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Financial Planning > Behavioral Finance

Be the teacher

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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 (, 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.

The Heartland Institute is another leader in the financial education world. The institute believes that financial education in the workplace is one of the best ways to help employees prepare for their futures.

Alan Gappinger, chairman of the institute, says that there is no such thing as too much education. He warns, however, that education without application gets you nowhere.

“Education by itself does little to solve needs and build financial security. Education without action isn’t going to solve a person’s financial problems.”

Gappinger believes that action is most needed in the workplace. He explains that the institute’s inspiration comes in part from the general lack of financial education in secondary schools and universities in the United States. “Americans reach the workplace without good, effective knowledge concerning basic financial planning issues.”

In response to this pervasive problem, the institute designed classes where advisors teach employees the financial basics. Through hands-on exercises and in-depth discussions, advisors teach employees about various financial products – without solicitation – and the employees walk away with greater financial confidence and preparation for their futures.

For advisors, this concept may be worth a second look. It provides a venue for financial education and an avenue to build a client base. Although only generic products are discussed in the classroom, teaching in this format can lend serious credibility to your name. And after class is over, you may find that you have built a foundation for new and lasting relationships.

Tools and tips Some of you may be thinking that it’s time to beef up on the amount of education you provide for your clients; others may simply need some fine-tuning. If tips are what you are looking for, look no further. Maselli says there are three main tools most advisors can use to educate clients – tools that should be used in combination.

First, education begins in normal, everyday conversations that happen over the phone or in face-to-face meetings. Maselli suggests that you carefully craft the conversation to include some educational elements. “The advisor needs to think about the goal for every client interaction and then carefully plan what they want to cover in order to reach that goal.”

Second, written communication is essential, especially for clients who are visual learners. Maselli reminds us a lot of people cannot learn from a long, drawn-out conversation. This is when materials like newsletters, articles and marketing materials come in handy.

“A good advisor will build a library of approved, written materials that can help educate clients on general and specific topics,” Maselli says.

Last is Maselli’s favorite client education tool: the seminar. From client appreciation dinners to symposiums, from workshops to adult education programs, Maselli says, “The power of seminars cannot be overstated.”

“Seminars allow an advisor to really shine in front of their clients and prospects. In this venue, you can be seen as a powerful and polished professional who can educate and even inspire an audience. This image can have a major, positive impact on your career,” he says.

No matter what forms of education you choose to encompass in your business, Maselli asserts that it is not only important to understand what you are teaching and why you are teaching it, but it is also important to evaluate how much education you are providing on a client-by-client basis.

Whether you are more of an educational purist, who believes that there can never be too much education, or you walk the line with Maselli’s ideology, that education is best allocated on an individual basis, it is essential that you understand your role as a teacher. Part of being a financial advisor is educating your clients on the intricacies of their financial portfolios. In the long run, the best client you can have is an educated one.


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