Nerd's Eye View Archives On Client Trust & Communication

How To Manage Strong Emotions When Asking Clients Kinder Life Planning Questions

August 10, 2022 07:01 am 0 Comments CATEGORY: Client Trust & Communication

When financial planning clients think about their future, they might imagine a relaxing retirement, world travel, or other pleasant experiences. What they’re probably not considering is their own death, even though everyone’s time remaining on Earth is finite (even if the number of years they have left is unknowable). And using this perspective, advisors can add value for clients by helping them prioritize their goals and explore whether their current behaviors match their desired outcomes.

With this in mind, it is easy to see how George Kinder’s three Life Planning questions help clients focus on the things that matter most to them. While Kinder’s first Life Planning question asks clients to ‘dream of freedom’, and to describe their ideal future life if nothing were to hold them back, the second question asks the client to do the same but, this time, while imagining they only have 5 to 10 years left to live.

The goal of the second Kinder Life Planning question is to encourage the client to focus on the present and to analyze gaps between how the client is actually living today and how they said they wanted to be living if all they had were the next 5 to 10 years. While this can help clients find more clarity around the particularly important aspects of their lives right now, it can also lead to potentially intense feelings of grief and/or loss.

While clients may feel vulnerable and uncomfortable having this discussion, advisors using the Kinder questions can help ease their clients’ discomfort by welcoming and normalizing any emotions that may come up, while keeping the focus on a deep exploration of the client’s priorities and specific goals. During this conversation, it is important for the advisor to offer complete support for and acceptance of the client, with the intent to discover – not to judge – the client’s views, using techniques such as exploratory questions and repeating back what they hear from the client.

When wrapping up the conversation around the second Life Planning question, the main objective is to determine how the client’s goals will be integrated into their financial plan (e.g., through a ‘statement of purpose’) and to identify how the relationship that exists between the financial planner and the client will support implementation. This is a way of grounding the discussion back to the financial plan and giving the client some framework of momentum.

Ultimately, the key point is that Kinder’s second Life Planning question forces clients to prioritize their goals within a restricted timeline. And because this question often elicits answers and insights that can be profound and emotionally painful, potentially exposing gaps between their current and desired behavior, it is important for advisors to be prepared to help clients gain clarity around how their priority gaps will be reconciled with sensitivity and compassion. Even though this can be a difficult conversation, in the end, it can lead to a deeper understanding of the client’s most important and immediate priorities, while also cultivating a growing sense of trust and confidence that enriches the advisor-client relationship!

Why To Use George Kinder’s 3 Life Planning Questions With Financial Planning Clients

July 27, 2022 07:09 am 8 Comments CATEGORY: Client Trust & Communication

Financial planning is both an art and a science. While an advisor needs technical financial planning knowledge to create and implement plans for clients, soft skills that involve effective communication and relationship building are also crucial to both relate to prospects and clients and to understand their needs. Further, one of the most important qualitative ways an advisor can add value to clients is by helping them identify and select meaningful goals. And so, by asking the ‘right’ questions and building a bond with clients, an advisor not only ensures that their clients select appropriate goals, but also creates ties that will encourage them to remain clients for years to come.

As part of his Life Planning approach, George Kinder developed three questions that probe deeper into a client’s hopes, dreams, and fears, to help advisors develop more complete and impactful financial plans. The first of these questions asks clients to dream about their future and freedom, brainstorming how they would live their life if they were financially secure. The question is open and exploratory, creating the perfect environment for the client to provide more insight into their goals and priorities.

This approach to goal setting relies on social constructionism, a theory that suggests reality can be developed collaboratively. When advisors and clients work together through dialogue to develop a shared vision of the client’s dream life, both parties are better able to understand not only what the goal is, but also why it matters.

Notably, the goal-development process is not a quick one. Often, clients do not know what their goals are, or might struggle to articulate the details of their goals. For example, a client might say that their goal is to retire, but that doesn’t tell the advisor what the client wants their retirement to look like. But by using dialogue and engaging in the process of developing a socially constructed goal, the advisor may uncover what retirement really means for the client – the goals and activities they wish to pursue, how they want to spend their time, and how they envision their future.

Another benefit that comes from socially constructed goals is relationship stickiness. When goals are co-constructed between an advisor and their client, the desired outcomes are something that both parties uniquely and intimately share. And when an advisor co-constructs with clients, no other advisor will do!

In practical terms, while Registered Life Planners typically bring up the Kinder questions with clients without warning (as they have extensive training to handle the ‘shock’ value of the questions), other advisors with no Life Planning training might consider giving clients advance notice so they can start to consider their answers and help both parties be more comfortable with the discussion. During the client meeting, it is important for the advisor to ask several follow-up questions, not only to keep the conversation flowing, but also to help clients clarify their goals. These questions could explore the client’s motivations, who else is with them when imagining their best life, and how their dream differs from their current situation.

Ultimately, the key point is that Kinder’s first question is a valuable tool for advisors to work constructively with clients to help them discover their true goals. Which not only helps clients better understand what they are really looking for in life, but also allows the advisor to create a better financial plan and enhance client loyalty!

Minimizing Advisor-Client Value Conflicts Using The Principles Of Aikido

July 6, 2022 07:02 am 2 Comments CATEGORY: Client Trust & Communication

Advisors occasionally encounter situations where their recommendations conflict with a prospect’s or a client’s opinions or beliefs. When encountering this resistance, the advisor has a choice to make: either to alter their recommendation to make it more acceptable to the client’s way of thinking, or to dig in and attempt to change the client’s mind on the subject (or, in the most extreme cases where the difference cannot be resolved, to re-evaluate the engagement and perhaps end it altogether).

In some cases, it is clear to advisors that it would be inappropriate to try to persuade a client to go against their values. For example, when a client and advisor are divided on a subject stemming from the client’s religious beliefs (e.g., a client who is requesting to use Shariah-compliant funds), few advisors are going to try and talk a client out of those beliefs. And if the advisor is not familiar enough with such religious funds to advise on, the advisor may simply refer the client out to another advisor who is a better fit. But in other cases, such as when a prospect or client wants to follow the advice of a popular financial guru, the advisor may be more tempted to push back.

For advisors in this situation, the Japanese martial art aikido can provide perspective on how to respond. In aikido, rather than fighting or resisting an attack, a defender redirects the attacker’s energy, rendering it harmless. Likewise, when advisors receive pushback from clients which they feel could be harmful to the client if carried out, rather than arguing or persuading the client to change their mind, it may be helpful instead to think about how they could redirect that energy in a harmless (or even beneficial) direction.

While many financial advisors may disagree with the opinions espoused by pundits like Dave Ramsey and others (e.g., their views on asset allocation or paying down debt), nonexperts often find them very compelling. Furthermore, in some cases, following the advice of a financial guru might have had a real positive impact on a client’s life – meaning that, for the advisor, convincing a client to simply ignore a popular pundit’s advice and start following the advisor's (possibly conflicting) recommendations might be a difficult and even unrealistic proposition for the client.

Advisors in this situation can consider using the lessons of aikido. Instead of trying to change their clients’ beliefs, it may be possible to channel them in a more productive manner. For example, if a client wants to follow a pundit’s asset allocation advice, an advisor could – rather than taking a hard line – try to see what it is about the pundit’s advice that appeals to the client, and then construct a portfolio that aligns with those values (while still being sound from the advisor’s perspective).

From this perspective, building the portfolio becomes an exercise that is similar to any other values-based investment philosophy (e.g., Socially Responsible Investing). In order to best align with the client’s values, the advisor may need to operate from a slightly limited fund universe – which, despite not being 100% optimized from the advisor’s perspective, can still be a worthwhile compromise as a way to build a portfolio that aligns with a client’s bigger-picture values (and that they, therefore, may be more likely to stick with in the long run).

Ultimately, the key point is that for financial advisors, understanding and appreciating a client’s values can make all the difference between working with an engaged and enthusiastic client, and one with whom the advisor might fight long and hard to ‘detox’ of their beliefs (and potentially end up losing the battle anyway). This is the core of investment management aikido – instead of fighting the client’s values, an advisor can redirect their energy in as beneficial of a way as possible!

Creating Visual Deliverables That Clearly Communicate Financial Planning Concepts

June 13, 2022 07:07 am 0 Comments CATEGORY: Client Trust & Communication

Communication is one of the most important skills for a financial advisor. While technical expertise is necessary to formulate a financial plan, being able to clearly communicate the findings to a client can make all the difference between whether or not the client will understand and agree to implement the advisor’s recommendations. Many advisors are accustomed to using verbal communication with clients (e.g., in client meetings) and written communication (e.g., through the delivery of a written plan), however, some concepts are difficult to explain and understand through these means. But by using visualization aids in their communication, advisors can clarify complex information and generate better conversations with clients.

According to one learning model, there are four basic categories of learning styles: visual, auditory, reading/writing, and kinesthetic. Research suggests that communication and education are both more effective when multiple learning styles are incorporated because an individual’s preferred learning style often varies day-to-day. Furthermore, presenters who use visualizations can tend to be perceived by their audience as better prepared, more professional, and more interesting than those who rely only on text-based presentations. Taken together, these findings suggest that using visualizations when presenting information to clients using other modes (verbally in meetings and through written plans) can be a good way to demonstrate expertise while building rapport with the audience.

When considering how to use visualizations, it is important to recognize that different styles of visualizations can be used to meet different communication objectives. For instance, visualizations can be categorized based on their content (conceptual or data-driven) and purpose (declarative or exploratory). By considering the nature of the content and purpose of their message, advisors can choose an appropriate style of visualization to implement. For example, data-driven, declarative ideas can be conveyed by ‘everyday data’ visualizations, such as a chart or graph objectively illustrating relationships between facts and figures (e.g., the S&P 500’s performance during the past year). Alternatively, a conceptual, exploratory idea would be better conveyed through an ‘idea generation’ visualization, such as an array of ideas that encourage brainstorming ideas. Conceptual, declarative ideas are best conveyed through visualizations that illustrate difficult concepts, and data driven, exploratory ideas can often be conveyed by combining visualizations merged together from multiple sources of information to encourage identification of new trends or themes.

Advisors can choose to create their own visualizations (such as a simple Venn diagram), but can also opt for turnkey software solutions or white-labeled products for more elaborate visualizations. Whichever option an advisor chooses, there are key design principles to keep in mind. For example, the thoughtful use of lines, colors, shading, font size, and other visual elements can help to communicate ideas and draw attention to key aspects of the visualization.

Ultimately, the key point is that visualizations can be a useful tool for improving advisor communication and client comprehension. Given the data-intensive nature of financial plans, visualizations can serve as a useful complement to written and verbal communication from the advisor and can provide clarity to clients, which can give clients more confidence in their plans and in their advisors!

The Re-Discovery Meeting: A Communication Strategy For Supporting And Retaining Newly Widowed Clients

June 8, 2022 07:06 am 4 Comments CATEGORY: Client Trust & Communication

Dealing with the grief of losing a spouse creates several challenges for recent widows and can change the dynamics of many of their relationships. For example, widows often note that they were previously ‘couple-friends’ with someone, but the relationship dynamics have changed such that it is now uncomfortable to spend time with them as a single person. This dynamic also can apply to financial advisors; in fact, up to 80% of widows leave their advisor within the first two years of becoming a widow. Which means that it is important for advisors not only to thoughtfully reengage with a recently widowed client, but also to explore how they want to be communicated with and what they want the planning process to look like going forward.

Given the significant amount of change occurring in the life of a new widow, a good way to address their circumstances and meet their changing needs proactively is to have multiple ‘re-discovery’ meetings to intentionally learn about their new preferences and goals. The process begins with the initial meeting following the spouse’s death, where the advisor can cover three important topic areas: 1) identifying the client’s current communication preferences while recognizing that these can change as they continue the grieving process; 2) discussing the idea of recurring re-discovery meetings so that the client knows what to expect; and 3) reviewing the client’s important action items, letting the client decide whether (or to what extent) they want the advisor to take the lead or handle the items themselves.

The first re-discovery meeting can be held six months after the initial meeting with a newly widowed client. In addition to checking in on the client’s communication preferences (which might have changed in the previous six months!), a goal of this meeting is to brainstorm ideas to identify new goals and information that are important to the client during this period when so much in their lives may be changing. There is no pressure for anyone to do anything (unless important action items already discussed are looming); the key is simply to create the time and space to give the client a chance to think about things and recognize changing needs and priorities as they arise.

The aim of the next re-discovery meeting, ideally held approximately one year after the initial meeting with the new widow, is to revisit newly identified goals and to focus on implementing them. In addition to revisiting goals that may have been identified in the last re-discovery meeting, advisors can start asking the client to consider a detailed, actionable plan that outlines how they will actually tackle their tasks and establishes a timeline for getting things done.

Ultimately, the key point is that as a widow navigates through the difficult transition after losing a spouse, an advisor can be one of the most sustaining relationships in their life. By doing their best to mindfully communicate with recently widowed clients about their changing values and needs in a genuine, honest, and compassionate way, advisors can help them effectively plan for and support their changing needs!

Questions, Not Answers: Conversations For Advisors To Navigate Clients’ Anxiety Around Change

May 4, 2022 07:09 am 0 Comments CATEGORY: Client Trust & Communication

Financial advisory clients are bound to experience stressful conditions that can impact their finances at some point during their relationship with their advisor. From market downturns to geopolitical shocks, there are many potential external factors that might make a client nervous about their financial situation. What’s more, the stories individuals tell themselves can lead to decisions that negatively compound the initial impact of the event. For example, a market correction can create fear for investors (particularly those nearing – or even in – retirement), and when they create certain narratives (e.g., “I need to sell all of my stocks now before the market drops further”) they can find themselves in an even worse situation. For worried clients, advisors often serve as a sounding board for many of their stories, putting the advisor in a unique situation to help clients weather their emotional challenges and stay on course with their financial plans.

Advisors naturally strive to offer expert guidance to their clients, but sometimes addressing only the technical intricacies of a client’s plan is not always the most helpful response. For example, reminding a panicking client during a market downturn that they have a diversified portfolio or that corrections are a regular part of market cycles might not resonate with them to truly alleviate their anxiety.

Instead, addressing a client’s upsetting stressors by encouraging them to form new personal narratives can help them understand and implement new perspectives that make it easier for them to address challenging situations in different (and often more successful) ways. In this way, the client can become their own ‘expert’ through facilitation from their advisor. One way for advisors to start this conversation is by asking the client the question, “What would you tell your best friend if they asked you this question?”

This strategy can lead the client to expand their narrative (by serving as an ‘outside’ advisor to themselves) and to potentially accept new ideas that they may already know but have been resistant to acknowledge before. Because reminding a friend that having a well-diversified portfolio is a good way to manage market risk can be easier than reminding themselves of the same thing (as they watch their portfolio value fall during a downturn); at the same time, clients are likely to respond to a friend with more kindness and empathy (versus the negative self-talk they can present to themselves). Thus, going through this exercise can calm and empower the client by revealing a more compassionate and relatable response that they come up with for themselves! Additionally, the advisor is afforded valuable insight into productive ways in which the client might want to respond to the situation.

Ultimately, the key point is that by finding ways to change their own narrative stories, a client can expand how they see themselves and better understand that they can change their role in the story. In this way, they can become empowered and more capable of preventing a stressful situation from compounding negatively. And advisors can play an important role in this exercise by facilitating the conversation and listening actively, enabling the client to craft a new narrative and potential next steps!

8 Inflation Conversations For Financial Advisors To Have With Clients

April 27, 2022 07:01 am 1 Comment CATEGORY: Client Trust & Communication

With inflation reaching its highest levels since the early 1980s, the topic of rising prices has been on the minds of many financial advisors and their clients. And though many hoped that the spike in inflation that began in autumn of 2021 would pass within a few months (once holiday season demand cooled and COVID-related supply chain issues worked themselves out), it has instead persisted for longer than many originally predicted.

In the early days of this inflationary spike, the most common (and perhaps the best) advice for clients may have been to simply “wait it out”, since a brief rise in prices – uncomfortable as it may have been – was unlikely to have enough of an impact on long-term planning to warrant any drastic changes. But even though we are still a long way from the kind of inflation that plagued the economy in the 1970s and 1980s (when inflation averaged over 9% for a 9-year stretch), the continued rise in prices may have many advisors (and their clients) wondering if there is more that they can do to better position themselves for a prolonged bout with inflation.

One place to start may be to better understand how inflation is personally affecting each client. The headline Consumer Price Index (CPI) number that we see constantly represents an average inflation rate for the entire U.S. economy, but in reality, different households experience inflation in different ways depending on their lifestyle and where they live. Advisors can help clients calculate their own ‘personal’ inflation rate (and a downloadable template is included to make it easier to do so).

Another immediate way that advisors can help ease the impact of inflation for clients is to create a cash management strategy (i.e., a system for knowing how much cash to keep on hand and where to keep it) to avoid them having more cash on hand than is necessary (since, with interest rates on bank accounts so low, the excess cash is almost guaranteed to lose value to inflation even if inflation does fall back to pre-2021 levels).

Advisors can also address different ways clients can protect their savings for retirement and other long-term goals against inflation. The conversation could start with the one asset that is likely already in most clients’ portfolios: U.S. stocks, which have a lengthy track record of outperforming inflation over long time horizons. Additionally, advisors can discuss the role of TIPS in a portfolio (and answer some common questions such as whether it is risky to buy TIPS when inflation is at a multi-decade high, and whether it is better to buy TIPS directly or within a mutual fund or ETF). And because clients may have questions about other types of assets that are often associated with hedging inflation risk – such as gold, commodities, REITS, and, most recently, cryptocurrencies – advisors can help by discussing the actual track records of these assets to help clients make a more informed choice about how to strengthen their portfolios against persistent inflation.

There are other practical areas to give useful advice, such as tax planning (where clients might experience “bracket creep”, and therefore higher taxes, due to their income rising faster than the inflation rate used by the IRS) and property insurance (where, with construction materials and labor costs among the fastest-rising prices across the country, homeowners may find their existing insurance coverage is no longer sufficient to ensure the replacement value of their property).

Finally, advisors can ‘zoom out’ to the long view of clients’ financial projections for retirement, and address clients’ concerns about whether the plan’s existing inflation assumptions (which may predate the current inflation spike) are still realistic – and discuss how, when looking at the market’s expectations for future inflation in the form of the TIPS breakeven rate, investors still seem to be betting on a return to ‘normal’ inflation numbers after a short-lived increase. (Which bodes even better for clients’ plans given that investors have historically overestimated their inflation predictions!)

Ultimately, even though the goal of many advisors at the moment may be to encourage clients to continue to stay the course and avoid making rash decisions, there are still concrete ways that advisors can help clients better position themselves to withstand the current spike of inflation and improve their situation for the long term without drastically altering their existing plans. And even if this inflationary environment proves to be short-lived, the work advisors with their clients now can help them be better prepared for future unexpected increases in inflation – which, though we can’t control when they may happen, we can plan to help ensure they don’t get in the way of our clients’ ability to reach their goals.

Questions Advisors Can Ask To Help Clients Take Action By Exploring Their Money Memories

April 6, 2022 07:07 am 1 Comment CATEGORY: Client Trust & Communication

In recent years, understanding and applying concepts of financial psychology have become increasingly important skills used by financial advisors. While technical knowledge can help advisors develop objectively sound financial strategies, turning those strategies into advice that the client will actually follow often requires some knowledge of the client’s personality, culture, and background, so the advisor can deliver their advice in a way that is meaningful and motivating to the client.

One powerful tool for better understanding a client’s financial behavior and psychology is an exploration of their “money memories” – the key moments in a person’s past that can shape their current beliefs and actions around money. By encouraging clients to reflect on these influential events from their past, advisors can help them examine their current behaviors more objectively and recognize the reasons for feeling so stuck (their change inhibitors), which can make it easier to identify workable strategies that will help their clients get ‘unstuck’ in challenging areas of their financial plan.

However, money memories can be a very sensitive topic for many people given the emotions (both positive and negative) that these conversations can elicit, and clients may feel deeply vulnerable when talking about their money memories and past decisions. If an advisor asks about money memories too early in the relationship – without first having built a deep foundation of trust – the client could feel as if they are being judged on their past or present actions and become put off or defensive, shutting down the conversation until their trust can be rebuilt. Which means that money memory conversations that are approached deliberately and respectfully can make them more productive and insightful.

Advisors can prepare their clients for the conversation by providing an agenda outlining the discussion topics well in advance, which can give clients an opportunity to contemplate their responses ahead of time. And keeping the conversation as an open-ended exploration of attitudes and feelings (rather than using it to diagnose specific problems or behaviors, which can feel overly judgmental to some clients) can help clients feel more comfortable about having a candid discussion of their money memories.

Ultimately, money memory conversations are about giving clients the space to explore their own perspectives and perceptions of their experiences. The simple question “What’s your earliest money memory?”, followed by respectful and open-ended follow-up questions to explore the client’s thoughts and feelings more deeply, can help clients recognize for themselves the ways that past experiences may manifest into current behavior. At the same time, helping clients uncover these memories for themselves can give advisors deeper insight into the client’s psychological approach toward money – helping the advisor give advice that aligns with what matters most to the client (and that can help them tackle their most challenging obstacles)!
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The 30-Minute Prospect Meeting: A Framework And Agenda That Convert By Focusing On The Prospect’s (Immediate) Problem

March 23, 2022 07:09 am 1 Comment CATEGORY: Client Trust & Communication

In recent years, financial advisors have increasingly recognized that making a personal connection with prospective clients early in the process (as soon as the very first introductory meeting) can make it more likely that the prospect will eventually become an engaged, motivated client. And so advisors often get personal with prospects early – in many cases asking them questions about their personal memories, attitudes, and psychology around money (e.g., “What is your earliest money memory?”) – with the aim of showing interest in the prospect as a person beyond the numbers on their balance sheet (which would theoretically serve to build an open, trusting relationship, and the kind of personal connection that the advisor wants to develop).

But in reality, asking such personal questions in an initial meeting (before any foundation of trust is built) can ironically have the opposite effect of what the advisor intended. Because diving into personal psychological profiles when the prospect may already feel anxious and vulnerable about meeting with an advisor could – from the prospect’s perspective – feel overly intrusive and ultimately put them off toward the advisor.

Furthermore, prospects also may have priorities on their minds going into the initial meeting other than their psychology around money. Often, there is a significant, concrete problem in their financial life that has pushed them to reach out to a financial advisor. And when solving this problem is foremost in a prospect’s mind, having the conversation shift to money psychology can feel to the prospect as though the advisor is not listening to what they have to say – the exact opposite of the feeling of open communication that most advisors hope to invoke in prospective clients.

In the initial prospect meeting, then, all that really matters is answering this question for the prospect: “Can – and how – will this advisor solve my problem?” The advisor can help the prospect answer this question by focusing on that problem for the entire meeting: first, by learning what caused the prospect to initially reach out and exploring that problem in depth; then by describing the advisor’s services and planning process as it relates to solving the problem. And by focusing solely on the prospect’s problem, advisors can hold an efficient initial prospect meeting – lasting around 30 minutes – that gets to what really matters for the prospect and gives both parties the information they need to decide how to move forward.

Ultimately, it’s important to remember that prospective clients often want to talk about the problem that has caused them to reach out – after all, that’s what pushed them to overcome any fears and schedule a meeting with a financial advisor in the first place! And keeping the conversation centered around that problem helps to keep the prospect talking, continually reinforcing that they have a problem that indeed needs to be addressed (and that the advisor can help them solve it!). Letting the prospect talk freely about what is important to them in that moment – with the advisor listening empathetically and reflecting that information back to them – can establish the strong personal connection that many advisors seek, creating a foundation of trust to build on, which can – at the right moment – include discussions of money psychology… but only after building up enough trust and preparing the client for having those conversations!

Asking ‘Have You Worked With An Advisor Before?’ To Uncover What Prospects Really Value Most

March 16, 2022 07:09 am 1 Comment CATEGORY: Client Trust & Communication

When meeting with a prospective client for the first time, two of the advisor’s primary goals include making a positive impression on the prospect and determining whether the prospect will be a good fit. However, if the prospect feels nervous about the advisor potentially judging their previous financial decisions, they might become uncomfortable or defensive when asked direct questions about their financial situation. And without asking the prospect about their financial history, the advisor might be challenged to determine whether the prospect would be a good fit for their services. Given this delicate balance, one particularly helpful question for the advisor is to ask, “Have you ever worked with a financial professional before?”.

This versatile question, along with relevant follow-up questions based on the prospect’s answer, can help advisors understand not only what the prospect really wants, but also how much financial planning education the advisor will need to provide to help the prospect identify and attain their goals. For example, many consumers who have never worked with a financial planner before don’t understand what advisors actually do for their clients. Additionally, prospects don’t always understand what a financial plan consists of or how they can benefit from using one. And prospects who have worked with an advisor before might come with unrealistic expectations about what they want from an advisor.

For prospects who previously worked with an advisor, good follow-up questions include asking about the length of the relationship with the previous advisor (which may give insight into when the prospect decided to examine their financial goals); why the relationship with the previous advisor ended (to see whether the advisor did something that made the prospect unhappy); and what the prospect found was most beneficial from working with their previous advisor (which can show the values the prospect finds most important).

And for prospects who have not worked previously with an advisor, helpful follow-up questions include what led them to take action now (to see what motivates them and whether they recently experienced a major life change); with whom they currently talk about their finances (to learn about alternate sources of information for the prospect); and what questions they have about the client-advisor relationship (which can show why the client wants to work together in the first place).

Ultimately, the key point is that the question, “Have you ever worked with a financial professional?” can be a useful tool for advisors not only to illustrate their value to new prospects, but also to determine potential fit. It can help them understand how much the prospect knows about the financial planning process as well as their experiences with previous advisors. And by asking appropriate follow-up questions, the advisor can learn everything from the prospect’s motivations for approaching the advisor to their expectations for the relationship. In the end, this conversation can help both the advisor and the prospect decide if a working relationship together can be beneficial and – possibly even more important! – one that they will both enjoy!
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