Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
I heard a lecturer talk about the power of vocabulary and its ability to unite or alienate people. For example, calling someone a "cardiologist" instead of a "heart doctor" responds to the need we have for experts with a knowledge or skill set that makes us feel intimidated enough to trust them.
We want to feel that experts know more than we do. After all, they are the experts.
Our words help us dress up or dress down for the occasion.
When I first started in the financial planning profession, I wanted to regale prospects with all the industry knowledge I had learned in the last few years and been tested on – regurgitating key terms and definitions. It did not take long for me to learn that approach would undermine my success. Prospects didn't care how smart I was on paper; they wanted to know if I could solve their problems.
Your intelligence must translate into something that a prospect or client can act on; otherwise, your meetings turn into 60-minute conversations on theories.
The balance is finding a way to relate to prospects and clients to let them know you're educated in the field and capable of helping them solve complex financial problems. Communication and the language we use are imperative to set the right ambiance.
Men have been taught to show up in a three-piece suit to present in person. If the audience is more casual, they can take their jacket off and roll up their sleeves to be more relatable. The language we use with prospects and clients isn't much different from the concept of showing up in your suit and sliding the jacket off if appropriate.
Industry jargon is a fast and immediate way to alienate yourself from the people you want as clients.
Jargon screening
So. Many. Red. Flags. We are using the same words, but we are not speaking the same language.
For two years, I knew that I needed to fire a client, “Bob.” During our first meeting, when he was still a prospect, Bob dropped so many red flags over my conference room that it looked like a murder scene. I am still in shock that he made it to the client stage. I knew better than to have Bob as a client.
Bob said he left his prior financial planner because, "When the market crashed in 2007, he was on a cruise ship somewhere around the other side of the world…" He said the market performance devastated his portfolio and he found it unacceptable his financial advisor was on vacation when it happened.
Travel agent to advisor in 2007: "Yes, I've scheduled you for a stateroom. Would you like to depart on the day the market declines by 20% and mortgage back securities end up causing a global crisis or just before?"
No credible advisor ever said: "The day that it plummets would be great; that way, I can't answer any phone calls."
Who wasn't devastated by the global financial crisis? A prospect or client expressing their frustrations was common. Many clients, including mine, still suffer deep regrets from 2008. Regrettably, some advisors didn't pick up the phone because they had no idea what to say to clients.
There are bad advisors. However, there are also outstanding advisors who were just as shocked by the global financial crisis as their clients.
When I meet with a prospective client, I want to set realistic expectations. I can't predict the global crises, acts of terrorism, what may come out of my kid's mouth in social settings. I run financial scenarios that account for when we have a market decline, not if. Setting this expectation with a client is important because I want a lifelong relationship. Over decades working together, we will see personal, local or global crises.
Not even the best advisors can predict every crisis or protect completely against downfall.
Then Bob said, "That is fine; I understand where my risk tolerance is at and have read through my risk analysis reports. While my retirement savings are safeguarded, I want to make sure that I am not leaving anything on the table either. You need to outperform the market."
How on Earth did this guy become my client? He was nice. I enjoyed visiting with him. He and his wife were a great couple to visit. Then, a switch would flip. He would leave the office and send book-long emails about wanting to see various Monte Carlos, asset allocation strategies, and modern portfolio analysis; the list was endless and his expectations on market performance unrealistic.
We were not his first financial advisory firm. Nor would we be his last.
For a couple of years, we tried to talk about the pros and cons of various theories and developed multiple financial plans. He was never satisfied with a 95% or higher confidence level using a Money Guide Pro analysis.
He wanted to outperform the markets and wanted "nothing on the table," meaning he would never suffer losses.
He was difficult because he used industry jargon.
The financial planning profession conditioned him to use those terms. He regurgitated vocabulary he had been taught to use by professionals.
That is how he was going to grade us, and we would fail his exam each time.
Answer the real question – clients only have a handful of questions
The reason that my advice would never work for Bob wasn't because he used the same terms we would use with our peers. It was because he wasn't listening to whether those terms fit his situation.
Imagine if Bob had been looking for medical instead of financial advice. He would walk into a specialist's office and state that he wanted the same treatment he has read about in the American Journal of Medicine. But that treatment wasn't designed for Bob's symptoms. Rather than listen to medical advice, Bob demanded every experimental treatment plan he had read about online and a guarantee that he would live each day in perfect health.
No doctor would keep Bob as a patient.
How often do we as advisors keep a client like Bob longer than we should because we "want to do our jobs?"
The problem is not prospects or clients learning financial terms and strategies and becoming educated about finance. Instead, it is that advisors are failing to explain why those terms matter to them as individuals, spouses, and parents.
When we fail to explain why we construct portfolios to minimize risk, we overcomplicate things and alienate our clients.
When we design a financial plan for clients, we solve what is most important to them about money.
We start by asking that very question: What is most important about money to you?
The clients I work best with have a handful of answers to that question:
- I do not want to outlive my retirement savings.
- I do not want to be a burden on my family.
- I want to take care of my spouse if I predecease them.
- I want my family to be okay.
Security and financial stability are the essential values in financial planning for the people I work best with.
I design a financial plan and strive to deliver massive value to them in ways that make sense.
I advocate one-page summaries on various topics. I dissect the financial plan to make the pieces that I talk about digestible to the client. Then one by one, I reduce those topics to a single page of information that is clear, concise, and answers the questions they've articulated to me.
I do not use industry jargon when I answer questions. If I do, like the cardiologist, I explain what it means and why it matters. For example, a cardiologist can provide you with clinical research on why indulging in bacon raises your low-density lipoprotein resulting in potential heart attacks or stroke. You may resolve yourself from tasting salty pork at brunch again, but that sweet-salty temptress will make its way back on your plate.
Conversely, your cardiologist, who you fondly call your "heart doctor," can tell you that foods high in saturated fats need to be balanced with a healthy diet and exercise and give you a nutrition plan and exercise schedule. You can make an informed decision that incorporates a realistic level of discipline, most likely to be successful throughout your lifetime.
You set the terms with your clients. Your role as their advisor is to define the terms you use and explain why they are essential to them.
The Perfect RIA is hosting a free power session next month about the most common mistakes advisors make in prospecting - WHAT DO THE "NICEST JERKS" IN THE INDUSTRY KNOW ABOUT PROSPECTING? You can register on the link HERE.
Jamie Shilanski is a Registered Financial Consultant® for Shilanski & Associates, Inc. As an RFC® she helps clients understand the various options and nuances of financial services so they can make informed decisions. In this discipline, she customizes a financial plan that fits their clients a unique set of circumstances.
Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.