Let’s wrap up this series on profiling. If you have been following so far, you know that some months ago I asked my readers to send me their favorite profiling questions. I have received over 600 questions to date, and as my thanks for helping, I will send all those who sent me questions a copy of all the questions.
In earlier issues, we have concluded that you need “too much information” to keep you in compliance with NASD rule 2310. Since your only real choices are too much information or too little, and since too little is probably an arbitration ticket, we conclude you need too much information.
We also concluded that you need multiple questionnaires. You’ll just have to go back to previous issues in this series at researchmag.com. Or, I’ve combined all the issues on profiling into a single piece, “The Good Way to Sell,” available at billgood.com/goodway.
My very strong recommendation is that you take questions from this article and last month’s article and craft them into a series of questionnaires which you would, of course, then submit to compliance.
Please note: I have not attempted to provide all the questions you could and probably should ask. I have approximately 1,250 words. The word count of just the questions alone is 7,895. So use these as a starting point to develop your own questionnaire.
As you run the questionnaire, you will undoubtedly want to add or delete questions, which means you go back to compliance. But when you get it right, you will have a document that will both protect your business and help you offer the right products and services.
In last month’s article, we covered how to gather information for points 1, 2 and 3 (below). In this article we will take up questions advisors nationwide are asking that I believe will help you satisfy No. 4.
1. The customer’s financial status;
2. The customer’s tax status;
3. The customer’s investment objectives; and,
4. Such other information used or considered to be reasonable by such member or registered representative in making recommendations to the customer.
Point No. 4 is obviously very vague and general. That’s why you would need questions in the following areas:
Personal and Family Dynamics. Questions on family are designed to give you a snapshot of family relations and especially obligations, which may require additional planning on your part. The personal questions, which should be asked of each decision maker, cover personal preferences and activities, both of which may also need to be factored into the planning process.
The personal portion of the questionnaire covers three dimensions: personal history, lifestyle and special interests.
Personal HistoryWhere did you grow up?
What is your best childhood memory?
What is your first “money memory?”
What person had the greatest impact in shaping your life? How?
Tell me about your upbringing.
How was money treated when you were growing up?
LifestyleHow do you prefer to spend your time and money?
What is your favorite college sports team?
What is your favorite pastime or hobby?
Where is your favorite vacation spot in the U.S. and outside the U.S.?
Special InterestsWhat stirs passion (zeal, anger, excitement) in you?
What are your favorite activities?
What are you passionate about?
What are your favorite hobbies?
What kind of pets do you and your family have?
What do you do for fun?
Family DynamicTell me about your family.
Ask of a grandparent, “Do you think your children will be able to give their children the same type of education that you gave them?”
Tell me about your parents. If living: How old are they? If deceased: Cause of death? Age at death?
If you could pass along one financial lesson to your kids or grandkids, what would it be?
Are you now or will you at some point in the future need to provide financial support for your parents or children?
Have you ever had a personal situation where a relative, parent, aunt, uncle or neighbor needed nursing-home or home-care services? How did it turn out?
How did you meet your spouse/partner?
What discussions have you had with your children?
Is there anyone else in your life you may have a financial responsibility for at some time? Your parents are all set? Your in-laws?
Investment Strategy. Here you pull apart the current portfolio and find out what they did, why they did it, and especially whether or not they do in fact have an investment strategy, and if so what it is. You should also include questions on the current state of, or lack of, any financial planning they may have done or want to do.
Status Quo. Here you review what they own and how they feel about it.
How do you feel about your current financial situation?
How would you characterize your savings habits and why?
What is your most important asset?
How often do you review your finances?
Do you understand how much downside your portfolio is exposed to?
Do you have a will?
Have you had your will reviewed in the last five years?
Tell me about your investments outside of the country. (Most of my clients have some as they have international ties.)
Are there investments in your portfolio that have sentimental value?
Risk Tolerance, Risk Management and Legacy. This provides an opportunity for you to discover what they are doing to manage the various other risks in their life.
Are you willing to lose larger sums of money in the short term in order to potentially enjoy higher returns in the long run?
If something happened tomorrow, and the market began to react negatively, what would you do?
Is capital preservation at all costs always of high importance?
Can you tell me who your beneficiaries are on your insurance and investment products?
Who is the owner of your life insurance policy?
When was the last time you reviewed your life insurance program?
What sort of legacy do you want to leave behind, other than money?
What, if anything, would you like to leave behind and to whom?
Expectations. There are at least four dimensions to expectations: What the client expects from the advisor, the portfolio, the economy, and what the advisor can expect from the client. This would probably be the last area I would explore.
What would you consider to be a reasonable rate of return on your money?
How would you know if you were financially successful?
What should we as a company do to earn and then keep your business?
Rank the importance of the following words: fees/ education/ performance/ service.
We seek to be the primary source of investment advice for our clients. What can we as a team do to gain your respect and trust as financial professionals?
What should I expect from you?
Bill Good is chairman of Bill Good Marketing Systems in Draper, Utah; see www.billgood.com.