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Brett Davidson: Unlocking advice firms’ true value

Delivering a positive emotional experience is the key to happy client relationships

What business are advisers in? This is not a trick question and there are a range of answers that are right.

However, one I really love is this: “We are in the relationship management business.”

A friend of mine recently related his experience of dealing with what could be described as a traditional adviser. He told me: “My adviser used to turn up in his Maserati and make me feel stupid for two hours talking about markets and investments.”

When we think about managing relationships, this is probably not the feeling we are trying to create for our valued clients. Needless to say my friend is no longer working with that adviser.

I realise good advisers create nifty strategies for clients that save tax, ensure good long-term investment results and manage costs downward where they can. However, while all of these things are valuable, they are not the magic. It is the emotional experience you create for a client that matters.

Delivering a positive emotional experience means focusing on a few core issues:

1. Asking questions

Asking insightful open questions is the key to creating engagement. When clients answer your questions they are, in effect, engaging with their own problem. Now they can engage with the solution too.

2. Listening

It goes without saying that listening is important in the client-adviser relationship. Advisers talk way too much in client meetings, even though they know they should not. Ask a question, then leave lots of space for the client to fill it with their answer. Then do that again. And again.

3. Eliciting goals

By asking great questions and listening carefully, you will elicit the major life goals that are important to your client.

In his book The Excellent Investment Advisor, Nick Murray outlines what he believes are the five goals of life for most clients:

a) The endowment of a long, comfortable and totally worry-free retirement, with no compromise in lifestyle and no real concern about ever running out of money.

b) The need/desire to intervene meaningfully in the financial lives of one’s children, during one’s lifetime and/or in the form of legacies.

c) The ability to fund, in whole or large part, the education of one’s grandchildren.

d) The capability to provide quality care to one’s parents in their later years.

e) The ability to make a meaningful legacy to a much-loved school, church, charity or other institution.

But while it is great for you to know and recognise these goals, do not let that interfere with your questioning and listening skills. It is not important that you know these things per se; it is important the client discovers such goals are their major priorities as they answer your questions.

A client that works this out for themselves, with your assistance, will be deeply engaged with the solutions you propose at subsequent meetings. They are also more likely to commit to the long-term nature of the work necessary to bring them to fulfilment.

The core skill in a first meeting with new clients is helping them see that whatever they came in for, often specific advice on investments or pensions, is not the real issue. The real issue is creating financial security and a plan for achieving their major life goals.

To do that effectively, advisers need to:

  • Believe in their approach
  • Believe that what they do is worth paying for

Once you realise you are in the relationship management business, a whole lot of things become clear:

  • Managing money for clients is simply one of the tools in your kit bag – it is not what you do.
  • Cashflow modelling becomes central to your proposition because it allows clients to see for themselves live on screen the impact of their choices or decisions, deepening engagement and buy-in.
  • Doing the right thing by clients in all situations is central to creating a relationship based on trust and keeping clients for life.
  • Your fees, however you choose to charge and collect them, are unrelated to anything other than keeping clients focused on what really matters and helping them achieve their life goals as best you can.

This is your real value. You are involved in a noble profession when it is done well.

Brett Davidson is founder of FP Advance



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There are 2 comments at the moment, we would love to hear your opinion too.

  1. A firms true value is the price someone is willing to pay for it. Simple.

  2. We are in a Relationship Management business ? Are not all businesses ? But try telling that to Bank reps or Insurance company reps ( like their CEO, Finance Director or Chairman – and they are regulated by not one but two regulators, A Bank of England a Treasury Select Committee and a Government – and still they fail ! The govt fines go to cross subsidise the New HSBC2 rail link with Birmingham – to keep this Far East bank in the UK – but at what price to the people of the UK and those upon the line of HSBC2 destruction.

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