Be the teacher

How do you break through to your prospects or clients? We all know that the No. 1 rule is to show that you care about their lives both personally and financially. But, you need to prove that you’re more than just a good listener. You need to prove that you know your stuff. How? Educate your clients.

Senior clients, especially, want to feel at ease with their advisors and have faith in their abilities. What better way to showcase your professionalism and knowledge than to teach your clients about finance and the options you can offer them? It’s your job to make sure your clients are well informed about their financial futures and the products they invest in. The worst thing they can ever tell you is that they didn’t know or didn’t understand. Your clients’ knowledge is a reflection of you and how well you did your job. If something is left unsaid or unexplained, you are ultimately responsible.

Chris Condron is a big believer in client education. As AXA Equitable’s chairman and CEO he knows a thing or two about advisor-client relationships. “In our role as financial professionals,” he says, “it’s our responsibility to educate [our clients].” Although most advisors agree, some are more educational purists than others. Frank Maselli has another take. As executive vice president and director of the IXIS Advisor Academy, an advanced training program for financial advisors, Maselli promotes limiting the amount of information on a client-by-client basis, suggesting that the finer details be left for the advisor to worry about, rather than the client.

“It’s your job to understand – not theirs,” he says. “Too much information can backfire with some clients.”

Maselli says that client education should be at the core of every advisor’s practice, but to what extent education plays in the relationship requires a sensitive approach. Baby boomers, for example, want to know how and why a particular financial product can help achieve their goals. They want to feel in control, he explains.

In this case, “Making them smarter only improves their experience and better enables them to make decisions, which in the end is to everyone’s advantage.”

But where he and other advisors like Condron disagree lies in the fine print. Maselli reminds us that every client is different. That’s why he tailors the amount of education to the individual client. He explains that some clients might feel like the advisor is leaving out key information and merely glossing over the details, while others might feel confused by the onslaught of information and determine that the product is too high risk.

“Even worse,” Maselli says, “some clients may see you as trying to pass too much of the responsibility of the investment decision back onto them.”

However, there are two key things that Maselli always teaches his clients about: benefits and risks. He helps answer basic but essential questions like, “What’s in it for me?” and “Why am I doing this?”

He also helps his clients understand that risk is a factor in any investment scheme. To be a top advisor, you must help your clients understand this.

“The issue,” Maselli says, “is how to manage those risks and blend them properly in a portfolio that gives clients a reasonable chance of reaching their goals.”

Education in many forms Independent advisors, organizations and large-scale carriers alike have created various ways to teach clients about their finances. At AXA Equitable, for example, a great focus is placed on education early on. Advisors take a comprehensive look at a client’s financial profile. They offer clients the opportunity to attend a series of seminars where they can walk away with greater financial knowledge as well as educational materials about products and pressing financial issues. AXA’s motivation? A more educated client.

“Well-informed consumers,” Condron says, “make better financial decisions, are more likely to achieve their financial goals and achieve higher returns on their investments.”

That’s why AXA continues to launch new ways to educate their clients. It recently developed the Variable Annuities Knowledge Center (www.variableannuityfacts.org), which is operated by a stand-alone nonprofit organization. Condron says the Web site is designed to provide general, fact-based information about variable annuities, which helps clients understand the role variable annuities can play in their retirement plans, and lays a foundation to help clients ask their advisors the right questions.