Outside voices and views for advisers

Personal client communication shows your value

View communication through behavioral finance to study how humans actually make decisions

Dec 12, 2017 @ 3:44 pm

By Victor Gaxiola

Why do clients fire their adviser? Is it for lack of performance? Bad service?

Most advisers suffer the disappointment of being let go by a client at some point—a blow often followed by weeks of agonizing, trying to figure out what went wrong. Was there ever a time that you wound up racking your brains asking, "Was it something I said?" Well, studies have shown that it's more likely something you didn't say.

Salesforce reports that 30% of investors say they would change advisers due to lack of communication, which seems like an easy fix. Simply reaching out to clients more often and trying to respond to their calls and emails in a timely manner can be a great start. But different clients prefer different types of communication, and perhaps more importantly, each client has his or her own unique decision-making processes and risk preferences.

Wouldn't it be excellent to satisfy each client's desire for regular communication while improving their financial fitness and influencing them to make better investment decisions? Absolutely.

That's why it is important to look at communication through the lens of behavioral finance—relaxing the "rational" assumptions of traditional finance to study how humans actually make decisions. Behavioral biases, willingness to take risk, and persona segmentation can combine to make communication more effective for advisers and their clients.

You must be a trusted thought leader.

According to ITSMA, 81% of buyers will pay a premium for industry expertise, and CFA Institute reports that 60% of wealthy individuals rate integrity as the most essential attribute for a successful adviser (only 51% prioritize financial acumen).

As an adviser, you should be a trusted source for all things financial, a thought leader for strong decision making, and someone your client thinks of every time they reach for their wallet. But achieving that status takes special attention, solid credibility and regular communication. Your clients won't wait around for a monthly newsletter, and you've got competition.

The web provides an endless source of market news and financial information. And even investors who realize the internet isn't always reliable will turn to the closest resource in a pinch. But what they really want is credible, relevant information from someone who actually knows them and the industry. Accepting that responsibility is a fantastic way to prove your value and solidify your role in the lives of your client. Be their gatekeeper of information and their top source of investment knowledge.

Humans expect consistent personalization.

The key to effective communication is personalization and consistency. Whether it's Netflix, Siri, or friends and family, your clients get individual treatment everywhere they go. But for one reason or another, many advisers have yet to prioritize personalized communication. This must change.

According to Cintell, 71% of companies who exceed revenue-and-lead goals have documented personas. Whether it's because the relevance of personalized information garners more attention, or because individual treatment makes people feel good, noticed and valued, personalization drives results. And as an adviser, you need clients to give you more than just money in exchange for services—you need their trust.

Your clients must trust you enough to give you a window into all their assets. The best way to earn that trust is by showing your clients you think about them, you care what concerns they have, what topics they are interested in, and how they are doing in life—all efforts that can truly transform your practice.

As motivational speaker Don Connelly says, "If you are passionate about people achieving their goals, they will choose you over the less passionate competition." Or, as I learned early in my career as a financial adviser with wise words imparted by more experienced advisers: Clients won't care what you know, till they know that you care.

Victor Gaxiola is vice president of sales and marketing at Finworx.


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