5 Things Financial Advisors Should NEVER Do With Their Clients
NOTE: If you’re a new financial advisor, make sure you check out Your First Year As A Financial Advisor, where I reveal several things every new financial advisor ought to know.
One of the biggest revelations of my life was that while I might not be able to directly control certain events, I could influence them.
As with a lot of things in life, being a financial advisor is more or less about doing things that shift the odds in your favor. I figure that if you can avoid making mistakes, you can greatly increase your chance of success.
Without further ado, here are five things financial advisors should never do with their clients.
Let them go uncontacted.
One of the biggest reasons clients leave their financial advisor is because of a lack of communication. Knowing this, you should make a concerted effort to stay in touch.
Years ago, financial advisors could only stay in touch with clients through direct mail, meetings, and phone conversations. Today there are so many other options – email, social media, etc. You have so many more ways to stay in front of clients (and prospects) that you have no excuse for not using them.
Also, don’t let your outreach be based on negative news. A study done by Pershing (The Second Annual Study of Advisory Success) showed that 58% of advisors reach out when markets are down and 68% reach out when the client’s personal investments are down.
Think about it… if you only reach out with bad news, what type of association does this make for you? Clients will soon associate you and everything about you with bad news. You don’t want this!
Ask your clients how they want to stay in touch and how often they want to be contacted. The mere act of asking what they want speaks volumes about your character. Some might not want a monthly phone call – some just might want a summary every quarter. But you will instantly separate yourself from your competition because you will be the only one who offered to not only keep in touch but keep in touch the way they want.
Take on anyone and everyone as a client.
Imagine that you’re Elvis Presley in his heyday. You’re the most popular, most respected music artist on the planet. You have an agent who you think works with nothing but the biggest names in entertainment. He wines and dines you, impresses you with everything he has to offer and gets you to sign on the dotted line.
Then you find out that he’s also working with seventeen other garage bands within a 50-mile radius. Oh yeah, and he’s also managing a fast food chain at night. How would that make you feel?
I know it seems corny, but you want to treat your clients like they’re a really big deal. They deserve to get the best version of you, and if you’re spreading yourself thin with several different types of client profiles, you can’t possibly give it to them.
There’s a quote by Bruce Lee that says:
I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times.
You want to get to the point where you’re practicing the same “kick” over and over again. You do this by choosing an ideal client and sticking to it. Before you know it, you will become an expert in your ideal client’s problems, challenges, and worries. Which means your effectiveness will skyrocket, and so will your ability to serve them.
Neglect to take notes about them.
Let’s continue with my illustrative example about Elvis, but let’s switch the roles. You are now the agent, and your goal is to earn Elvis’s business. Elvis is the hottest act in the world, selling out concerts everywhere he goes.
You’ve got agents on your left, right, front, and back all vying to earn his business. Presley eventually decides to spend time with each of you to figure out whom he wants to work with. How could you make sure that you were the one he kept?
You would want to know Elvis almost as well as he knew himself. You would want to know how he likes his dry cleaning, what his favorite restaurants are, what type of medication he takes, and even the fact that he likes his beverages chilled at 37 degrees – not a degree more or less!
Okay, that’s an extreme example, but hopefully, you see the point. You should at least know a few things about your clients – birthdays, children’s names, workplace, favorite restaurants, etc. Keep this information in your CRM and never get rid of it. As you learn more, add to your notes and use them to tailor how you build the relationship.
I’ve found that when you keep detailed notes about a client, you’re able to deliver impressive personalized service. And when people get good service, they’re more likely to stay.
Make them feel stupid.
Ouch, kind of harsh. But when clients (and prospects) watch you explain things, they’re mentally grading you. They’re asking “How well can I understand this person?”
And here’s the thing – people almost NEVER come right out and say that they don’t understand what’s going on. They’ll nod, smile, and look thoughtful….which makes you think you’re doing a good job. Then when they don’t move forward or leave you entirely, it’s difficult to figure out what went wrong.
It’s critical to make your concepts easy to understand. Use analogies, metaphors, and stories to get your points across. Make your clients play back what they hear to make sure you’re both on the same page.
When you make a complex topic simple, you make people feel smart. When you make people feel smart, they like you, and liking someone makes it a whole lot easier to do business together.
Fail to manage client expectations.
Here’s the mentality I recommend you have as a financial advisor: you are not here to make your client’s supremely wealthy, but instead prudently manage their investments and make sure they meet their goals.
Your job also isn’t about managing money. It’s about managing your client’s behavior and expectations. If you can manage clients’ expectations, you can keep them for the long haul. A good way to do this is to educate clients about the unavoidable volatility of the markets.
Doing this will help to cut down on all the noise that your client hears on a daily basis from the internet, the media, co-workers, family, friends, etc. While you can’t control the market itself, you can influence your client’s reaction to what happens. If you can do that, you’ll keep them longer, which improves their odds of meeting their long-term financial goals.
P.S. If you're a financial advisor who wants to get more clients from LinkedIn, make sure you check out How to Get Clients With LinkedIn: How Financial Advisors Can Set Appointments and Convert Prospects With LinkedIn