Do You Know Enough About Your Clients?

I read your column, and I know you have a similar attitude about the soft side. I want to hear from you whether it is wrong to believe that numbers matter most and not everyone should try to be a psychologist with their clients.

K.A.

Dear K.A.,

Well, that is a set-up if I ever heard one. You don’t have a question, but you want me to validate something that you say is in opposition to what you have read in this column before. While it puts me in an interesting place, I’m going to validate your perspective, which is probably what you least expected me to do.

I do firmly believe that to help clients with what matters most to them in life (their finances, health, family considerations, dreams, fears and goals), you must understand them as deeply as possible. This means knowing what they care about, understanding their values and motivators, learning about what risk means to them and uncovering family dynamics – among many other things. To learn this information, you have to be willing to ask good, open-ended questions and then listen. And you do have to care, just a little bit, about the answers and what the client cares about.

But I am a firm believer in one’s behavioral and communication style. You can’t be phony and fake when you do this. If this approach makes you uncomfortable, and your comfort zone is in the numbers and talking about portfolio allocation, then don’t ask a question feigning interest in their vacation when you genuinely don’t care about it! Many times, an advisor attracts clients who have a similar communication style to their own. It is quite possible your clients are not the type who want to spend time talking about their vacation. You know your audience, and you have to make this judgment. But if you have a mixed group of clients and some do care about their advisor learning more about them and knowing them more deeply, then you need to consider your options in how best to interact with them. You could:

1. Be honest. Let the client know that while you are a bit uncomfortable with asking personal questions you do believe it is in their best interest for you to learn more. Then roll right into a question with something like, “Share a bit about why you went on the most recent vacation. What mattered to you in planning this?” Then let the client talk. You might learn about their decision-making process, or their values or how they budgeted for the trip – all things that could be helpful in your efforts to do excellent portfolio allocation on their behalf.

2. Bring another team member who is more comfortable with the softer side and who does like to engage differently. Explain to your client you are teaming up with someone who is a bit different from you so that you can make sure to cover all aspects of the client relationship effectively.

3. You are in a helping role. While making the best portfolio decisions is ultimately what your client is paying you to do, for them to feel confident, comfortable and think “all is well,” they need to trust you and know you understand them. Staying only with topics related to finances is not going to deepen trust in the overall relationship. They will believe you are a good portfolio manager, but you want to be the trusted advisor. Consider your own goals in how you want to be known by clients and then determine whether your current perspective is the best one for you and your clients longer-term.

Dear Bev,

I recently had a very uncomfortable experience with a client. His mother (84 years old) entered a nursing home, and he was the main person to find the home and is now paying for it. We had not had his mother in our earlier projections and had not even known about the expense related to the home. He called my support team to ask for auto payments to be made each month and that’s how I found out.

The uncomfortable part comes from when I called him to ask about these payments. He was in an irritated state and told me he didn’t believe I was there for him during one of the most difficult times in his life (moving his mom into the home). He said he thought it was my role as his “financial partner” to have learned about his mother and even to help him seek out a place for her.

This client is a single man, never married and is an only child. We have put plans in place for when he dies, diverting money to several philanthropic endeavors and to his best friend’s daughter (now 32 years old). I felt like I knew him and knew what he cared about, but we never spoke about his mother. Now that I understand the situation, I feel it was a miss on my part not to have inquired about his mother’s health and longer-term plans (I did know she was still alive).

What can I do now to correct the situation? What if I have missed other client scenarios where I haven’t asked enough of the right questions? His angst and anger toward me, after my belief we had a very good relationship, really threw me. It makes me question whether we are delving deeply enough with our clients overall.

C.J.

Dear C.J.,

Your note embodies so many important elements, I want to try and do justice to all of them. There isn’t a lot you can do regarding this situation, except:

1. Apologize for not understanding more fully the situation with his mother. Apologies can go a long way in situations where a client feels wronged.

2. Continue to ask about his mother, show an interest in how she is doing in the new home. Make this genuine – if you don’t really care, it will only anger him more.

3. Review how you are engaging with clients to ensure you have all the information you should about their lives and extended family situations.

The other piece of your note is the elder-care consideration. Many years ago, I partnered with an elder-care lawyer and elder care specialist to help advisors on this very topic. I still believe it is a much underrated and overlooked aspect of what advisors do. The care manager told us a story about an advisor helping a client’s parents save for long-term care and finally move into a beautiful facility. While they could afford the expensive care, the wife became deeply depressed and almost suicidal because she was so lonely and missed her old neighborhood and friends (she was still in reasonably good health). They blamed the advisor for not taking into consideration the emotional component of making the move, along with the financial aspect. They fired him and hired someone else shortly after the move.

This taught me that while the focus is often on the “next generation” – children and grandchildren of wealthy clients – understanding what clients are dealing with for their parents is equally important. A student in one of my grad classes I teach shared this past week that statistics show that up to 60% of the American population is in a care-giver role. Many of them are dealing with elderly parents or relatives. It’s important for advisors to understand this dynamic both financially and emotionally to fully help their clients plan.

Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry, in 1995. The firm also founded and manages the Advisors Sales Academy. The firm has won the Wealthbriefing WealthTech award for Best Training Solution for 2022 and 2023. Beverly is currently an adjunct professor at Suffolk University teaching undergraduate and graduate students Entrepreneurship and Leading Teams. She is a Certified Professional Behavioral Analyst (CPBA) and Certified Professional Values Analyst (CPVA).

She has spent over 25 years in the investment industry and has been featured in Selling Power Magazine and quoted in hundreds of media outlets, including The Wall Street Journal, MSNBC.com, Investment News and Solutions Magazine for the FPA. She speaks frequently at investment industry conferences and is a speaker for the CFA Institute.

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