FLBC 053

Podcast Details:

Podcast Title:  Listening…The Advisor’s Best Tool
Podcast Series: Financial Literacy Boot Camp


The latest research suggests there are:
  • over 400,000 advisors in the US
  • over 164MM working adults (26-65) or “potential clients”
Based on these numbers, every financial advisor would have about 400 families to serve, and everyone wanting financial services would have an advisor and every advisor that wanted to serve clients would have plenty of clients to make a good living.

Factors disrupting this Utopian like scenario would be…
  • DIY Investors (that will likely never hire an advisor);
  • Robo Advisors (that will absorb some of the need for investment management service specifically);
  • there are bad advisors that don’t deserve 1 client let alone 400;
  • there are good advisors that on their best day can’t serve that many clients
ThinkAdvisor asked Alan Alda (M.A.S.H actor and former financial advisor) the following question:
TA: Why is it critical for financial advisors to communicate well?
AA: “It’s important, not so you can sell people something they don’t need but so you can help them see what they do need if you understand their goals and how they can reach them. If they don’t understand you, your clients are in danger of leaving the way I had to leave my accountant when I couldn’t understand him because he was talking in jargon — for years and years.”

My point on his comments…
Jargon alienates people.  When I go to my doctor I expect him to break down in simple terms what’s going on.  Since he’s a good physician he should be able to use all the medical terms (as if he were with peers) and then switch to a good “bed side manner” as if he were with patients.  To me, this is the mark of a good physician.  He understands that my goal is not to become a doctor, and therefore, I don’t need all those fancy terms, I just want my problem fixed.  Same way with a financial advisor.  Clients just want their problem fixed and they want to know that you can help them.  No need for fancy terms, just solutions.  You can only do this when you listen.
Alda also mentions that some clients will be afraid to ask “what does that mean” when and if they don’t understand something.  Here’s the power of being able to conduct a dialogue with clients versus a monolog.  In many cases, I’ve seen where the advisor is talking so far over the client’s head that there is a disconnect. This only causes the relationship to drift apart eventually and unmet expectations ensue.

TA:  Generally, how does one relate better? 

AA:  “It doesn’t involve staring at someone in the eyes. It involves taking in the whole person. Some research I helped get done suggests that there’s a real advantage in increasing your empathy [stepping into the other person’s shoes] by paying close attention to who you’re talking to, trying to figure out what they’re feeling by observing their face. So there’s a little science suggesting it really does matter.”

My point on his comments…
So this is a really salient point because people really don’t care how much you know until they know how much you care.  Any service professional has the duty to listen to the client and place his or her self in the client’s shoes.  After all, the client is coming to you with a problem because they think you have a solution.  We do well to fully understand the problem before inserting a solution.  I talked about “diagnosing” on Maven’s Keys recently.  So I’ll use the physician analogy again.  Any good physician is going to first diagnose the malady prior to prescribing medicine.  Here’s where the experience factor for advisors really comes to play because after working with so many clients you will begin to diagnose more accurately after listening to the client.  Unfortunately, this isn’t necessarily taught in classrooms, and even when it is, it has to be practiced constantly for the advisor to become good at it.


Helpful Links:

About Me:
Dominique Henderson, CFP® is founder of DJH Capital Management, LLC., a fee-only, registered investment advisory firm specializing in comprehensive financial planning and wealth management.

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