In any professional services business, an important tool of our trade is our ability to communicate with, engage, educate and connect with those whom we serve. Yet, in my work with helping clients better manage critical business interactions, I find it astonishing that professional schools such as law, medicine or business provide no training in how to engage with clients on a practical and human level. As financial advisors we are no different. Although we are very good on the technical side of finance, many of us are less competent when it comes to navigating the extremely complex human side of the business, which at times demands a sophisticated level of expertise.
Clients frequently know very little about financial planning, product options and investments. For them it is commonly a convoluted labyrinth of unintelligible information, which overwhelms and frightens them. They become submissive and dependent as a result, and feel quite impotent in the financial planning process. To be effective advisors, we need our clients to be partners with us rather than we being masters over them. We want them to be active participants rather than passive observers, and they cannot be partners and participants unless they have acquired a basic level of knowledge and understanding.
An important, but often neglected role then, as we advise our clients, is one of educator. We need to educate them so that they become more knowledgeable, informed, feel a greater degree of control and are less overwhelmed and intimidated. This will allow them to feel empowered and informed in determining their financial goals, objectives and future. To serve this essential and rightful need of our clients, we need to go beyond our perception of the financial advisor’s traditional role and add another arrow to our quiver: We need to bring out that educator within us.
When I think back to my school days, many of my teachers were quite mediocre. It was those who taught me to fly whose excellence really stood out. A certified flight instructor is the quintessential teacher and one whose very life depends on his teaching acumen. Flying together with pilots-in-training requires nerves of steel because of the very great potential for danger. A novice pilot can put the aircraft into a dangerous altitude quite rapidly, and put his own life and that of his instructor in peril. The instructor needs to make sure that his instruction leaves no margin for that kind of error whatsoever — not the standard that most teachers need to meet. It should therefore be no surprise that I look towards these magnificent men in their flying machines for best practices in teaching and instruction.
One of the more complex aspects of learning that a pilot does nowadays is the transition from analogue flight instruments to a digital video screen. This advanced cockpit technology can be quite overwhelming because of all the additional bells, whistles and other gee-whiz stuff which, when mastered, can enhance flight safety and pilot awareness. The problem is that when pilots attempt to use this technology too much and too soon, they can become distracted by pressing buttons and twisting knobs as they search for desired functions and correct screen displays. The very technology designed to increase safety has in fact jeopardized it.
Those high-performing educators — the flight instructors — understood that the key to unlocking this paradox lay in the way it was taught. They proposed that the key to effective teaching is to provide information, concepts and principles in a way that the student can integrate them, master them and develop confidence in applying them. As a result, they developed a curriculum which would expose the technology little-by-little, starting with the basic essential features which are absolutely necessary to fly the aircraft safely. They would not expose additional features until those were practiced and mastered over time. Only then would they advance to the next more complex ones.
As with pilot training, financial advisors have an enormous responsibility to educate our client. However, with expansive knowledge about our areas of expertise, we are apt to dispense advice without realizing the less informed clients may become quite overwhelmed with the data, facts and figures that we present to them. We can become quite self-absorbed as we wax forth about accumulation and distribution plans. We proudly showcase our high level of expertise as we present reams of investment-performance data. Finally, just as our clients are demonstrating severe symptoms of abject confusion, we attack them with our precious pie charts! We have done a wonderful job of plying information, but without realizing it, we have failed in our responsibility to educate our clients, and to be sure, there is a vast difference between educating and merely informing.
How then do we transform from simple information providers to effective educators? We need to take a page out of the flight instructors’ manual. Just like the process that flight instructors employ to teach pilots how to safely maximize highly sophisticated cockpit technology, we too need to educate our clients about sophisticated economic theory and financial solutions little by little. We must first expose them to the basic and essential information without overwhelming them. Only after they have integrated, digested and mastered that, should we proceed to the next level with each step building on the previous one. Our clients will then become educated, knowledgeable and active participants in planning their financial future. We will have adequately equipped them to provide input that will facilitate well-informed decisions. They will feel empowered and will recognize us as the consummate professionals that we are.
- Remember that we are partners with our clients in advising them and not masters over them
- As financial advisors it is our responsibility not just to inform our clients but to educate them too
- To effectively educate our clients we must be careful not to overwhelm them with too much information at once, but provide it in a way that they can integrate it and master it.