Close Close

Financial Planning > Charitable Giving

Becoming Fluent in Client Negotiation

Your article was successfully shared with the contacts you provided.

Here’s a classic married couple meeting with an advisor:

The wife is saying: “We really need to do some financial planning.”

The husband is sitting there, leaning back in his chair, not saying a word.

“His arms are crossed. His face looks like he’s sucking on a pickle. One of the signs when someone is in disagreement is that they stop talking,” says Peter Barron Stark, president of management consultancy Peter Barron Stark Companies and co-author of The Only Negotiating Guide You’ll Ever Need (Broadway Books, 2003).

It takes sharp negotiating skills to convert a frosty spouse into a client, and many advisors just don’t have the know-how.

That’s a big shortcoming nowadays because for FAs presenting themselves as advice-givers, negotiating skills in managing client relationships are crucially important. Traditionally, client-advisor interaction centered on product and price.

 “Now it’s very much about goals and achievement. That requires in-depth behavioral and emotions-based conversations. But you can’t have those without strong negotiating skills and a deep knowledge of emotionally charged issues,” says Brian Fowler, senior vice president, private client group at Raymond James Financial, based in St. Petersburg, Fla. “Negotiating skills are one of the most critical skills a financial advisor should have.”

 There are, of course, a number of negotiating styles. The adversarial and manipulative sort—where the outcome produces a winner and a loser—certainly is not recommended for financial advisors. A different version tries to determine a way to achieve a goal that’s better for both parties than either can accomplish on their own. Clearly, that’s the one for FAs.

“In the long term, it’s solution selling—figuring out what the client’s needs are and whether they’re a fit with what you have to offer. It starts with ‘Can I help with what you’re trying to do?’” says Bruce Patton, co-founder of the Harvard Program on Negotiation and co-author, with Roger Fisher and William Ury, of the second edition of the bestseller, Getting to Yes: Negotiating Agreement Without Giving In (Penguin, 1991). Patton currently teaches the strategy in Harvard executive education workshops.

Indeed, negotiating skills are essential to creating client rapport, establishing a structure for the advisor-client relationship, recognizing resistance—and overcoming such objection.

“It’s not me against you—it’s us against the problem,” stresses Raphael Lapin, Harvard-trained founder of Lapin Negotiation Strategies ( and author of Working with Difficult People (Penguin, 2009).

“You need to change the conversation,” says the Los Angeles-based Lapin, “from supplier-customer to a collaborative problem-solving, consulting conversation. You almost have to act like a therapist in defining the problem and then helping the client understand and articulate it. That way, it becomes a joint problem to solve.”

How to get the turned-off husband at the top of this story to start talking and spill whatever’s on his mind? Stark recommends asking an open-ended question. For example: “‘I’d like to pause for a moment and have you tell me your biggest one or two concerns about financial advisors. ’ If you ask, ‘Do you have any concerns about financial advisors?’ he’ll just say, ‘Nope.’ He’s lying, No. 1, and No. 2, you’re not going to get him past the resistance stage.”

Raymond James provides advisors with negotiating skills training woven into its business practices and solutions programs. Much of the emphasis is on framing meaningful questions in advance and, for best results, posing them in a particular sequence, Fowler notes. Also emphasized are developing strong listening skills and handling “emotional aspects,” such as remembering to focus on the issue, not the person.

“The best way to have a win-win situation,” Fowler says, “is to offer the other person the solution or benefit that you would want if you were on their side of the negotiation. It’s a Golden Rule-type principle that alleviates a lot of stress and lets you arrive at the resolution much quicker.”

When meeting with a prospect for the first time, you may gain an awareness of what makes them tick by pegging them according to four different behavioral and communication styles, as described by Stark. Each one filters information differently—information that ultimately determines whether or not a prospect will trust you.

There are, for instance, the “Amiables/Supporters.” They want to help and consider the relationship most important above all else. “Analytics” have a pressing need to know every investment’s pros and cons. “Drivers/Directors” are eager to tell you how they’ve achieved their wealth; and “Expressives” are a blend of two or three of the others, says Stark, based in San Diego.

You can discern each type partly by the topics they bring up—for instance, career versus family—along with the questions they ask.

Amiables, Stark notes, “are high on emotion but low on assertiveness. An Amiable will never tell you to your face if they like or don’t like you. But if they don’t, they’ll do everything humanly possible not to get in your presence again. Analytics are low on both assertiveness and emotion. Drivers are high on assertiveness and low on emotion. Expressives typically are high on both assertiveness and emotion but are often apt to tone down.”

Close Attention

A surefire way to create rapport is to give prospects and clients the feeling that you’re taking them seriously. This is a foundation for successful negotiating because, whether male or female, people want to be heard and understood.

“Study after study shows that somebody who looks you in the eye and gives you a sense of really listening is somebody you want to do business with and whom you have more trust in. The essence of [effective] negotiating is feeling heard, respected and being understood,” says Patton, a partner in Vantage Partners, a management consulting firm in Boston that he co-founded in 1997.

Curb your enthusiasm and skip the monologue as a way to dominate the conversation. Far better: Encourage the client to speak by asking them astute questions.

“The person in control is the one asking the questions that drive the outcome of the relationship,” Stark says. “If you meet with a prospect who says, ‘We’re interviewing four different advisors; tell us what you think you can do for us,’ and you answer that question outright, you will lose. Instead, ask them first to talk about their life and goals. They talk for 50 minutes. You talk for 10. They go, ‘Where do I sign?’”

Fowler advocates that, in general, advisors “talk as little as possible” in prospect meetings. “If you over-explain what your services are, you never have time to understand what the client’s issues are.”

Probing to discuss client concerns and problems lays the groundwork for negotiating solutions.

“You’re in control of a conversation when you’re asking questions and doing active listening [being attentive and giving feedback] than when you’re asserting your demands,” Lapin says. “When you’re asking a question, the client has to respond. When you’re asserting demands, they can resist.”

Suppose you get an answer with which you take issue? “That’s something you can negotiate,” Lapin says. “Once you understand the client’s concerns, you can craft or re-craft the relationship in a way that meets and addresses them.”

For instance, Lapin notes, “if the prospect says, ‘I want my advisor to do everything and not involve me,’ you might ask, ‘What is it about that sort of relationship that you like?’ If they say, ‘Well, I don’t know anything about finance,’ you may respond: ‘Would it be helpful, as we move ahead, if I try to educate you on some of this stuff bit by bit?’”

You might counter instead with a few options. For instance, should the prospect want continual high-touch interaction about changes in the market and their account, Stark suggests proposing: “I’m not able to contact you every time the market shifts. But I could give you a quarterly update. Or would it work well if one of my team members provides you with a frequent update?”

Resistance in general is best resolved by understanding upfront to what a client is objecting—and why.

“If you try to push somebody, they push back,” points out Patton. “Instead, stand side-by-side with them and try to be helpful: ‘What is it you’re concerned about?’”

Fowler agrees, adding, “Make yourself a little vulnerable and say, ‘I really need your help to understand further why this is an issue.’”

There is of course some compromising to negotiating; but in certain situations, that may not be the best course. Say an investment’s results failed to turn out the way a client had hoped.

“If,” Patton says, “you compromise in the sense of splitting the difference in order to repair the relationship when you think the client’s demand is unreasonable, typically you’ll freeze the relationship damage for all time.”

He continues. “You think you’re bending over backwards to show good faith, but the client sees this as an admission that you screwed them—and you’re not even giving them full recompense for it.”

The better approach, Patton says, is “to dig into what may be a very difficult conversation about why you think there’s a problem: ‘I know there was a bad outcome, but there was no guarantee of a good outcome. These are the risks inherent in investing.’”

Not Just Price

Without a doubt, negotiating skills come in handy when it comes to establishing how—and how much—you will be compensated.

“To make sure you get what you deserve in a way that actually builds trust and strengthens potential relationships, explain fees in terms of market standards—on which your fees are based,” Patton says. “You deserve a fair return for the value you’re providing. And if you’re a better financial advisor than your peers, it’s reasonable to ask for something at the higher end of the usual range, and explain why.

“Be unconflicted about this,” Patton continues, “because to some extent in negotiation, people react based on the signals you give: If you’re conflicted and seem uncomfortable, they’ll conclude that they should feel uncomfortable.”

Articulated properly, your operating principles will indicate the experience clients should expect.

“Negotiate around these principles,” Fowler says. “This moves the conversation to one that’s about solving issues and providing solutions rather than about price. If it’s all about price, I would question the overall value proposition the advisor is there to provide.”

At a time when high tech and social media are, ironically, disconnecting folks person-to-person, “those who are able to connect on an authentic human level are at a big advantage” in negotiating, Lapin says.

And it wouldn’t hurt to interject some humor.

“Humor is a lubricant and a facilitator to building relationships,” Fowler says. “It helps to establish rapport and [promotes] likability. If you’re able to have a light moment or a laugh over, say, the crazy ways we might be spending our money, it helps make the point.”