From the November 2006 issue of Wealth Manager Web • Subscribe!

November 1, 2006

Bad Signs

When I enter a new place, I like signs that are easily viewed and easily understood. Unfortunately, most of the time when I'm looking for directional guidance, the signs are missing, hard to see, in the wrong place or simply unclear. Good signage can be so helpful and should not be all that difficult to create--and yet it is all too rare.

Some of the best signs I've run across can be found in the London Underground and the Paris Metro. They tell you where you are, when the next train is expected, which line to take and how far it is. I never get lost in either place because the signs are so clear.

Unfortunately in my own country, most signs are made and installed by people who already know the way. For them, it doesn't matter if the signs are clear; they don't need them. As a result, signs are placed where trees grow to obscure them. Signs indicating a turn are placed where you don't know if you should turn at this corner or the next. Signs are missing or fall down, and nobody bothers to replace them.

Some towns have it figured out, and some just don't have a clue. I'm guessing that when new signs are installed, they're never tested on a group of people unfamiliar with the town to see if the directions are good. Some bureaucrat is probably assigned responsibility for deciding where signs should be placed and what they should look like. Crews install them, hopefully in the right place. Town citizens are the only ones who make suggestions to the "town fathers" about improvements in the signs, and they probably never look at them since they already know where they are going. Visitors don't have the time or the knowledge of City Hall to send in comments about how the signs misled them or weren't viewable, helpful or decipherable.

We were in Kennedy airport the other day in a rush to get to our gate, 9A. It was in a different terminal than gate 9, but there were no signs to indicate that. We followed the first few 9A signs, and then they just disappeared. Luckily, we found an employee who was going where we were headed and followed her. After walking several hundred yards through crowded corridors, windowless passages and finally back to normal-looking terminal space, the signs appeared again.

All this got me to thinking about how we introduce our clients to unfamiliar territory and whether we are giving them good signs or bad ones.

For example, when you enter into conversation about investments with a new client, do you explain what a stock, bond or mutual fund is? It's all so familiar to us that we forget that it's not to everyone. When I first use those terms, I try to remember to ask the client if it would be helpful for me to define them. About half the time, I sense a huge sigh of relief from the client. They know they should know what a stock, bond or mutual fund is, but they don't, and they certainly don't want to appear dumb, so they don't ask. As the conversation continues, they are still trying to figure out what I was talking about or whether they should have asked me, which means they are missing the remainder of the conversation. It's so easy to make sure your client understands your terms, and it's so disastrous when you don't.

When that sigh of relief occurs, because you were willing to ask if they understand and to help them when they don't--all with a vital sense of respect--the result is fast-growing trust and openness. Most of us remember to tell our clients that "there is no stupid question," but when you take the initiative, you prove that you mean it. That dissipates their suspicions and the questions that nearly always exist at the beginning of any client-advisor relationship:

"Will I like this person?" "Will they treat me well?" "Can I trust them?"

How else do we create bad signage in our practices?

o Many of us too often use words and jargon that clients don't understand, like "Capital Needs Analysis" or "Asset Allocation" or "Asset Class" or "Disability Insurance" or "Life Planning" or "Capital Gains Tax." Solution: Don't use jargon. When you do, recognize it and explain it the very first time you use the phrase and periodically after that. Clients don't retain everything we tell them; they are hiring us because they don't like this stuff--and that includes not understanding or wanting to learn about ideas that are second nature to us. Alternatively, stop every paragraph or two in your discussion and simply ask the client: "Do you want me to explain anything I just said?"

o We give clients questionnaires and expect them to fill them out. Every questionnaire I've ever seen incorporates words and phrases and concepts that are unfamiliar to many clients. Solution: Either sit with the client and fill out the questionnaire together or go through it first before handing it to them so that you can explain what is being sought and why it is important.

o We know our processes and systems, but our clients don't. When we move from one topic to the next, we expect them to be right there with us. But too often, they are still thinking about and trying to understand the last topic or confused about how all these subjects tie together. Solution: Provide your clients a roadmap of your process. Help them understand each of the steps ahead of time so they can be thinking about the issues and preparing for what you need from them. Help them understand and anticipate the decisions they'll be making and the input you'll need from them. This allows them to be a full partner in the process.

o We may talk without remembering to ask questions and without making sure the client is still with us. If a client doesn't want to go down that road, but we think it's important, charging ahead without making sure the client is interested and paying attention means we have lost that client, at least on that topic. Never ever lecture a client, unless it is invited. Solution: Make sure you have the invitation to lecture. Provide an overview of why a topic is important, and then ask the client if now is a good time to talk about it with them. If it's not, you don't have to abandon the subject; it might be that you simply need to come to an agreement about a better time.

o We can be so focused on our own agenda--and sometimes, on showing how much we know--that we fail to address the issues on the client's mind. Solution: After appropriate pleasantries, always ask the client if there is anything they want to be sure to discuss, and how much time they have. They pay the bill, which makes them the more important part of the pairing with you. Your agenda is meaningless and sometimes an interference if you are not first addressing the issues on the client's mind, including their time limits. If they have the time and their mind is clear of their own concerns, they will always be more open to the messages and lessons you want offer them. Start from where they are--not from where you expect them to be.

If you use good signage as illustrated by the examples above, your clients will feel more comfortable with you. They will be more likely to do the things you need them to do, more likely to accept the things you can do for them. They will make more progress towards their own goals. With more successful client relationships, you'll pick up a greater portion of their wealth, and you'll enjoy more referrals from them. A little effort on your part to ensure that your clients are comfortable and understand what you are saying will bring you many benefits.

Clients whose questions have been anticipated or solicited and treated with respect are more secure and trusting in their relationship with you, because they know they will be helped along the way and addressed with a crucial sense of dignity. It's what we all want in our own lives. When your client is in front of you (or on the phone with you), that client should be the most important thing in your life, and you should be doing everything you can to make sure their questions--asked or unasked-- are being answered, their needs are being anticipated and addressed, and they feel well attended to.

Making sure that your signage anticipates these needs and is as helpful as possible will serve your clients in the best way possible. And when clients feel they are being well served, your rewards will multiply.

Norman M. Boone is the founder and president of Mosaic Financial Partners, Inc. a fee-only wealth advisory firm in San Francisco. He is also the co-author of "Creating an Investment Policy Statement: Guidelines and Templates" and its sister software product found at www.IPSAdvisorPro.com.

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