Insights

Every financial advisor understands the power of strong communication skills. From being able to pick up on non-verbal cues to ensuring clients feel "heard” in a conversation, effective communication skills are the bedrock of a strong client relationship.   Believe it or not, not everyone – including the advisor population - is a “natural communicator.” In fact, I have found that the strongest communicators in our space learned and developed specific skills over time through conscious practice.   So, where does one start on their journey to becoming an extraordinary communicator? The answer is by listening. While this may seem simple and obvious, most people are surprisingly poor listeners – which is why it is so important to develop a skill called “active listening”.  What is Active Listening?  Active listening is a way of intentionally engaging during conversation to build a deeper understanding of the person you are speaking to. The Harvard Review of Business cites three key components:  Cognitive: Paying close attention to all information being conveyed, both explicit and implicit, and integrating that information into your understanding of the person.  Emotional: Monitoring and regulating your emotions during the interaction to stay attuned to the person, rather than succumbing to emotional reactions such as irritation or boredom.   Behavioral: Showing that you are engaged with the person through visual and verbal cues, such as nodding or mirroring their body language.  What Does Active Listening Achieve?  The combination of these three factors is extraordinarily powerful. Active listening can:  Produce positive feelings: fMRI studies show that active listening activates the brain’s reward system and produces positive emotions. In other words, you can literally make someone feel good simply by showing them you are listening to them.  Increase understanding: Concerted attention ensures you take note of important information other advisors might miss. It’s these tiny details that will shape and inform your responses and reactions, completely changing the trajectory of the conversation and relationship.   Increase engagement: Active listening helps advisors “anchor” themselves in conversations with clients, helping them show curiosity and use that curiosity to propel the conversation forward.  Active listening is the lowest-hanging fruit as it relates to creating a rewarding client experience.  When done right, it requires little effort but produces tremendous value.  Here are four ways in which you can powerfully leverage active listening skills in your routine interactions with clients.   Four Ways Active Listening Can Help Advisors Improve the Client Experience 1. Identify Client’s Belief Systems   Roughly 90% of financial decisions are based on emotions, and those emotions are dictated by a set of underlying beliefs. In practice, that means advisors need to understand their clients’ belief systems and worldview – which is something active listening can help you achieve.   Let’s assume an exaggerated example. Imagine you are working with a couple, where the male spouse believes that he should be the sole financial-decision maker since he is the bread winner in the family.  This could have a wide range of implications, influencing how your client interacts with you and how he engages in the financial planning process. Awareness of this fact can help you facilitate and steer conversations, so that you are “balancing” the power between the more and less dominant spouses, resulting in outcomes that benefit the entire family.   After a client meeting, it is important for advisors to create a space to reflect on what they have learned about the client.  The Cheat Sheet After each meeting, ask yourself these three questions:  What have I observed about this client that is worth remembering for the next conversion?  What am I noticing about the dynamic between spouses? OR What am I noticing about specific language or phrases the client uses?  What do I need to be mindful of when asking questions?  Be sure to store the answers in your CRM – they will help you recall these belief systems and factor them into future engagements.  2. Influence Behavior  Many advisors wish they could take on a more “powerful” role during client meetings but may fear creating a negative atmosphere. However, active listening skills help you attune to your clients’ emotions – which enables you to assert power when appropriate whilst remaining connected.   During the planning process, advisors have a chance to help clients recognize and shed belief systems hindering their progress and success. This is one of the most powerful roles an advisor can play.  There are so many examples that can be found when working with couples specifically.  Perhaps one partner is extremely dismissive of the other, resulting in frequent arguing and a misalignment around goals and decisions. One way to handle this is to listen intently and then (only after you’ve built enough rapport with both parties) ask permission to share objective feedback about what you have witnessed.  Be sure to not appear as if you are “taking sides” but rather provide objective feedback on what you’ve heard and then guidance on how both parties can meet in the middle.   3. Recognize and Support Clients  More than 50% of Americans are more trusting of advisors who show they care about their clients as people.1 While active listening has been shown to intrinsically make people feel valued, it also enables advisors to demonstrate their care through action.  One example would be addressing negative self-talk. Many clients exhibit patterns of behavior or speech that suggest they feel bad about themselves or their ability to manage money. However, advisors who pick up on these instances can uplift their clients and help them be less hard on themselves – ultimately building a stronger bond.   The best way to do this is to help the clients set goals, including small, short-term goals that are easily achievable. If you help the client stay accountable to those goals and then reinforce and celebrate their success when they achieve them, you will build their confidence and deepen their trust and loyalty.  4. Stay Engaged  Every advisor struggles to stay engaged 100% of the time during long client meetings. Oftentimes when we’re tired, bored or burnt out it can also be challenging to empathize with what the client is saying.  But your client deserves your full attention and care – which is one reason active listening is so important.  Through active listening you can facilitate a technique I call “manufactured empathy”. When your mind begins to wander, lean into your curiosity. Recall a specific detail the client asked and ask an open-ended (“what” or “how”) question.  Keep being curious, using what the client is saying to help formulate your next question. This can help anchor you into the conversation, re-engaging your mind and making the client feel heard and listened to.   The net result is the client feels good leaving the conversation. Think about how many times you’d have a conversation with someone, where they talked a lot and you talked very little, but they thanked you profusely for the “great” meeting.  THAT is the power of active listening.   Take Your Communication to the Next Level  Financial advisors who develop their active listening skills see significant improvements in both client retention and referrals. But it is just one tool advisors can leverage to deliver a better client experience.   Our Communication Toolkit offers a range of powerful questions to communicate more effectively at each phase of the client journey. It condenses more than a decade’s experience into a practical guide you can refer to whenever you need to build stronger connections with your clients.  

Planning to leave your firm but worried about the process of transitioning?  You’re not alone.   60% of Advisors say they have put off their transition because they “fear of the unknown”, with concerns about client attrition and the scale of administrative duties making the process feel too challenging for many.  But it doesn’t have to be this way.  There are a series of proven steps you can take to make the process simpler and more successful – and this article reveals them all. Whether you are joining a new firm or starting your own, setting aside six months to organize your client data will enable you to hand in your notice with confidence – knowing that everything is in place for a seamless transition.  Six Steps to Prepare Your Client Data for Transition  1. Check Your Employment Agreement   The first step to transitioning is to extract client data, but first you need to have a lawyer check your employment agreement. Can you legally download copies of your client’s financial plans? Are you allowed to export client data from the CRM? And do you have to disclose what you’re doing?  There are two broad possibilities:  The best-case scenario: You have no obligations and can leave freely whenever you want. While you will still need to notify your current firm and agree on when your last day will be, there will typically not be any restrictions around what information you can take with you on the way out.   The worst-case scenario: You are contracted to take a 30-day “garden leave”, during which time you are not allowed to contact clients or ask them to join your new firm.   It is important to have plans in place for both the best and worst-case scenarios. This could save you a lot of legal trouble: if your firm owns the data and compliance notices you are illegally extracting information from the CRM, they could start monitoring your activity and ultimately prepare a nasty lawsuit.  2. Get Familiar with Your Tech Stack  The ideal outcome of your transition would be to seamlessly switch your client data into your new tech stack. But to make that a reality, you must become familiar with that tech stack and assess how the data will transfer – which can take some time.  We recommend you start by identifying the system you will be using – whether it’s proprietary tech from your new firm or a solution you chose for yourself. This will give you plenty of time to learn how it works and assess its interoperability with other software. However, even moving data within the same software can cause friction and not allow a complete transfer.    For example, let’s say you have a financial planning software license with your current firm and intend on using the same financial planning software at your new firm. Your current license might be owned by your current firm, or it might be a customized license that offers fewer features than a traditional license; you’ll want to check with each software vendor.    In some instances, the vendor will offer services, for a fee, to help you recreate each financial plan. As for portfolio management and reporting software, if you are moving to a new vendor, expect the process of retrieving or recreating all your old performance data to be clunky and in some cases, simply not worth the attempt.   Remember that the firm you are joining should be able to help you with these conversations and in many cases will also pick up the cost associated with transferring data.   You will need to ascertain:  What software you plan to keep or change  What data is and isn’t transferrable given your contract and the vendors you are dealing with  How and who will transfer the data to the new system  What support is available, if you are moving to a new firm or using a transitioning support service  When you will transfer data and how long it will take  This should all be stored in a checklist that enables you to plan and execute the transition as smoothly as possible.  3. Gather Your Spreadsheets Once you have the all-clear to extract data, you will need the following data compiled into a master spreadsheet:   Client demographic data: Your clients’ names, household info, birthdates, addresses, emails, phone numbers, social security numbers, etc.   Client account data: All your clients’ accounts, including registration types and beneficiary information. It is also important to have your clients’ asset allocation, tax budgets, etc.  You will likely derive all this information from two primary sources: your CRM and the custodian. If you are moving to a firm that provides transition services and support, they will likely provide the configured spreadsheets for you so that you don’t need to worry about creating them yourself.   Important to note: Take this opportunity to rigorously inspect the data for gaps or errors. Even a single typo on an email address, such as “.con”, can cause significant delays during the transition process – and will be much harder to identify later in the process.    Now, unfortunately, there are some instances where you will not be able to take client data with you, specifically when you are leaving a captive firm. In those instances, you will want to consult with an attorney on your rights:  Are you allowed to publicly source client information?  Are you allowed to simply promote on social media that you have left your firm and provide generic contact information so clients can contact you?  There are other instances where you may be leaving a firm that adheres to a policy called Broker Protocol, which dictates that advisors leaving are only allowed to take a few key pieces of client data with them, typically the clients’ names, addresses and telephone numbers.   4. Prioritize Your Households  You cannot feasibly transition all clients simultaneously, which means you need to prioritize how you will contact clients and move accounts. Organize your client account spreadsheet into three categories:  1st tier: The most valued and important clients 2nd tier: Important clients but not as important as your top  3rd tier: The people you are either certain will follow you when transitioning, or you do not want to bring to your new firm  This list will help you and/or your transition team stay organized around who will be personally contacted and will receive paperwork, immediately on the first day, and then on the days that follow.  This is especially important if your contract with your former states that you cannot contact clients before the transition date or end-of-garden leave date.   5. Optimize Your Book  The next step is to plan how you will charge clients at your new firm. Enlist the help of the firm you are joining to do this analysis. Create two columns in a spreadsheet:  Current fees: What your clients are currently being charged   New fees: What your clients would pay if you moved them to a new fee schedule (either your firm’s recommended schedule or one that you introduce on your own)  This is a big opportunity for advisors transitioning away from captive institutions, b/ds or hybrids. Firms often have large mandatory platform fees that are tacked on to an advisor’s fee.   As a result of the transition, there might be an opportunity to actually reduce client fees and still generate the same or more revenue; equally, you might be able to keep fees where they are but generate additional revenue.    Advisors also should never shy away from increasing fees after a transition if there is solid justification for it. For example, you might have been undercharging previously and will now be adding a lot of resources and capabilities that you didn’t have access to before. Either way, getting a sense of where you are now and where you could be post-transition will help set you up for long-term success.   6. Prepare Your Communications  The final step is to prepare messaging templates for your transition announcement. Advisors should not be drafting emails the night before their transition; these messages should be planned and optimized in advance.   Once you leave, you should:  Send a mass communication to all clients explaining that you have left your firm, the new firm you are joining and what they should expect over the coming days. (You will want to be careful if you are maintaining a broker-dealer affiliation. B/ds have their own guidelines and rules; in some cases, they will not approve the use of common marketing communication tools like Hubspot.)  Some advisors choose to embed a pre-recorded video or voice note in the communication, explaining the reason for the change.  Reach out to individual clients letting them know about the change and setting expectations about what will happen if and once they agree to come along.   Deliver a templated email to each client once they agree to join you. This should explain that they will be receiving an email from your contract management system such as Docusign in the next few days, and what they should do as the next steps.  This is your opportunity to “control the narrative” and show clients the benefits of following you. Focus on factors such as better and more robust resources and services, fewer restrictions from your firm and more frequent communication – all of which will increase clients’ trust.   Find the Best Path to Independence for Your Practice Financial advisors that follow these steps have dramatically increased their client retention and reduced the stress of transition. But there is another key part of the puzzle: choosing exactly which RIA model you transition to.  That’s why we created A Straightforward Guide to Choosing an RIA. It condenses more than a decades’ experience into a five-minute read, helping you navigate the complicated world of RIAs and find the path that will best serve your goals.  

Advisors have been vehemently encouraged to break away and stand on their own, defying a source of oppression (the wirehouse). Empowering advisors to be independent and highlighting the need for registered investment advisor (RIA) firms to better meet clients’ needs, does not mean being independent is doing everything alone. Going independent entails an immense amount of work that, depending on the size of the practice, can quickly become untenable. We like to offer an alternate vision for advisors to consider when pursuing the independent model.  

Everything supposedly changed post-pandemic except the financial advisor’s role and how they drive new business. The contrarian view was part of a keynote session titled “Growth & Client Acquisition in 2022 & Beyond” at the Retirement & Longevity Summit in San Diego on Monday morning.

Women are a growing economic force in the world, controlling one-third of all wealth. Yet many wealth management firms and the industry as a whole continue to misunderstand the needs of women investors leaving them underserved.

According to a 2019 study, small businesses use an average of 40 different apps. This number grows  to over 200 for enterprise-sized companies and can include many with overlapping and duplicative functionality due to merger and acquisitions that pile layer upon layer of tech debt.

Principals of advisory firms know that if they want to monetize their practices, there may be no better time than right now. The reason? An 11-year bull market has driven valuations for firms into record, and possibly unsustainable, territory; a coming increase in taxation on capital gains makes holding off on a sale risky; and a fiercely competitive market for more valuable, high-net-worth clients is prompting growth-minded firms to broaden their offerings with in-house estate planning, tax preparation and trust services.

Financial advisors considering an independent move should cast aside any delusions that it’s easy, according to RIA coach and entrepreneur Penny Phillips. Phillips and advisors Michael Brown and Brian Flynn launched a new practice management-focused RIA aggregator called Journey Strategic Wealth at the beginning of the year. Entering a crowded sector that Cerulli Associates pegs at an estimated $2.8 trillion worth of RIA assets available for purchase over the next decade, Journey unveiled its first deal earlier this month. Despite an influx of private equity capital that’s fueling record consolidation in wealth management, advisors often need more education about the options available to them and the realities of making the transition to independence, according to Phillips.

On this week’s episode we speak with Penny Phillips, President and Co-Founder of Journey Strategic Wealth. She has extensive experience coaching and consulting financial advisors, business owners and wealth management institutions on assembling the resources and tools they need to powerfully serve clients. The pandemic has altered the way advisors interact with clients. Phillips observes that “everything is changed and nothing has changed” for advisors. She characterizes the developments of the past year as more of an evolution in the client journey.