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Financial Planning > Behavioral Finance

Do you really know your client?

By Jim Brogan

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In this industry of providing financial advice, I define success as not only building a profitable practice, but also truly serving our clients, employees and community through the work we do. If I could identify the number one trait of a successful financial advisor for both today and tomorrow, it is the ability to truly understand your client.

However, oftentimes, there is a disconnect between us and how well we understand our clients. An April 2012 Charles Schwab study focused on this very issue, examining the views of both high-net-worth (HNW, meaning over $1 million in investable assets) investors and their advisors. In my view, some of the key disconnects are as follows:

• HNW investors think investing is easier than their advisors believe, and they also believe it is much more likely for them to meet their goals in this challenging market environment.

• While both HNW investors and advisors believe that retirement income should be the focus of the retirement financial plan, investors place a much greater emphasis on income than do their advisors.

• HNW investors want to have a greater focus on preservation of assets, with growth as a secondary goal.

• HNW investors most often move to a new advisor due to the desire for greater service, as well as a more holistic approach to their planning.

What can we learn from this study to get better at what we do? One, are you a salesman or are you a true advisor? A true advisor not only listens intently to the client, but is always focused squarely on the client’s agenda. A salesperson, by contrast, is often too preoccupied with fitting a particular product into the client’s plan to truly listen and hear what the client really wants.

Ask the right questions

Two, we need to not only ask questions, we need to ask the right kinds of questions. Questions that help clients discover and understand for themselves what risks could threaten the success of their financial life plan. They are then much more receptive to the solutions to those risks.

Three, we need to properly educate our clients. Point number one from the Schwab study is very interesting to me. You and I as advisors often understand the significant challenges to today’s retirees, but they do not necessarily see it themselves. We, therefore, must be good at teaching them with powerful messaging. We must learn how to take the complex and make it simple. When we do this effectively, we stand out in this crowded field of financial advisors. 

Invest time in your clients. Listen to what they have to say. Always be focused squarely on their agenda, not your own. And teach them how to be successful, using language they can understand and apply. These are the keys to developing long-lasting client friendships.

“We must learn how to take the complex and make it simple.”

Jim Brogan is president and founder of Brogan Financial in Knoxville, Tenn. He was named Senior Market Advisor’s 2011 Advisor of the Year. Responses and questions can be sent to [email protected].

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