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.