Executive Summary
For financial advisors, one of the main challenges of the initial meeting with a prospective client is demonstrating the value of financial advice – and showing the prospect how they would benefit from becoming a client. But it isn’t always easy for advisors to articulate this value in a way that resonates with the prospect. Because even though the advisor might be able to name several ways in which they could help the client – like professional investment of the client’s investments, behavioral coaching, and retirement planning – it’s possible that none of these will seem relevant to the prospect’s immediate problems.
Much of the research on quantifying the value of financial advice has revolved around the benefits to clients’ investment portfolios, but investment management is not always the highest priority for prospects (nor is it always the main component of an advisor’s services), so advisors often focus on other, less tangible benefits (like behavioral coaching) when explaining their value. However, even though clients of financial advisors often do value these intangible benefits – as research studies have shown – they ironically tend to recognize that value only after they become a client, meaning that many intangible benefits don’t actually tend to make great selling points with prospects either!
A better way for advisors to demonstrate their value might be to first ask the prospect what has caused them to reach out to hire a financial advisor at this particular moment during their first meeting. The “Why now?” approach identifies important nuances around the prospect’s specific pain points, which helps the advisor understand their deeper concerns beyond a generic need for financial advice. And having identified those concerns, the advisor can better understand what the prospect really values – and can subsequently tailor their own value proposition in a way that truly resonates with the prospect.
Another benefit of the “Why now?” approach is that it sets the stage for good follow-up questions. By inviting the prospect to go deeper into how they might be struggling with whatever prompted them to reach out, the advisor can let the prospect articulate – in their own words – why they need financial advice, and how the advisor can help them resolve their immediate pain points. Which means that, rather than the advisor having to guess at what the prospect might value, asking “Why now?” gives them the answer – while reinforcing to the prospect why reaching out was important to them to begin with!
Ultimately, it’s important to remember that every prospect has (at least) one reason for reaching out, and that there are unique ways they can benefit from the advisor’s services. By identifying those reasons, understanding how the prospect wants to be helped, and clarifying the urgency that prompted the prospect to make contact in the first place, the advisor can personalize their response by articulating their value in a way that will resonate with the prospect and that connects to solving their problems (all while affirming the prospect’s reason for being there in the first place)!
Explaining Value To Prospects (Beyond Investing) Is Challenging
While financial advisors understand that their relationship and their services are valuable to their clients, explicitly defining and discussing their value in a prospect meeting can often be a challenge. The 'product’ of financial planning – along with the associated services provided to the client – doesn’t often get the same level of attention as asset management. In reality, there are a myriad of both tangible and intangible benefits from the relationship that are valued by financial planning clients, from providing guidance and support in defining realistic financial goals, to dealing with complex family relationships and expectations to ensure the client can realize the goals they have set up for themselves and their loved ones.
Another reason why investment management often gets more attention than any other service provided by advisors lies in the tendency for the wealth management industry to define an advisor’s relationship value only in terms of their investment strategies. And when advisors talk about behavioral coaching benefits, the conversation is often centered on investment behavior.
This is not to imply that advisors shouldn’t focus on investment management… there are good reasons to showcase how investment management services will benefit clients, and advisors can palpably see how behavioral advice matters when, for example, their clients' savings have grown sufficiently to sustain them through retirement, because the client followed their advice and stayed on course with their financial plan. Furthermore, less tangible services, especially those in the realm of financial psychology, are not always as easy for advisors to discuss as selling points. Describing effective communication skills, good financial behavioral coaching practices, and the ability to quickly develop rapport with clients is not always easy for advisors to include when discussing their value proposition with prospects.
This challenge or problem is highlighted in multiple research studies (including Morningstar’s Gamma, Vanguard’s Alpha, and even our own Kitces Research studies) that focus on investment behavior and the value of the advisor-client relationship only as it pertains to investments. For example, Morningstar research suggests that, while investors and advisors agree that helping clients reach their financial goals is a top advisor attribute, many investors often underestimate how valuable behavioral coaching can be for clients. Which means that prospects often consider the advisor relationship simply as transactional, without really understanding the behavioral coaching role that financial advisors can fill.
Accordingly, prospects may find it difficult to understand how they will benefit from engaging with a financial advisor – especially if investment management is not their highest priority – until they actually go through the financial planning process with the advisor, so that they can see for themselves how they will benefit from working with a discerning financial advisor who understands the value of going beyond offering just technical analyses, and instead knows how to delve into the more nuanced behavioral aspects of helping clients.
Nerd Note:
Despite the challenge for prospects recognizing the full benefit of working with financial advisors, several studies have shown that once prospects do become clients, they are indeed very satisfied with the relationship. For example, recent research from Sonya Lutter, Director of Institutional Research and Education at Herbers & Company, found that individuals working with financial planners are 3 times happier than those without. And a research study by McKinsey & Company indicates that recent client retention rates are at a record high!
Identify Actual Prospect Focus And Demonstrate Value By Asking, “Why Now?”
While behavioral coaching that helps clients with their investments is undoubtedly important and has quantifiable value, it is just one example of how interpersonal relationships are useful for clients. In reality, advisors often provide their clients with emotional support through challenging situations (e.g., life transitions, loss of loved ones), serving as trusted guides and facilitators who help their clients take action on important financial decisions.
Furthermore, advisors often serve as teachers, empowering their clients to aim for new (but realistic) goals, and they can even be their clients’ friends, congratulating and celebrating important milestones and offering support as a steady lifeboat through unexpected storms. Yet, when an advisor meets with a prospect for the first time, how do they communicate these valuable qualities? And how can they articulate why their value would benefit the prospect?
Asking “Why Now?” Helps Identify A Prospect’s Deeper Concerns
Regardless of the specific problems a prospect may have, a key question that can help advisors express their value is to ask, “Why did you reach out now to hire a financial advisor?” Because asking a prospect, “Why now?” after learning about their particular pain points not only lets the prospect explain their priorities related to those pain points and their sense of urgency around those priorities, but using the question, “Why now?” also helps the advisor understand why the prospect wants a relationship with them in the first place, and what the prospect considers so valuable about what the advisor can provide to them that they would want to engage with the advisor for the next 30 years!
Imagine an advisor meeting with a prospect. The advisor has exchanged pleasantries and has asked the prospect about what brought them in today. Consider the following two exchanges below to see how asking “Why now?” helps the advisor set up the conversation to discuss (and show!) how behavioral coaching can benefit the client.
In this first conversation, the advisor stops exploring the prospect’s concerns immediately after identifying the pain point and begins to describe the firm’s services:
Advisor: Thanks for coming in today. I am glad you are here.
Prospect: Great, thanks for having me.
Advisor: So, tell me – what is on your mind about money?
Prospect: I’ve been wondering a lot about my ability to retire.
Advisor: Retirement is a big goal. We work with many clients entering into retirement – you are in the right place.
However, in this next dialogue, asking the prospect, “Why now?” encourages a more detailed discussion of the prospect’s priorities and concerns:
Advisor: Thanks for coming in today. I am glad you are here.
Prospect: Great, thanks for having me.
Advisor: So, tell me – what is on your mind about money?
Prospect: I’ve been wondering a lot about my ability to retire.
Advisor: Retirement, great goal – sounds like the retirement question has maybe been weighing on you for a while, so may I ask, why now? What about now made you decide to reach out?
Prospect: Yes, retirement has been on my mind for probably a year. I guess I am coming in now because I just don’t want to think about it on my own anymore. I don’t feel that I have the tools to figure it out, so…I want to be able to talk through different scenarios.
In both examples, the advisor was cordial and compassionate. Yet, asking the prospect, “Why now?” in the second dialogue gives the advisor some deeper insight into what the prospect’s real struggle involves, which is not simply a matter of calculating the time value of money or creating the right portfolio strategy. The prospect is asking for a sounding board; they want someone to understand their situation and help them consider how multiple scenarios might play out for them. They are, in effect, saying, “I would value a relationship where I can change my mind and try out different ideas – all while being heard and getting quality feedback every step of the way.”
Furthermore, asking “Why now?” implicitly helps the prospect reinforce why it was so important for them to seek out a financial advisor in the first place by clarifying their own perceived needs. There is a striking difference between the situation in which an advisor acknowledges the prospect’s needs by explaining how they can help, and the situation where the prospect themselves verbally articulates their need for help – and actually asks for the advisor’s help – because they can’t do it on their own.
Refer back to the first advisor-client exchange presented above that stops at the pain point. The conversation is going just fine, and the advisor feels that they had a good chat with the prospect to identify their challenges. But after the meeting, the first advisor never hears from the prospect again!
By contrast, the second conversation that implements the “Why now?” question helps the advisor to set the stage for the prospect to ask for the advisor’s help, which makes it much easier for the advisor to convert the prospect into a client. This is a very different situation from the advisor trying to convince the prospect to sign into an engagement, because when prospects leave a meeting explaining to the advisor how they need their help and actually requesting that the advisor help them, chances are much better that there will be a follow-up meeting.
Illustrating Value By Asking Good Questions
As an open-ended question, asking “Why Now?” sets the stage for asking follow-up questions that help advisors learn more about the prospect. And good follow-up questions aren’t just helpful for learning about prospects, they can also be useful tools for the advisor – especially during first meetings – as they have been shown to increase the likability of the person asking the question!
For example, in the second dialogue above, when the prospect answers the advisor’s “Why now?” question, the advisor could continue the conversation by asking the prospect for even more details. “Tell me about some of your scenarios”, or “What have you done to think about (or plan) your retirement in the past?” are just two ways the advisor could use follow-up responses to provide the prospect with exactly what they told their advisor they would value most – an opportunity to contemplate and discuss different potential retirement scenarios. At the same time, the questions are asked with sensitivity and attention to the specific concerns of the prospect.
Furthermore, “Why now?” is a good question that helps advisors to take the conversation deeper in a way that can feel more natural, gently leading into a potentially sensitive conversation that could be much more comfortable for the client than if they were directly asked, “Tell me what you are struggling with financially.”
As while asking prospects to describe their struggles more directly may still elicit honest answers, doing so can be asking for a lot from someone who has just met you. It can be very difficult and emotionally painful for a person to share intimate details about their financial life, especially with someone they don’t know well.
By allowing the conversation to go deeper and a bit more slowly, advisors can demonstrate their value by expressing the care and interest they have in the prospect, which is more likely to result not just in better information for the advisor, but also in more comfort for the prospect.
Better Approach Meetings Utilize “Why Now” & Then Follow-Up
Envision the meeting. The advisor and the prospect are about five minutes in, and pleasantries have been exchanged. Advisors can ask any of the following versions of the “Why now?” question to help the advisor understand the client’s main concerns and to get the meeting going.
- What is happening now that has brought you in for the first time?
- Why did you decide to reach out now to hire a financial advisor?
- What has prompted you to start working with a financial planner now?
However, suppose the prospect is quick to explain what has brought them in, even before the advisor asks them “Why now?”. They are worried about their retirement. They are stressed about a tax bill. In this situation, the advisor already has an idea of the prospect’s main pain point that has brought them in today. In this instance, one of these variations of the “Why now?” question can be used, serving as a good way to ask a follow-up question.
- I hear you about retirement. It is a big decision. May I ask, though, why now? Likely you have thought about retirement before – so what brings you in about retirement now?
- Large tax bills are painful. May I ask, though, is this your first big tax bill, or are you facing other tax complexities that are new this year? I would like to know if there’s a particular reason why you’re concerned about this now?
In addition to being great tools to start a conversation, “Why now?” questions are also useful to sustain a conversation to gather more information from the prospect. Consider how the conversation below – a continuation of having asked “Why now?” about retirement – serves to identify specific scenarios and potential solutions that the prospect has already been thinking about.
Prospect: Yes, retirement has been on my mind for probably a year. I guess I am coming in now because I just don’t want to think about it on my own anymore. I don’t feel that I have the tools to figure it out, so… I want to be able to talk through different scenarios.
Advisor: Tell me more about some of the scenarios you’ve considered.
Prospect: Well, in one…I quit my job tomorrow and I am just done. It’s been a rough few years. In another, I just do something else for a while, so I still quit, but I do some other work. I just don’t know how much money I need to make at all or at this “other” work. Or three, I just tough it out.
Advisor: Let me repeat back to you what I am hearing – you are not thrilled with your job and you really want to do something else. Sticking it out is not truly on the table.
Prospect: Yeah. I am done, or at least – I really want to be.
Advisor: Okay, I hear that. So would it be fair to say that if we begin working together there would be immense value in just sitting down together and walking through four or five different scenarios, and brainstorming how to take one or two of them to the finish line?
Prospect: Yes! I would find that immensely beneficial. Is that something we can actually do? I would really like to work with you if that is the case.
Advisor: Absolutely! You have made a huge step by being here today. I am onboard to take the next steps with you. I’ll grab the contract.
In this second example, the prospect has gotten animated and eager to share their reasons for meeting with the advisor. And while it can be tempting for the advisor to refrain from asking “Why now?” out of fear of slowing the prospect down from sharing their ideas, asking the question can actually reinforce the idea around why they do want to take action right now. Which can provide a little extra motivation for the prospect, which never hurts.
“Why now?” questions are very versatile; they can be used as meeting openers and follow-up questions, or as tools to probe more deeply into issues. Accordingly, there are various ways that advisors can implement them. Asking “Why now?” can be part of a prospect- or client-facing meeting agenda. Or it can be added to an internal list of ‘great questions’ to ask in prospect meetings. The question can also be highlighted in a notebook to remind advisors to ask the question in the meeting, as while using these questions effectively does not take a lot of practice… the bigger battle is often just remembering to actually ask them.
Ultimately, the key point is that asking, “Why Now?” can give the advisor a simple way to identify the prospect’s pain points, to understand the urgency behind those concerns, and to identify how to leverage the information so that they can personalize their service for the prospect to offer the best value possible. Additionally, using “Why now?” helps prospects to clarify for themselves the importance of getting help from an advisor, and to understand just how much they want – and value! – the advisor’s services!
