Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
Want to know the best way to make a prospective client’s eyes glaze over? Say this: “Our portfolios have outperformed their benchmarks consistently and our clients with the most efficient investment results have successfully utilized our complex strategies for wealth protection and growth.”
What you, as a financial advisor, have just said is that your investment strategies are great, and you sell insurance and financial plans. What the prospect heard is, well… who knows what they heard?
But it wasn’t what you wanted.
After spending many years in the planning profession, I’ve found that advisors place superfluous importance on speaking intelligently and comprehensively. Knowing that people buy what they understand, we should speak our client’s language. It’s much easier than you think.
I once met with an elderly client who was a widow of a retired investment advisor. We thought, “Great – she knows what we do and has certainly heard her husband talk shop for years, so explaining will be easy.” As we sat at her breakfast table overlooking her luscious landscaping, my partner and I began to talk about all that had been put into place for her, complete with annuities, brokerage accounts, LTC, savings accounts, the works. We laid out a plethora of spreadsheets, trying to convey that she had nothing to worry about for the next 30 years, and each account she owned had a specific use and time period for distribution. When we got to the part about when to use bucket A and when to dip into bucket B and what happens if you need bucket C, I thought her sweet face would melt into tears.
Not only was she confused, she was worried.
As I quickly searched for the right words to use, I had a “duh” moment: she does not speak the language of finance. Another glance out of her window and it hit me – “Mary,” I said, “your gardens are beautiful, I assume you enjoy working in them?” “Oh, yes,” she said, eyes ablaze suddenly. “Gardening is my passion.”
I continued and slowly laid out the following analogy. “What if you went into the garden store with the purpose of planting a complete farm that must sustain you for the next 30 years?” Maybe you’d plant some vegetables for harvest in a few months, I discussed. Then maybe an apple tree that would bear fruit in several years. Possibly we’d place herbs that are available daily. Also, if beetles invade, we’d buy some pesticide to protect our hard work. When I pointed out that her financial universe operated the same way – some buckets are veggies for now, some are apple trees for later, some are for illness protection, and all will provide for the next 30 years – I could see the relief in her face. She got it.
She knows gardening, and I just spoke her language.
The success of using a real-life analogy led me to how I can translate for all my clients. Could there be a repeatable process for turning financial lingo into words that every client can understand? Let’s break it down like this – nearly everyone you speak to will have either a career or a passionate hobby. If the desired result of their activity is the goal, then they will inevitably consider three things to achieve it: time, precision, and obstacles.
For each parameter, you must uncover the analogy between what they do and what you do. Your goal is the desired endgame of your financial planning for them (retire with $3 million, buy a vineyard, make better returns than the neighbor, etc.). What is their daily goal? Meaning, in their job, what are they working toward?
Your time, of course, is how long you have to reach the goal (retirement in 20 years, funding college in 10 years, etc.). What time parameters exist in their job? Product release in 18 months? Kitchen remodel in two weeks?
Precision encompasses the appropriate tools to put plans into action. For my clients, I must judge what will be the most effective investments for them and their risk tolerances, and I have millions of options at my disposal (funds, stocks, annuities, option strategies, yada yada). This is the parameter, in our language, that is the most difficult to discuss with people not in our profession. Educating clients on why an individual stock portfolio may be better than mutual funds, or why we’d like to use a variable annuity instead of an indexed one can be a challenge. But if we think about it in terms of precision that they’d understand in their own life, we can alleviate some of the confusion. Comparing our path to efficiency with their own allows us to point out that each tool or investment choice has a different usefulness for the goal at hand. For example, you can use a toothbrush to paint a house, but is there a more effective brush that will accomplish your goal within your allotted time?
Obstacles are anything that could deflect us from the goal. For our profession, this typically means DDT – death, divorce, taxes. We try to put products in place that protect assets if these occur. For our clients, what obstacles exist in their line of work? Staffing shortages? Weather events? Cost fluctuations? And how do they protect against those things? Insurance? Inventory back-ups?
When you narrow down the analogies into time, precision and obstacles with a finish line, you give your client a frame of reference to grab. If they can compare what you do to what they do, they will understand more about their own big picture. In my practice, education is a driving factor in client satisfaction and revenue. One of my top clients is a neurosurgeon with significant assets and a pretty high risk-tolerance. He came to us with a standard portfolio, except very heavy on municipal bonds. He was having a little difficulty understanding why, with his goals and lifestyle, being so overweighted in bond strategies wasn’t the most efficient choice. Utilizing the parameters for translation, the conversation went a little like this: “John, let’s say you need to operate on an elderly man with a golf-ball sized brain tumor. You need to remove it before his vitals crash, and you’ve got to maneuver around the hypothalamus to get there. What tools would you use to achieve this? For your financial picture, you’d like to make large returns quickly and can accept some risk to get there. Using all municipal bonds is like using a butter knife to get to that tumor. Let us show you a scalpel.”
Danna Raube is an investment professional in Franklin, TN. She began 15 years ago in a family practice with her parents in Charleston, SC where she specialized in estate and insurance planning for physicians. Now, she partners with her husband, Danny Raube, to provide full-service financial planning and investment portfolio management. An avid golfer, she is a member of the LPGA Amateur Golf Association and three-time Ladies Club Champion at Westhaven Golf Club in Franklin.
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
