Let’s say you’re my client, and that I know your name, your address, your Social Security number and other account numbers. I know 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.
But after all that, I should ask: Do I really know you?
Financial firms are emerging from one of the most tumultuous periods in social and political history, and one of the biggest discoveries we’ve made is that we don’t know nearly enough about the clients we serve; as a result, our relationships are at risk. Many things have led to this state of uncertainty, but in the big picture it’s due to changed perspectives and changed realities.
Let’s start with clients’ eroded trust. Many of them have had their faith in the markets shaken, as well as their faith in the institutions they once revered and their trust in the industry’s judgment. They’re rethinking what they consider to be real things of value and have raised their expectations.
While advisors have done an excellent job of gathering facts and numbers about their clients, many have fallen short in terms of understanding who their clients are. To make up for it, they must become more personal. They must ask their clients deeper questions about their history and the challenges they face and find out what consumes their time, attention and resources.
The concept of client discovery must evolve to include the stories clients tell about themselves (not just the numbers measuring their financial situation). That means gathering through anecdotes. The following chart describes both the financial aspects advisors usually focus on in discovery and the personal things they could ask that are often missing.
For the last decade I have helped some of the largest firms (as well as small ones) develop their client profiling. Every firm can improve the way it comes to understand clients, which means improving the content of the conversation, and thus the connectivity.
First, we should strike a balance. I’ll never forget the time some years ago when a major firm asked me to assess its new and improved client profile. The questionnaire had 100 questions! That wasn’t the worst of it—95 of those could be answered with a fact or a number. I don’t know anyone who looks forward to answering 100 impersonal questions. Asking clients for an endless litany of useless information is no way to engage with them.
Yes, advisors need numbers if they want to help clients improve their financial situation. How else would they establish baselines and financial goals? But they must gather these figures in the context of a story, a framework that includes the clients’ experiences, concerns, responsibilities and hopes.
It’s the defining past experiences that have made clients who they are today and shaped the way they approach money matters. Meanwhile, their present concerns and responsibilities, including possible instability, consume their energies. They also have hopes and visions for the future that could prompt them to act responsibly with their current assets. This brings us (finally) to the numbers conversation. The problem with our industry, however, is that our practitioners attempt to get to these numbers first and to the stories second, if at all. When we do it that way, we lose context, and the price we pay is fickle relationships and uncertain degrees of trust.
Hopefully by now we all realize that humans reveal themselves through stories not numbers, and the best advisory relationships will be formed by those who can tease out these stories with good questions and surveys. We should resist the temptation to think the numbers alone tell us what we need to know about clients.
Advisors must take the time to understand who their clients are and the experiences that have shaped them, as well as what the clients most care about and what they hope to achieve. By broadening the conversation, advisors will see deeper relationships and more opportunity. Our businesses will evolve in direct proportion to the ways our client profiling and discovery processes do.
Mitch Anthony is the creator of Life-Centered Planning, the author of 18 books for advisors and their clients, and the co-founder of ROLadvisor.com and LifeCenteredPlanners.com.