helps clients work toward a place where they feel they have done what they set out to do, and eventually, take the last step and touch the snake.

Dan_Martin_Headshot
Dan Martin is the Director of Marketing for the Financial Planning Association®, the principal professional organization for CERTIFIED FINANCIAL PLANNERTM (CFP®) professionals, educators, financial services professionals and students who seek advancement in a growing, dynamic profession. He is an award-winning author with a diverse financial services industry background in marketing and communications. He earned a journalism degree from the University of Denver and his MBA in marketing from the Daniels College of Business.

 


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These Tips Can Help Advisers Attract—and Keep—High Net Worth Clients

By Robert Powell, MarketWatch.com

For many advisers, high net worth individuals or households — those with more than $1 million in investible assets — are a kind of Holy Grail.

The reasons are clear. HWNIs, which represent just 0.7 percent of the world’s adult population but own 45.2 percent of the wealth, are good for business. They’re highly profitable and loyal, according to Rebecca Li-Huang, a wealth adviser at HSBC, who wrote a chapter in the June 2017 book Financial Behavior: Players, Services, Products, and Markets.

Consider: An adviser can earn one-half of 1 percent of assets under management on a $10 million account, say $50,000 a year. By contrast, the very same adviser would earn only $1,000 a year on a $100,000 account. For financial advisers, the attraction should be obvious.

But there’s more to the story, and advisers should get to know the psychology of HNWIs before taking them on as clients. Just like regular folks, Li-Huang wrote, they are prone to behavioral biases and judgment errors, not perfectly rational, utility-maximizing, unemotional homo economicus.

In short, wrote Li-Huang, they are humans. And in the U.S., according to Li-Huang, they often share a particular way of thinking about what they want from their money that financial advisers should consider when trying to serve them.

American HNWIs like to direct their investment according to their personal beliefs and values, and they play a large role in public life through philanthropy and politics, according to Li-Huang. And many want to leave a legacy by giving back to society while generating a financial return on their investments.

“The holistic returns on cultural, environmental, social, and political causes are gaining importance in wealth management,” wrote Li-Huang. “The trend toward helping HNWIs address their personal aspirations and social-impact needs is part of a broader wealth management industry transition toward giving holistic wealth advice.”

Focus on goals while mitigating stress

How can advisers do that? For starters, according to Li-Huang, advisers can focus on goals-based financial planning, holistic wealth management, and services that address investments, lending, tax and estate planning, insurance, philanthropy, and succession planning.

With goals-based planning, wrote Li-Huang, success is measured by how clients are progressing toward their personalized goals rather than against a benchmark index such as the S&P 500 stock index. (Publicly traded securities don’t necessarily contribute that much to a HNWI’s wealth, notes Li-Huang, as just one in eight millionaires say equities were an important factor in their economic success.)

Still, she argues, HNWIs do need to invest in diversified markets and use tax-efficient strategies. And advisers can add value by “mitigating psychological costs, such as reducing anxiety rather than improving investment performance” and by focusing on financial planning and advice on savings and asset allocation.

Li-Huang cited research that suggests that investors don’t necessarily want the best risk-adjusted returns but, rather, the best returns they can achieve for the level of stress they have to experience, or what some call anxiety-adjusted returns.

In the cast of HNWIs, they tend to practice something called “emotional inoculation.” They outsource the part of the investment decision-making that induces stress, according to Li-Huang.

HNWIs are especially looking to their wealth manager for help with philanthropy. They are looking for “support and advice, such as setting goals and defining their personal role in their areas of interest, identifying and structuring investments, and measuring outcomes of their social impact efforts,” she wrote.

Given that advisers need to provide their HNWI clients with tax and philanthropy specialists.

In advisers they trust

When HNWIs consider selecting an adviser, they tend to focus more on honesty and trustworthiness than past investment performance or standard professional credentials, according to Li-Huang.

That’s not to say that professional credentials and competence don’t matter — they do — but, rather, that they are not sufficient in and of themselves, according to Li-Huang.

HNWIs — who tend to have less time and resources for due diligence than typical clients of financial advisers — use something called “trust heuristics” when searching for an adviser with whom to work.

In other words, they’re even more likely to assume that the category leaders are among the best in a highly regulated world even as they hold advisers referred by family members, friends and acquaintances in high regard, according to Li-Huang.

Consequently, perhaps, HNWIs tend to trust their advisers much more than less wealthy retail investor trust their financial advisers.

So, what is trust to a HNWI? According to Li-Huang, HNWis trust advisers who show signs that they’re acting in the client’s best interest, reach out proactively, charge reasonable fees, deliver mistake-free work — and admit when they’re wrong.

In many ways, attracting and retaining HNWIs isn’t much different that getting and keeping what are called “mass affluent” clients, who have with assets of less than $1 million. But the differences are worth noting, because the stakes are higher, and a bit of extra knowledge can pay off.

This story first ran on July 21, 2017. Reprinted with permission.

Related Links from MarketWatch:

This is one of the best marketing moves an adviser can make

How preparing for a partner’s death may have saved this company


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3 Levels of Trust and Why They Matter

In this year—2017—there is a “crisis of trust.”

So says the 2017 Edelman Trust Barometer, an annual global trust survey. Not since the study began tracking trust among the global population have they found such a broad decline in trust in all four key institutions—business, government, non-governmental organizations and media.

The 2016 survey noted that financial services are the least trusted industry of any they surveyed.

With the fall of trust, the majority of respondents now don’t believe that the system is working for them. In this climate, people’s societal and economic concerns turn into fears, spurring the rise of populist actions which have played out across the globe.

Such is the importance of forging trust among your clients. When it comes to trust there are three levels and advisers should know each one in order to be more trustworthy in the eyes of your clients.

As the chair of financial and legal innovation at ForbesBooks, and as a former financial coach, I’ve spent a lot of time focusing on the issue of trust. Trust is the foundation of the financial adviser–client relationship. We all know that. It’s particularly crucial when somebody is in a vulnerable position and with family and health, finances are among the most vulnerable areas we have.

Trust is a powerful intangible asset, defined differently by each client. Allen Harris, CEO of Berkshire Money Management, Inc., said that when it comes to the adviser-client relationship, trust is sometimes a too-easily-earned commodity. Clients want to trust their adviser and sometimes do so unquestioningly.

“Unfortunately, financial advisers don’t have to do much to earn that initial trust,” Harris said in a recent interview. “The client needs help and believes that someone with a shingle has their best interest at heart.”

study by the Wharton School looked at three levels of trust between advisers and clients. The first is trust in knowhow. Investors are looking for someone whose competence inspires trust. This first level addresses the question, “Do you know what you’re doing?”

“Many people find advisers by way of referral, so they feel they can trust the adviser because someone else trusts them,” Harris told us in a recent interview. “But why did that first person trust the adviser? Maybe the adviser did something to earn that trust, but maybe not. Clients get lucky a lot, because most every adviser is a good person who means to do good. But like in any profession, that’s not always true. So the client rationalizes trust by a gut feeling, a referral or a slick brochure.”

The second level is trust in ethical conduct. This level addresses the question, “Do I trust you not to steal money from me?”

“If you are trying to protect from embezzlement, that’s easy,” Harris said. “You want a public held, highly regulated, closely scrutinized custodian of your assets. Then the client always has the access to and the ability to view their money.”

If the client is trying to protect herself from malpractice, one big problem is that the SEC and FINRA do not allow investment performance to be a consideration in complaints against an adviser. Don’t get me wrong—investment performance isn’t the thing that should be a deciding factor, but it should be a benchmark to be sure clients make money when the market goes up but also that the adviser is proactive in protecting the portfolios during down times. That’s the type of referral you really want.

The third level of trust is trust in empathetic skills. This level addresses the question, “Do you care about me?” There is no formula for this one. CNBC sites a study released by the CFA Institute which shows that so-called soft skills—typically things such as relationship-building and interpersonal communication—will be more important than technical skills in the coming years.

These attributes—a proven track record, an ethical reputation and sincere empathy—inspire trust on all three levels. For financial advisers, trust is not simply a nice thing to have, but a critical strategic asset.

Harper Tucker
Harper Tucker is the chair of Financial and Legal Innovation Practice and vice-president of Authority Marketing, a leading the author acquisition process for ForbesBooks and Advantage Media Group