• Presenting too many options. As part of a study regarding the psychology of personal choice, researchers Sheena Iyengar and Mark Lepper set up a grocery store display featuring 24 different varieties of gourmet jam. Then, they came back another day to same spot in the store but this time only set out six. While the display showing 24 jams generated more initial interest among consumers, the one with just six resulted in more sales. It led them to conclude that 24 choices was overload, ultimately finding that when people trying to make a decision are presented with too many options, often they won’t make a decision at all. Clients are like this, too. They come to you for your expert advice. So while it’s undoubtedly important, for example, to have access to a wide range of investment options to help meet their needs, work to narrow those down based on your expertise. Then put it in the client’s hands and allow them to make a decision.
• “What are your hopes and dreams for retirement?” Since the financial crisis, the average investor is much more concerned with safety and security versus fulfilling their hopes and dreams. Prolonged market volatility and a near collapse of the global economy will do that. Sure, travelling the world, combing beaches and playing golf every day sounds great, but that’s no longer immediately achievable in the view of many. Instead, in today's environment, the advisor may be best off asking clients and prospects what their expectations are for retirement. Then from there, the advisor can build a realistic, goal-based plan that can be benchmarked over time. If their situation improves, great — you’ll be able to make adjustments.
• Talking extensively about product performance. When you talk too much about how a particular product has performed, you are positioning yourself as a retailer. People don’t have relationships with retailers; they have relationships with people. Today, investors can easily find someone to sell them investment products, meaning no prospect or existing client needs you to do that for them. What they do need, however, are the services and insights you provide. Act and talk like an investment and financial planning professional, not a retailer selling investment products that can be found anywhere.
Everybody is familiar with the old cliche “You never get a second chance to make a first impression." For advisors, they should broaden that to understand every interaction with a client or a prospect is like a first impression, and you better make the most of each one — or it could cost you.
To that end, always be mindful of what you say, using words and phrases that invite more interaction and compels them to open up more about what they believe, think and feel. You’ll win more business and establish more loyal client relationships that way.
Dawn Drewitz is a senior business consultant at HD Vest Investment Services, the Irving, Texas-based independent broker-dealer.