We all know it: Modern day financial advising isn’t about transactions, sales pitches and reeling in clients. Rather, it’s about understanding clients’ financial needs, and how they relate to their wants, hopes and dreams. According to industry experts Alan Parisse and David Richman, in their new book, Questions Great Financial Advisors Ask… and Investors Need to Know, an advisor’s ability to diagnose and understand “each client’s unique investment personality or ‘wiring’ is what ultimately determines your success as a broker.”
Most client investment mistakes are emotional, not intellectual, claim the authors. They tell readers that it’s important to ask the right questions in order to get the best responses. During meetings, they recommend that advisors stick to the 80/20 rule, and listen 80 percent of the time and then talk the remaining 20 percent. “If you’re like most people, you won’t get close to that ideal, but try to anyway,” they write. “If you achieve only a 50-50 split of listening and talking, you’ll still stand far ahead of the crowd.” Also, they believe that most clients don’t want a prepared lecture or slick Power Point presentation. Rather, they want to be heard and understood.
To listen well takes a good deal of attentive power. “Ask your questions, restate them, confirm them, listen to the answers and then probe further,” write Parisse and Richman. They recommend questions and follow-ups such as:
o “So what you’re saying, is…?”
o “Let me see if I understand.”
o “How would you feel if circumstances change?” They also recommend:
o Establish eye contact that engages without being overly intimate
o Mirror the client’s body language to create connection