Learning More About Clients With the Whole Client Model
How to find out what you need to know about a client.

Editor's Note: The following column is excerpted from the authors' latest book, Wealth Management: The New Business Model for Financial Advisors.

Over the past few years, we've made the case for the move to the wealth management model, which allows an advisor and his or her team to deliver a full range of interrelated brokerage, investment and advanced planning services in a highly consultative way.

For affluent clients, the wealth management model simplifies and centralizes their financial lives, no small task given the choices and complexity they're confronted with. One person, the wealth manager, becomes responsible for every aspect (or critical aspects) of the client's financial well-being. Our research also has shown that the affluent generally prefer this model--they tend to want that higher level of connection and context.

The benefits for the advisor are no less substantive: a better and broader relationship that in turn leads to more products and services, as well as high-quality referrals.

Information Gathering

Implicit in the difference between advisors and wealth managers is the idea that the latter must have a far more intimate understanding of their clients and what they need so they can establish a consultative relationship: They can do more for them because they know more about them.

One way to demonstrate the difference between advisors and wealth managers when it comes to how they work with clients is by looking at the way they gather information. For financial advisors, there's no shortage of forms, fact finders and questionnaires. But from the wealth management perspective, many of those tools are skewed by a narrow focus on investable assets and net worth.

The wealth manager takes a far different-and far more personal-tack. We evaluated top advisors and successful wealth managers as to how they gathered information and what kind of questions they asked of their affluent clients. The result, the Whole Client Model, is a data-gathering tool that can influence and inform the nature and success of the wealth management relationship.

The Whole Client Model is organized into the following six sections, with such sample questions as:

1: Goals

What are your personal and professional goals?

What do you want (or feel obligated to do) for your spouse, children, other family members, friends, society and the world at large?

2: Relationships

Which family relationships

(spouse, children siblings, parents, etc.) are most important to you?

What is your religious orientation (and how devout are you)?

3: Assets

How are your assets structured and in whose name (yours, a spouse, a business)?

How do you make money (and how is that likely to change in the next few years)?

4: Advisors

Who are the other advisors you're working with and what role does each advisor play?

Of late, how often have you dropped advisors and added new ones (and why)?

5: Process

How many times would you like to be in contact with your advisors each year and in what form (face-to-face, by phone, via email)?

What security measures are you using to protect your personal and financial information?

6: Interests

What are your favorite activities, TV programs, movies and sports teams? Do you have any hobbies, like pets, or travel often?

Are health and fitness important to you and, if so, what's your regimen?

Interaction Not Interrogation

Learning about a client is not just about the questions, of course, but the way they're posed and the manner in which the information is compiled and leveraged. The process says as much (or more) about the wealth manager as the content.

Some aspiring wealth managers may think that asking personal questions is intrusive or even offensive. We disagree. In fact, assuming they respect the wealth manager and his or her intentions-an important caveat-the majority of affluent clients are quite willing to talk about themselves because they understand that data informs a wealth manager's approach to their unique situation. As a result, a deft wealth manager should be able to get the information without reading from a questionnaire or the above list. They can instead deduce the information over the course of time by engaging affluent clients in an ongoing conversation about themselves, their needs and wants, and their interests. Above all, the process should put clients at ease by taking the form of an open-ended conversation, not an interrogation.

As for timing, there's no one right answer. Indeed, the process will probably be incremental. Even if one is able to sit down with a client or prospect for an hour or two to ask some of the above questions, information will continue to be added as the client's profile is fleshed out in subsequent meetings and as the relationship advances. Regardless, the Whole Client Model is exceptionally powerful at fostering the consultative approach that's central to wealth management. That is, in the course of developing a detailed understanding of a client as a person, the advisor and client can get to know one another in a more personal and meaningful way that can only enhance the relationship and the client's confidence.

In any event, as can be seen by the nature of the sample questions, the discovery process is not just about assets. Of course, a wealth manager has to learn all that he or she can about a prospect's finances before being able to offer viable options. But it's just as important to know who they are-their goals and objectives as well as their interests and relationships-as it is to know about their portfolio holdings. That kind of personal probing, facilitated by the Whole Client Model, will be less familiar territory for some advisors (and even some clients) but it makes for fertile ground when it comes to building a relationship.

And the discovery process is not a one-way street: It's also a valuable opportunity for the prospect to learn more about the wealth manager's values, orientation and the way he or she does business. Conveying one's expertise and experience, and how it has helped people like them, is an essential step in developing mutual trust and understanding.

In addition to building a better relationship and setting the stage for more products and services, the Whole Client Model also helps wealth managers hold onto clients when investments don't perform as anticipated. Because of the rapport that's been established, a client will often give a wealth manager more time to make adjustments during a period of poor or under-performance than they would for an advisor with whom they have a less consultative relationship (that is, an advisor who manages their assets in a limited way as opposed to managing their entire financial life in a holistic manner).

Another benefit of the Whole Client Model is that it often makes it easier to get business in the first place. A previous research study cited in this column focused on 103 investors with at least $5 million in investable assets, who had met with and received proposals from advisors the previous year but did not hire them. Four out of five said the advisor didn't understand them.

If the majority of affluent clients aren't feeling understood, there's something very wrong with the discovery process being employed. Understanding is a prerequisite for rapport and trust. If that connection isn't made, there's little hope for a relationship.

It's also important to identify the issues that link a prospect's lifestyle and finances, especially those that have not been addressed to their satisfaction. For instance, surveys of the affluent often reveal a desire to establish a charitable legacy and instill philanthropic values into their children. But they may not have had time to articulate their values and think how those values might be best realized. That's just one example of where the bonding process can begin and understanding can take hold.

Before making any recommendations, it's not enough to simply understand what a prospect wants to achieve, what complications they envision and what concerns they have. It's also helpful to know if there are any preconceptions or interests about particular products or services that should be investigated. By reviewing these issues together, a wealth manager and prospect can move toward a shared acceptance of goals, and the wealth manager can convey a level of understanding and comfort to the client that any service and solutions offered will be tailored to their needs.

Hannah Shaw Grove is managing director and chief marketing officer of Merrill Lynch Investment Managers. Russ Prince is president of Prince & Associates.