5 client personas advisers need to know to build wallet share

It's important for advisers to understand how the emotions of clients can dictate whether and when they'll give you more assets to manage.

During uncertain times, financial advisers encourage clients to stay the course rather than make panic-based decisions. Understanding your clients’ behavioral biases and interceding can help keep their financial plans on track. It can also help you capture a larger share of their wallet.

According to a recent FlexShares study of more than 260 investors working with a financial adviser, 63% based their initial investment on “an amount that felt comfortable” rather than on an informed strategy. In other words, the majority of clients chose to allocate assets to an adviser based solely on emotions. Another finding is that clients often are not transparent with the advisers they’ve hired. For advisers seeking to increase wallet share, it’s important to understand how the emotions of your clients can dictate whether and when they’ll give you more assets to manage.

FlexShares’ behavioral research into investors’ existing beliefs, fears, past experiences, and capacity for trust suggests it’s possible to segment clients into five distinct personas based on how their emotions drive behavior related to how they allocate assets to advisers. Understanding how the key characteristics of these personas affect client decisions can guide advisers to the conversations and actions necessary to build deeper, longer-lasting relationships — ones that ultimately can lead to winning a greater share of their clients’ wallets.

THE PROTECTOR

Key Characteristics: Protectors are highly risk-averse. They’re skeptical about the investment industry and approach financial advisers with caution. While they may have a substantial amount of assets, they are often reluctant to cede control of those assets to an adviser. They also frequently decline to share their complete financial picture with any single adviser.

Relationship Tip: With protectors, building trust and having patience is key. They’re worried. Reinforce the rules of investing. Give them a sense of stability — how things will work, how things do work, the rules of the game.

THE COMPETITOR

Key Characteristics: Competitors are highly driven and outcome-oriented. They prefer to have multiple advisers managing their money in order to foster competition. They closely track relative investment performance with an eye toward allocating their funds to whomever produces the best results. This intense focus on performance means that they also tend to avoid conversations about long-term planning or comprehensive strategies.

Relationship Tip: Competitors are often anchored on short-term performance. Bring attention to the long game. Make sure they see you as being on their team. Despite their posturing, competitors really do want to establish a relationship, but they expect you to take the lead.

THE COLLECTOR

Key Characteristics: Collectors prefer to spread their assets across multiple advisers. Mitigating investment risk is just one reason they don’t like to have all their eggs in one basket. They also seek varied expertise by hiring advisers with different perspectives. Having multiple adviser relationships is both a source of pride and a reflection of nervousness about their assets.

Relationship Tip: A collection of advisers becomes a burden for the collector to manage, so appeal to their need for simplification. Move the conversation to a focus on planning and do your best to build a strong and personal relationship.

THE VERIFIER

Key Characteristics: Verifiers expect advisers to earn their trust (and assets) over time. They’re transparent about assets they hold elsewhere and about their preference to consolidate those assets with an adviser who wins their trust. Verifiers tend to have investment expertise and a desire to plan for the long term. They want their advisers to be proactive and responsive.

Relationship Tip: Demonstrate your value to verifiers by challenging how they’ve traditionally thought about investing and identifying the missing pieces in their financial life.

THE SIMPLIFIER

Key Characteristics: Simplifiers want the easy button. They lack investment expertise and prefer to have a single adviser in control of all their finances and have little anxiety related to moving all of their assets as one lump sum. They are seeking a long-term relationship with an adviser.

Relationship Tip: Simplifiers want it all — advice, investments and management — in one place. To win them over, show them the breadth of services you offer and try to anticipate and proactively address their questions. Make sure they know you’re thinking about them.

TRUST AND WALLET SHARE GO HAND-IN-HAND

Personas open up a powerful new way to approach the challenge of growing wallet share. Choosing how much to allocate with a financial adviser is rarely a purely rational process for clients. Like other financial decisions, it’s often driven by emotions and behaviors built over a lifetime. Understanding how emotions and beliefs translate into the traits found among clients can help advisers tailor their approach by persona to build trust and wallet share.

Laura Hanichak Gregg is director of practice management and advisor research at FlexShares Exchange Traded Funds and a host of The Flexible Advisor podcast.