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Practice Management > Building Your Business

Quality Time

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In our past two articles, we discussed qualitative research that JPMorgan conducted on both affluent clients and their advisors. The goal of this proprietary research was to thoroughly examine the referral process and determine what was preventing advisors from maximizing referral success. The study revealed that there was no single thing that could maximize success. Rather, it was as individual as each advisor and his or her clients. We showed that maximizing your referrals depends on a unique combination of four elements:

1. Your referral attitude;

2. Your clients’ referral readiness;

3. Quality of your relationships with your clients;

4. Perceived value of services you deliver to your clients.

Since we covered three of these elements in the last two articles, this month we will focus on the quality of client relationships.

All too often, when I speak with advisors about “client relationships,” I hear moans and groans. Underneath those groans may be the unspoken feeling that “people pay me to manage their money, not to date them.”

Granted, your clients are not paying you to build a relationship in the traditional sense; however, there needs to be a level of professional intimacy between you and your clients so that you both may achieve success.

If I haven’t lost you by using the word “intimacy,” congratulations for being open minded and wanting to learn new concepts that can enhance your practice. Often I have seen advisors shut down the second that word is mentioned. However, intimacy is not implying affection, but rather that the views of the advisor and client are aligned. We must be in lockstep with our clients, listening to them to understand their positions and feelings. We’re not talking about major psychoanalysis here and it doesn’t have to be overwhelming–all that is needed is to understand what is important to your clients.

Listening for Signals

The process to accomplish this is as simple as first asking, and then listening to the answer. Listening leads to understanding. If you understand someone else fully, then you know how to get closer to that person and work better together.

At the risk of sounding like your significant other, I’ll point out that too many of us hear but do not truly listen. Hearing is a physical ability while listening is a skill. Effective listening starts with being attentive, not interrupting, not fidgeting and, most important, reserving judgment. To become an effective listener: open your ears, shut your mouth, and open your heart. Showing interest in what your clients are saying can start with taking notes and restating what clients are saying to you.

I would be remiss if I did not add this one last thought on listening: a good listener pays attention to what clients are not saying as well as their spoken words. Look for non-verbal cues, such as facial expressions and posture, to get the full gist of what your client is telling you.

For example, Joe Navarro, a world-renowned expert in non-verbal behavior, states that when you see women playing with their hair or touching their throats and men touching their necks or faces, it generally means they are not comfortable and these non-verbal behaviors are attempts to calm themselves down. When this happens, stop speaking and ask them what they are thinking or if they have any question. It is vital that you find out what is behind the discomfort right away rather than finding out too late–such as when you get their account transfer forms.

So the level of success you’re looking for rests on really listening to clients and letting them know that you value and understand what they are saying.

Besides being a good listener, there are four principles to good relationships:

1. Work on the relationship;

2. Address problems as they arise;

3. Spend enough time together, but don’t overdo it;

4. Laugh often.

I know all this may sound like an episode of “Dr. Phil,” but don’t despair. These four principles can easily be translated into tangible business concepts with which we can be very comfortable.

Work on the Relationship

Relationships are not a one-stage process, but an ongoing effort, based on an accumulation of many little things. The end result is that the clients feel that they are understood and given what they need and want. Too often, we leave this to pure intuition. People are complicated and react to events in different ways, so the more you put a process or science to understanding these differences, the more effective you will be.

To help sharpen your intuition, you might want to refer to the June 2006 Investment Advisor article entitled, “Listening to Margaret Mead: What anthropology can teach you about the affluent.” This article provides a process for identifying your clients’ buying behaviors and tools to help you adapt your service model to their behaviors. Appreciation of clients’ buying behaviors will provide great insight into what motivates them, why they do the things they do. The most successful advisors determine what each client values most and then work to deliver value that exceeds the client’s expectations.

Keep in mind that it will often be the case that what we consider important may be very different from what our clients value. For example, we may be motivated by practicality while our clients may value exclusivity. Thus, using a very rational approach probably won’t reach clients who are motivated by something completely different.

Furthermore, without having an understanding of the way our clients are different from us and, more important, why they are different, it is too easy to end up judging as opposed to working within the confines of our clients’ motivations. This is a critical distinction that we need to be aware of so that we don’t end up judging another person and creating distance and defensiveness.

Several advisors, after reading the article on anthropology and the affluent, said to me: “I just realized that everything I do is what’s comfortable for me, not necessarily for my client.” Are you similar to many of your colleagues? Think about whether you are truly client-centric or self-centric.

An easy test is to see how you segment your book. Is it by fees, products, assets under management? (These categories would suggest that it is all about you.) Or do you further segment by demographics and psychographics? (This would suggest it is about your clients.)

Being client-centric is not always easy and the rewards are not always instant, but sacrificing your immediate preferences and committing to understanding and listening to your clients are giant steps toward the goal of a satisfying, profitable relationship.

Relationships take work but they don’t need to be a constant struggle. To help avoid working with people who are going to take a tremendous amount of energy, you need to identify your ideal client. Too often, advisors define the ideal by the amount of assets the client brings to your practice. That works if you are a machine, but you are not. So you must determine what it is about this person that makes him fit your “ideal” classification. The answer will, no doubt, be multifaceted.

You want to strive for absolute clarity as to which client segments are most profitable, what these clients value and what areas you need to focus on to earn their loyalty. Identifying your ideal clients is all about creating positive experiences for them from the word “go” through an endless string of needs understood and promises kept. It is imperative, then, to align your clients and processes to consistently deliver on those values. So try to select your clients to match your business model and philosophy.

Address Problems as They Arise

When we don’t have a solution to a problem, or the obvious solution makes us uncomfortable, it is tempting to ignore the problem. But ignoring a dilemma for too long can make it more difficult to solve.

Typically, there are two types of client problems: mistakes and reliability. Mistakes happen, since no one is perfect. When a mistake happens, do not get defensive; instead, empathize. Clients want to deal with advisors who sincerely care about them and their concerns. Therefore, think Triple A: acknowledge; apologize; take action.

Acknowledge as soon as you realize that a mistake has taken place. Even if it is the fault of someone else, take responsibility and apologize for the inconvenience and then finalize your apology with what action steps you will take to reduce the probability of this happening again.

Reliability or trust problems will arise when there are unclear objectives, roles, and expectations of each other. As in any type of relationship, if we don’t know what we want from the other, misunderstandings are inevitable and the relationship will suffer. Therefore, a true relationship cannot exist without a well-defined service model and a clear understanding of clients’ goals.

These types of issues are not always apparent. Open yourself up to possible criticism and periodically ask your client, “How are we doing?” You want to get as much feedback as possible on the way you have been working together. You can use phrases such as: “What is good about the way we are working together?” or, “How can we improve the second half of our meeting?” You must be intentional and consistent to keep open and honest communications between you and your client.

As mentioned earlier, watch out for body language. Do you see signs of discomfort? If you do, then, in paraphrasing the words from Meatloaf’s song, “Paradise by the Dashboard Light”–Stop right there! I gotta know right now! Before we go any further… Do you like what I’m saying? Will you like it forever?

Spending Time Together

Industry research consistently shows that more frequent and meaningful advisor-client contact is strongly linked to increased assets and referrals for the advisor. Cultivating the Affluent Client, a study commissioned by Dow Jones Newswires from CEG Worldwide, finds that clients want 28 contacts per year, on average, with some top clients preferring as many as 48 with their financial advisors.

You’ve probably noted that these contact numbers are “average,” while each of your clients are unique. Some people like more contacts while others prefer less. Too often advisors do a blanket marketing communications strategy versus honing in as to when, what, and how often their clients want to hear from them. At the onset of the relationship, speak with your clients about how you tend to communicate with them and the benefits to them from receiving this information. Then let each client decide what the preference is for receiving this information. Break the communication tools down by professional life, personal interests, and investing.

Relationships thrive on the quality, not the quantity, of contact.

Don’t Forget to Laugh

Socialize with your “ideal” clients. When people are relaxed they are better able to speak about what matters to them. Try to find ways to meet informally with your best clients, so they feel comfortable raising issues that are important to them.

To be economical, you’ll want to conduct targeted client appreciation events. These are small events (maximum of 15 to 20 people) where you are engaged in an activity of shared interest, such as wine tasting, cooking classes, pheasant hunting, lectures, or sporting events.

Relationship building may cost a little more in time or effort in the short term, but it can pay off in the long run.

In conclusion, the principles of building an effective relationship are universal and can be summed up in a word–alignment. As with asset classes that are perfectly correlated, be in lock step with your clients. It may take time but remember that great relationships are made, not born.

Susan L. Hirshman, CFP, CPA, CFA, CLU, is a managing director for JPMorgan Asset Management in New York. In that position, she develops strategies to provide wealth solutions to the affluent market. She can be reached at [email protected].


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