Advisors need to break through their clients’ “black box” when it comes to asking for more wallet share to manage, said Laura Gregg, director of practice management and advisor research at FlexShares ETFs (a family of funds run by Northern Trust Asset Management).
By “black box,” she means looking into the clients’ personality traits, those that can make it difficult for the clients to hear an advisor’s message. To do this, advisors need to tune their message to the personality types of their clients.
That means knowing what kind of client they are dealing with if advisors don’t want to be an annoyance, Gregg told the audience at the Invest In Women Conference, being held by Financial Advisor magazine in Atlanta this week.
“We all know it is more efficient to grow our business by gaining wallet share of existing clients rather than to try to get new clients all the time,” Gregg said. The question is how to do that, and the answer is to target your firm’s message to the persona of the client, according to FlexShares research. It is a message that resonates with both men and women, Gregg said.
Five Personalities
Generally, clients break down into five personality types, she said, and each needs a different style of advice.
One type is the “protector,” the most risk averse of clients. This person is skeptical of advice and is the most likely to be a do-it-yourselfer, Gregg said. Advisors need to approach this client with caution because it is easy to come off to them as annoying rather than helpful.
“For the protector, you need to wait for them to come to you” and offer more assets to manage, Gregg said. With this type of client, an advisor should emphasize his or her training and the rules that put guardrails on transactions that protect the client.
The second type is the “competitor,” who is completely different. “They want to focus on investment benchmarks, and they expect you to outperform those benchmarks,” Gregg said. Advisors should not ask this type of client for additional share of wallet and should expect to prove themselves before they are given the opportunity to manage more assets.
The third personality type, the “collector,” probably has several advisors who were acquired over the years through happenstance. The collection of multiple advisors is likely a source of pride to this client and it will be difficult to win assets away from them.
When it comes to collectors, advisors need to appeal to their need for simplification and try to show the value-add of planning over performance benchmarks, Gregg said.
It is easier to win wallet share from the fourth personality type: the “verifier.” This type of client wants planning consistency and oversight, and the result is they will want a consolidated solution for their investment portfolio.
The last personality type, the “simplifier,” is also easier for advisors seeking a larger share of wallet from existing clients.
“The simplifier sees all assets as a lump sum and likes being affiliated with a brand name firm to manage them,” Gregg said. “But even if you do not work for a large firm, you can be the quarterback who brings the assets and advice together in one place for this type of client.
“Retention becomes the issue for this client, rather than increasing wallet share. Remind the client of all you bring to the table and everything you are doing for him or her,” she added.
Nearly all clients (90%) fall into three of the categories—verifiers, simplifiers and collectors, FlexShares research says.
Since advisors themselves also fall into the five personality types, they should examine themselves and see where they fit in, Gregg said. In many cases, it will be easier for an advisor to work with a like-minded client because the advisor will understand what is motivating the client’s behavior.