Financial advisers are like general practitioners: they cast a forensic eye over a client’s financial health, assessing their vital signs, obtaining a life history and identifying pain points. This information is then used to develop an action plan to secure the client’s long-term prosperity and help remedy any financial headaches. This process requires great proficiency and trust, not least because the adviser is dispensing advice that can change lives.
Importantly, just like GPs, advice from financial advisers is only as good as the information they receive from the client. That’s why relationship building is so important in the advice industry. “It’s critical,” says Paul Drum, CPA Australia’s general manager of external affairs, policy and advocacy. “It’s extremely important because your client is not an automaton, and neither are you.”
So how can financial advisers build rapport and strengthen relationships to tease out information that will better serve their client?
Make it personal
Financial advice isn’t just about profit and loss and the latest investment trends. First and foremost, it’s about people. “Even though it is a financial planning business, it’s a personal business,” says private wealth adviser and Financial Planning Association of Australia member spokesperson Nathan Nash. “People want to know each other personally, and that’s how you build that trust and that relationship. They want to know that you’re a trustworthy person who’s helping them to make decisions, and not just serving your own self-interest.”
Nash says listening is one of the most important skills in the financial adviser’s toolkit. And not just listening for the sake of it. It’s about taking a genuine interest in a client’s life journey, be they a farmer, a white-collar professional, or a retiree. “There are all these different stories that make a client interesting, and if you are interested, they can see that there’s authenticity, that there’s someone genuinely there to help them,” Nash says.
The need for such skills is also reflected in our recent in-depth retail report, Understanding the Adviser-Client Relationship 2018. According to the report. “In terms of value-added services, consumers highly value the ‘soft’ skills of their adviser – being caring, listening, providing education, being patient and being available after hours,” the report notes. “Consumers are also demanding high levels of communication from their advisers.”
“As with just about any relationship, people want to feel their adviser cares about them and listens to them,” says MetLife’s Senior Manager, Marketing Science, André Purtell. “It may sound like a cliché, but clients genuinely want to receive personalised and tailored service. They don’t want to be just a number. What clients dislike most is taking out a policy and never hearing from their adviser again.”
Paul Drum agrees that relationship building is about much more than asking perfunctory, clinical questions in a routine fact-finding discussion. Instead, a financial adviser should instigate a deeply personal conversation about the client’s personal interests and family circumstances.
“It’s about building a relationship with them that goes above and beyond just the function you’re performing for them,” Paul says. “That involves taking an active interest in who they are, what they do, their expectations and their family and their hobbies.”
Paul says information sharing needs to be reciprocal, with the adviser giving something of themselves in return. “To develop rapport, it’s a two-way street. You’ve got to be able to have a conversation. ‘What are your hobbies? Are you interested in AFL or tennis? What sports do you play? Where are your kids at in school?’” says Paul. “These types of things help build an affinity that you look for in strong relationships in your private life and it’s exactly the same in business.”
“It’s not just about whether you can crunch the data and give them a number and a result. At the end of the day it’s about developing an ongoing relationship with a client.”
Drop the jargon
Financial advisers should speak to their clients in language a non-expert would understand, and break down any complex terms in an engaging way. According to André, the complexity of life insurance means advice can come with lots of jargon. So, he says, “the onus is on the adviser to make the process as simple as possible. A good adviser will explain the relevant aspects of a product so that it is easy to understand, and will also provide guidance on the level of cover appropriate and relevant to a client’s needs and lifestyle.”
Kristina Plimer of Wealth Tutor is a psychologist dedicated to helping clients change unhelpful behaviours around their personal finances. She believes “there’s no harm in using financial jargon and lingo, but you always need to preface it with an explanation. It’s also about teaching the client and bringing their knowledge up. Some people, for example, may not even know what ‘return on investment’ means. So, it’s just using the jargon then giving the client an explanation in plain English. This is going to empower the client in their future discussions, and once they feel empowered they’re going to take more control.”
Consider a client’s values
Financial decisions aren’t made with the head alone – the heart also plays a role. Imagine meeting a middle-aged client who is servicing three mortgages on investment properties. One property is a poor performer and it would make sense to liquidate the asset and consolidate debt. However, the property in question belonged to the client’s late mother, and the client has a strong sense of family and is reluctant to let the property go. In this scenario, while the advice may be technically sound, the adviser could potentially do the client a disservice if they tried to argue for selling.
“As long as the client is aware of the pitfalls, they’re going to value the advice so much more if it’s tailored according to what’s going to make them feel comfortable and happy,” says Kristina.
Don’t judge, reassure
Telling a stranger how much you earn, how you spend your money and how much (or little) you save can be uncomfortable. Not to mention disclosing those mounting credit-card debts, personal loans, mortgage balances and perhaps even that little gambling habit. As an adviser in these sorts of scenarios, the job is to listen and not judge.
“The fear of being judged is widely accepted as a reason many Australians do not seek financial advice,” says Michael Nowak the national vice-president of the Association of Financial Advisers. “One of the ways a financial adviser can help clients feel more at ease might be simply to highlight that many people feel the same way they are probably feeling right now and that you, as a financial adviser, are there to help them.”
It is also important for financial advisers to acknowledge that every person has had a different history and relationship with money, Michael says. “The aim should therefore be to engage clients in a way that makes them feel comfortable. People come from unique backgrounds and this needs to be honoured as part of the initial and ongoing financial advice process.”
Kistina, who counsels people in financial stress, says offering reassurance goes a long way towards making clients feel more comfortable. And it doesn’t hurt to point out that there is always someone whose financial scenario is worse than their own.
“Some people honestly believe everyone else is doing fine with their finances,” Kristina says. “So, if an adviser can say, ‘No, you’re just being human, that’s actually really very normal but there are ways and means to get around it’, then people feel much more at ease and relaxed.”
Keep in touch
Client relationships are like marriages – they need regular maintenance to keep the spark alive. As the MetLife Adviser-Client Relationship Report makes clear, regular communication is key. “The overwhelming majority of respondents – 86 per cent – with existing cover said they wanted to be contacted by their adviser every 12 months, and 52 per cent wanted to be contacted twice a year,” says André. “For advisers, this means considering how to deliver a personalised service in a cost-effective way.”
To this end, Paul says it’s important to be present and visible on a regular basis. “It’s not a once-in-a-blue-moon or annual thing,” he says. “You need to engage with a client regularly, drop in on them, buy them a coffee. That’s what friends do and that’s what trusted advisers do – they check in on their clients. They ask how the client is going, about their latest results. Then they can offer ways to help and, if they’re in business, ways to crunch the data to improve their profitability or whatever the objective is.”
The MetLife Report noted that the preferred methods of contact for clients were email (82 per cent), phone call (41 per cent) and face to face (41 per cent). But different demographic groups showed markedly different preferences for contact. For example, consumers in the 18-39 age group were more likely than other groups to prefer contact via email (84 per cent) or message/text (18 per cent), while those aged 60-plus were more likely to prefer face-to-face (52 per cent) or phone call (47 per cent) than other age groups. Interestingly, the 18-39 group was also more open to receiving communications about life insurance via social media (30 per cent) and podcasts (13 per cent).
Despite all this, advisers also need to be wary of becoming ensnared in a purely electronic relationship. Technology can become an excuse for holing up in the office and losing personal touch with valued clients.
“Face-to-face is so important,” Paul says. “If someone is just sending you their files down the line and someone in the office prepares them and sends them back – you haven’t really engaged with that, you’ve just performed a function. You’ve got to get off your butt and get out and see the client, and if they’re small clients, you might be meeting in their home, you might be meeting after hours. If they’ve got a business, go to the business.”
For someone whose family has been using the same accounting firm for generations, Drum knows better than most the power of maintaining relationships. “I still use the same accounting firm my grandfather started using in the 1930s because we have a relationship with that firm. They’ve built trust with us and they have intergenerational knowledge of the family and they know all about us. There’s a comfort in that.”