- A discussion cost with a client is important to articulate value
- Use personalised words when communicating with a client rather than buzzwords
- Don't discredit review meetings - these are great relationship builders that can lead to referrals
Netwealth’s Outside the Super Square 2019 roadshow focuses on helping advisers find innovative ways to engage with their clients. Attendees will also learn compelling ways to revisit their own messaging, to help enhance their value-led relationships with clients.
The relationship between a financial adviser and their client is built on trust, and the growth of that trust depends on successful communication between the two parties. The relationship has a number of touchpoints – and with some thought, each of them can be developed.
Scott West, Head of Invesco Consulting, has been working on the language used in the financial world for more than a decade, and the research he has conducted illustrates how language can play a vital role in effectively communicating your value to current and potential clients. His team has been undertaking the largest survey and analysis of financial services language since 2008.
“We’ve been testing this one question with clients for 11 straight years. ‘What do you want to hear most from your financial adviser: financial strategies, financial advice or financial solutions?’ What most advisers say is that clients want solutions,” says West.
“It’s been the worst response for 11 straight years. The problem is that if you use the word ‘solutions’ pre-emptively, you’re assuming the client has a problem. I’m not suggesting you don’t use it. What I'm saying is never use the word ‘solution’ until the client tells you they have a problem. If they have a problem, then you have a solution. Until they do acknowledge they have a problem, you have a strategy.”
The considered application of terminology can help emphasise a point, prepare a client for a topic for discussion or help clearly articulate intangibles such as a sense of value, transparency and respect.
“What we teach advisers is that they want to respond to the cry of an investor who says, ‘Are you smart with my money?’ with the fact that you’re always looking for cost-efficiency, not low cost, and providing high value,” says West.
The interplay between cost and value is critically important. According to West, price is only an issue in the absence of value. There are three steps when it comes to talking about cost with clients, according to the emotional research Invesco Consulting has carried out.
“The first step is that you acknowledge and show respect for whatever a client’s paying. Often, advisers don’t acknowledge a client for paying what they pay and they don’t always show respect for that. No matter how much or how little, respect them.
“Secondly, use it as a way to transition into your statement about value. In other words, the transition statement would be, ‘You may be wondering what you’re getting for this cost. Let me explain…’ There’s the chance to communicate your value. When we show that messaging to clients, immediately they really care about the acknowledgement that they’ve put hard-earned money into this and you respect that
“The third component of an effective cost conversation is the simple, straightforward disclosure of the actual costs. It may seem obvious; however, it is vital that the client knows that you know exactly what they are paying. If you have done the first two steps correctly this step is much easier.”
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Avoid using hijacked words
The business and finance world is awash with buzzwords. Over time, these words have developed strong inherent associations, which may not be a good fit for the desired outcome of a conversation.
“We’re always fixated with words,” says West. “When you use phrases like ‘This is customised for you’, the word ‘customised’ has been hijacked. It doesn’t mean anything. The word that translates much better is ‘personalised’: ‘This is personalised for you.’”
Talking to clients can also be impacted by whether the client or the adviser is the emphasis of the conversation. “Something else that really stood out for us was that pronouns matter; I’ll be talking about this at length during the roadshow. When you use the terms ‘you’ and ‘your’, and specifically ‘your goals’, the responses always jump up versus using ‘I’ and ‘me’.”
West’s research exposed three components that client engagement should focus on, which will lead to the client valuing the relationship: a financial plan that includes the right investment that fits your goals.
“First, advisers will develop a financial plan – which, by the way, should be treated like a verb, not a noun. You should talk about financial planning as an ongoing process that you can adjust on the fly, which will be sensitive to your life changes,” says West.
“‘This financial planning process will pick the right investment – those investments that will fit your life goals.’ Those are the three components that we think resonate to help an adviser have a transitional conversation beyond just investment management.”
The review meeting, revisited
Research undertaken by Invesco Consulting highlights the potential for a revised approach to the client review meeting. It can serve as more than just ‘checking in’ and be a vehicle to encourage clients to talk positively with their network about their experiences.
“This could actually be an acquisition trigger. That sounds a little crazy on the surface, because so many advisers denigrate the whole process,” says West. “In the United States, they have to do this annual review – and I’m sure it’s going to be true in Australia as well. They have to meet with the client every year to ask about goals and if anything’s changed.
“In the US, many advisers look at it as a pain in the neck; a check-the-box. What we found is that investors said, ‘No, I want to feel like I’m on track for my goals.’ By undertaking reviews, clients are more likely to feel that they’re getting great value from the relationship and even feel motivated to bring other people your way.
“Our research showed that if they don’t feel like they’re on track, almost two-thirds of people felt that they would question the very nature of the relationship they had with their existing adviser,” says West.
“The reason they’re dissatisfied when they have these review meetings is that advisers default to what they know best, which is to go over the investment performance, give a bunch of numbers and justify their existence based on the investment management – it has nothing to do with the client.”
To learn more about communication strategies that can help convey to clients the value in your relationship, register for the Outside the Super Square roadshow or read more on the research project Scott West has undertaken with Invesco Consulting.
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Views expressed are of the interviewee and may not be the opinion of Netwealth or its related companies.