I know your name, your address, your Social Security number, your account numbers, the whereabouts of those accounts and the balances within them. I know where you work and your adjusted gross income. I know your family members' names and ages. I know the date you were born and the fact that you consider yourself a "moderate" risk taker. Do I know you?
We are emerging from one of the most tumultuous periods in financial history, where one of the most apparent discoveries we have made is that we don't know nearly enough about the clients we serve, and consequently those relationships are often at risk. Though many factors have led to this state of relational uncertainty, the macro view must take into account a confluence of both changed perspectives and changed realities.
The changed perspectives are the result of eroded trust. Faith has been shaken in the markets, in many of the institutions that were once revered and in the industry's judgment. Changed realities are the result of experiencing 9/11, the Great Recession and unpredicted life changes in a single decade. The net-net of this confluence of changed perspectives and changed realities, emotionally speaking, is that clients have raised their scrutiny of what constitutes "value"--and subsequently have elevated their expectations.
Clients are expecting more from their advisors, and yet the definition of what "more" is has been difficult to delineate and is an abstract concept to most. What is clear is that we have done an excellent job of gathering facts and numbers relevant to a client's situation, but have fallen short in terms of understanding who our client is. A more personal survey of clients must, by definition, include anecdotes from their experience bank and a deeper knowledge of the challenges and opportunities that consume their time, attention and resources.
The concept of client discovery is now evolving to take into account the stories that define our clients, as well as the numbers that measure their financial situations. The financial aspects of our clients' profiles are gathered through facts and numbers. The personal aspects of their evolving profiles will be gathered through anecdotes and well-designed surveys of their life situations. The following describes the financial aspects we have discovered and the personal corollaries of understanding we often lack:
Financial Profile
Net worth
Liabilities
Cash flow
Money goals
Personal Profile
Experiences
Concerns
Responsibilities
Hopes
For the last decade, I have been engaged in consultation and development work along these lines of client profiling for some of the largest firms in the industry, as well as some of the smallest but most robust practices. An observation I must offer is that we can all improve upon both the manner and the methods by which we come to understand our most valuable asset--our clients. If we cannot improve the content of the conversation itself, we can almost always improve upon the connectivity achieved in that conversation.
The first way we can improve is by bringing balance to the profiling of clients. By balance I mean the balance between a story of numbers and a number of stories. I'll never forget the time some years ago when a major firm asked me to assess its "new and improved" client profile. It had 100 questions! That wasn't the worst of it--95 of the questions could be answered with a fact or a number. I don't know anyone who looks forward to answering 100 impersonal questions. It's a Bataan Death March of numbers that most clients are asked to engage in. What a way to introduce ourselves into a relationship!
While we cannot help clients improve their situations without knowing the numbers that help us to establish baselines and financial goals, we must gather these numbers and facts in the context of gathering their stories.
It is their defining experience from the past--concrete and established--that has made them who they are today and shaped how they approach money matters. It is their concerns and responsibilities in the present, unformed and in various stages of chaos, that consume their energies. It is their hopes, visions relegated to the future, that drive them to act responsibly with their present assets, which now brings us to a numbers conversation. The problem with the industry at large is that the practitioners attempt to get at these numbers first and the stories second, if they even get to the stories at all. When we attempt to profile clients in this manner, we are acting out of proper context--and the price we pay is fickle relationships and uncertain degrees of trust.
Hopefully by now we have all come to the realization that humans are not revealed through numbers but through stories. It stands to reason that the best relationships are going to be facilitated by those advisors who have developed the highest degree of skill in educing those stories and the best possible direction in the questions and surveys they undertake. How much more solid would the advisor/client relational footing be if we understood the defining experiences from our clients' past, the pressing concerns and responsibilities from their present and the hopes and aspirations directed into their future? One day soon we will be able to answer this question in numerical terms (increased AUM, client retention, etc.) as the client profile process evolves into gathering these more personal aspects of our clients' situation. Every day we look at numbers regarding our clients, but we must resist the temptation of believing that these numbers tell us anything about what we need to know about them.
One thing we all know for certain is that if an advisor has taken the time to understand who a client is (and the defining experiences that have shaped him or her), what the client most cares about and what the client aspires to achieve, that relationship would be difficult for any client to walk away from. Every advisor seeks the strengthening of the client relationship and the broadened access that goes with it, but the relationship can grow no further than the conversations that guide the process. Broadening the conversation will result in both broadened relationships and broadened opportunity. Our businesses will evolve in direct proportion to how our client profiling and discovery processes evolve.
Mitch Anthony is widely regarded in the financial services industry as an expert on building client relationships and has been recognized for his pioneering work in Financial Life Planning. His innovative tools for strengthening client relationships are available through his Advisor Insights at mitchanthony.com.