Many veteran advisors contact me with the following questions: “Why do my high-value clients only entrust a portion of their assets with me? If they trust me with some assets, why not allow me to manage all of their assets?” “How can I change this situation?”
According to a recent Capgemini, RBC wealth Management U.S. Wealth Report, a survey of a large sample of high-net-worth clients across the U.S. showed that they graded their wealth managers with an average score of C-. Furthermore, clients who graded their advisors with these scores only turned over 32 percent of their wealth to that advisor, versus 68 percent by more satisfied clients.
Add to this a 2013 study by Fidelity Investments that found a remarkable 70 percent of widows fire their financial advisors within 12 months after their spouses die! For the women surveyed, they cited the following examples of why they fired their family’s advisor:
- “He didn’t really listen to me.”
- “He seemed condescending toward me, dismissing my knowledge of our financial situation and options.”
- He hardly looked at me or asked my opinion.”
- I felt undervalued.”
- I didn’t believe that he really understood my fears and goals.”
Clearly, the challenge for wealth managers is gaining insight into what matters to each of their clients so that they will feel comfortable entrusting their advisor with the bulk of their assets and remain loyal to them. We all know that there are significant differences between clients and their needs, fears and goals. Some advisors get overwhelmed trying to accommodate each client. Moreover, many advisors are so busy prospecting and worrying about attracting new clients that they take their existing clients for granted and spend little time nourishing the relationships they have with them.
It boils down to your mindset and the culture of your firm. Committing a block of time each month to nourishing each relationship you have with your clients will not only go a long way toward raising the satisfaction “grade” from your clients, but will also help to move them from entrusting you with only a small portion of their assets to a majority of their assets.
So, how do you nourish relationships? Well, think about other relationships in your life—your spouse, children, friends, etc. When they complain that something is lacking, what do they complain to you the most about? Is it the lack of time spent with them? Is it that they do not believe that you listen to them or understand their needs?
The Big Secret Revealed
In my 33-year career as a consulting psychologist, I have worked with hundreds of relationship issues—couples, business partnerships, coach/athlete relationships, advisor/partner relationships and advisor/client relationships. The common denominator in all relationship issues is communication breakdowns because people do not truly listen to one another.
The good news is that listening is a skill that can be easily learned. The most successful method of communicating involves active listening. If you google the term and practice the steps, you will quickly learn the “how to’s.” I promise you that if you use active listening skills with your clients, your AUM will increase dramatically, taking pressure off of your need to prospect. You will develop greater trust and loyalty from those clients. As a side benefit, once you learn the skills, other relationships in your life will also flourish!
An Advisor Case Study