Articles About Client Trust & Communication

In financial planning, it's not just about having expert knowledge and wisdom to dispense to clients; after all, if clients don't ultimately implement the recommendations and change their behaviors, then their situations will not improve. In fact, many financial planners experience frustration when client's won't act, and view the failure of clients to implement recommendations as a sign that the people must be "bad" clients. The implication is that it may be more productive for planners to seek out "good" clients instead - those who act promptly and see the value in the planner and his/her advice.

Yet research from Dr. James Prochaska and his colleagues in the field of psychology suggests that in truth, the process of changing behavior - whether with respect to eating healthier and exercising more, ending a smoking habit, or making better financial decisions - is far more nuanced. Not only does it often take more than just one dose of good advice to bring about significant and lasting behavior change, but just because someone has a meeting with a professional does not necessarily mean that person is really even ready for change in the first place. Accordingly, an ideal process for working with clients may entail first understanding what stage of change the client is in, and then adapting the advice process to help the client move forward, from wherever he/she is at the time.

The most important implication, though, is that it may no longer be appropriate to simply view clients who don't implement as "bad" clients. Instead, a greater responsibility may rest upon the professional practitioner to help clients, regardless of where they happen to be in the process of change, to move forward. In turn, this means that it may be time for financial planning training to be improved, to develop the understanding and skillsets necessary so that planners can not only inform clients of what needs to be done to improve their financial situation, but also help motivate them to actually do it!

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A common challenge in financial planning is getting clients to actually implement the recommendations they've been given to help themselves progress towards their financial planning goals. While in theory, rational human beings should easily be able to take the necessary steps to improve their situation - especially once an expert has provided a list of recommendations and required action items to do so - the reality is that we're far less rational in practice. External influences that "shouldn't" be relevant can often impact our decisions and actions anyway, and in turn this means it's possible to influence decisions, or "nudge" people in certain directions, by paying attention to how the choices are presented.

This concept of "choice architecture" - acknowledging that the way choices are presented can influence their outcomes - is relevant not only for those making public policy decisions, but also anyone who is trying to help people make positive behavior changes... such as financial planners. Whether it's helping clients to change their own behaviors, to implement your financial planning recommendations, or even to help them determine whether to hire you in the first place, it may be time to pay a lot more attention to how those decisions are delivered to clients in the first place.

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As professionals, we take financial planning very seriously, and generally hope that our clients do as well. After all, if clients don't take their financial situation and its outcomes seriously, how will they ever change their behavior for the better? However, the reality is that in many fields, some of the best progress in helping people change their behavior comes not from raising the seriousness and penalties for making mistakes, but for turning the subject into a gaming experience that rewards positive outcomes. In the context of financial planning, this process of "gamification" creates the potential to help clients making the changes they need to achieve financial success. Although some aspects of financial planning would be difficult to turn into the kind of instantaneous feedback necessary for gamification to work - at least until technology moves along a few more years - other parts can be implemented now. For instance, even just making a financial planning action items list continuously available to clients, with checkboxes left blank until the task is completed, can help compel clients to finish what they need to in order to get to check the box! Will gamification have the potential to help clients having difficulty with change get to the financial planning outcomes they need and want?Read More...

Although operating a business that delivers financial planning services is called a "practice" the reality is that most financial planners do little to actually practice their skills outside of the ongoing work they do for clients. Yet while this is standard in the financial planning world, it seems almost absurd in other contexts; if a professional athlete only practiced during the time that actual games were played, he/she wouldn't last long. In fact, looking at the history of top performers in most fields, from sports to business, shows that those who are most successful have an ongoing process for effortful practice and a deliberate strategy for self improvement.

Nonetheless, financial planners do little to hone and practice their own skillsets, especially once meeting the experience requirements for the CFP certification. Is the problem simply that most financial planners, like most people, aren't entirely comfortable with criticism and feedback - even if it's purely constructive - and would rather avoid the situation entirely? Or is there some other reason why financial planners don't actually do much to practice?
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For most clients and planners, the data gathering process is simply viewed as a necessary evil to obtain the information required to produce a financial plan. The planner proceeds through a long list of questions, covering everything from financial details to client goals and aspirations, recording it on a data form or notepad to be used later. A new approach is emerging, though - to complete the data gathering process using mind mapping, which organizes information visually, in a manner that both the planner and client can build upon. The end result is a data gathering meeting that is more collaborative and interactive, as clients become part of the process of building a mind map that takes shape before their eyes - and also becomes an actual takeaway from the meeting, as the mind map document itself is provided in print or electronically to the client as well. Which means in the end, mind mapping may be a way to improve the financial planning experience itself.
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Financial planning can often involve some pretty long meetings, simply given the complexity of both the lives of our clients, and the solutions from which they must choose. Unfortunately, though, recent research shows that when we have to stay mentally focused for an extended period of time, it can actually lead directly to less effective decision making. Consequently, asking clients to make important decisions at the end of a long financial planning meeting - even one filled with great information and education - may actually be the worst way to lead the client to a well-thought-out decision, due to mental fatigue! Fortunately, though, there are solutions. Some planners may choose to adjust how meetings are structured, making the meetings shorter and/or presenting decision-making opportunities to clients earlier (before they are so mentally fatigued). Alternatively, it turns out that a remarkably effective solution is to actually refuel the brain, with some carbohydrates/sugars that bring the brain the glucose it needs to refresh itself. But in the end - whether it's a shorter meeting, a cookie, or some fruit juice - it's probably time for planners to pay more attention to the client's state of mind before moving to the decision-making phase of a financial planning meeting!

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As social media continues to take the world by storm, advisors are increasingly under pressure to begin using social media in their own practices. Yet the advisory community has generally been slow to adopt, due both to the compliance challenges involved, and a general wariness about whether prospective clients would really make a decision to trust and work with an advisor based on social media marketing. In fact, a recent study by the Aite Group suggested that "the bloom is off the rose" when it comes to advisors adopting social media to bring in new business. Yet at the same time, a new social media trend is emerging - using social media not to develop new clients, but to better communicate and interact with existing clients. And the good news is that this approach to social media potentially has far fewer compliance headaches, too, because it's less about talking, and more about listening.

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Once upon a time, the purpose of a client vault was to use it like a vault. It would store important client documents to be accessible if/when needed. It was designed to be the digital equivalent of a safety deposit box in your local bank's vault. But at some point over the past several years, we began to shift, and the client vault became not only the place we store the files we access rarely, but the ones we access regularly. Advisors increasingly made it the centerpiece of their efforts to securely share files and collaborate with clients. Yet in reality, this is quite impractical. Just as you don't regularly go to your local bank vault to constantly move things in-and-out of your safety deposit box, so too do we need to stop using our digital data vault like a collaborate file sharing tool. Just as going regularly to your bank every time you need to check on something would be a huge hassle and a negative experience, so too is using the data vault as a collaboration tool a negative client experience. It's time for a better alternative.

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What one skill (above all others), if you developed and did it in an excellent fashion, would have the biggest impact on you as a financial planner?

This is the question that was posed to the leaders in the financial planning profession. Initially, the plan was to elicit feedback as to where to focus energy in the new year to become a better advisor, but after receiving so many excellent responses I wanted to share the common themes. What is the most important skill? There is always a big focus on the technical side of planning (which is obviously very important), but is it that the most important?  Or is it empathy, communication, or relationship building?

The answers varied by the leaders that responded, but the common theme was clearly that in the end, the interpersonal trumps the technical.Read More...