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Financial Planning > Behavioral Finance

Questions Great Financial Advisors Ask

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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

o Nod when appropriate, and murmur comments such as “I see,” “Hmmmm,” “Oh” and “Please say more.”

Adopt a tone that matches your client’s mood and message. For instance, for “Mr. Know It All,” they recommend that advisors not debate them. Instead, ask: “Do you have a consistent investment process that can be repeated over time?” “When do you decide to sell a stock or mutual fund?” “Are you an impatient or patient investor?”

For the putterer, investing is prime-time entertainment or a major social event. For a retiree, puttering is a way to stay in the world of business. Some potential questions: “Would you rather be doing something else?” “Would you hire a money manager who says the reason he or she manages money is to keep busy?” “Doesn’t your financial future deserve more?”

Ms. Pennywise is the client who doesn’t want to pay for anything, and responds that your financial advice is too expensive. Your response: “Actually, I’m proud of the fees we charge because they reflect the value of the service you will receive. May I explain why?” Among the questions to ask Ms. Pennywise: “Can you do all the investing and related money-management functions yourself?” “Do you think a team of professionals can achieve a better return than you?”

Questions Financial Advisors Ask stimulates the dialogue needed to serve clients in today’s competitive marketplace. Although many of these ideas have been presented before, the plethora of suggested questions will be handy to any advisor seeking to increase his or her client base. The book includes a final chapter with lists of all the questions throughout the book under various categories. So, while you’re working to reach that 80/20 mark, you’ll no doubt value the multiple ways to gain knowledge about your clients.


MARY SCOTT is the co-author of Companies with a Conscience. See or write to [email protected].


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