“Caring” is Often a Cover for “Transactional”

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What’s the difference between genuinely caring for your clients and having purely transactional relationships? While many advisors claim to care about their clients, their actions indicate their primary focus is gathering AUM and generating revenue instead.

Here’s how to conduct yourself as an advisor if you want to demonstrate that you care about your clients.

The Transactional Nature of Most Relationships

Most relationships, including those between advisors and clients, have some transactional elements. We seek benefits from each other, whether it's financial gain, emotional support, or professional advancement. However, “caring” can erode trust and undermine the advisor-client relationship, when it becomes a mere cover for transactional motives.

Think about your relationship with your favorite barista. You go to the same coffee shop every morning and exchange pleasantries; they even remember your usual order. This friendly exchange is enjoyable but primarily transactional. If the barista started recommending more expensive drinks, you’d quickly notice the change and might feel like you were being manipulated.

The same principle applies to advisor-client relationships.

Your Clients Know the Difference

Your clients have a keen ability to detect insincerity, especially when it comes to differentiating between "caring" and "transactional" relationships. Clients are generally adept at sensing when an advisor's actions are primarily driven by a desire for financial gain rather than genuine care for their well-being.

In a "caring" relationship, the advisor demonstrates a deep understanding of the client's needs, actively listens, and provides personalized guidance and support without immediate financial gain in mind.

Genuine care involves prioritizing the client's best interests and building long-term, trust-based relationships, not transactional ones.

Purely Transactional Relationships

What does a transactional relationship look like? Here are some examples:

Conditional Affection: Some advisors offer affection or benefits only to receive something in return, keeping a mental "ledger" of interactions. They may shower clients with attention and gifts when they expect a significant investment or referral, only to withdraw their attention if the client doesn't reciprocate.
Lack of Genuine Concern: Purely transactional advisors may feign interest in the client's personal life or goals, but their primary focus is on the financial aspects of the relationship.
Pressure Tactics: Transactional advisors may use pressure tactics, prioritizing their financial gain over the client's best interests. They may push products or services that generate higher fees, even if the client has more suitable options.

How to Demonstrate Genuine Care as an Advisor

To build meaningful, trust-based relationships with your clients, demonstrate genuine care beyond mere transactions.

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Here are some ways to conduct yourself as an advisor if you genuinely care.

Focus on Understanding Clients' Needs: Take the time to deeply understand your client's financial goals, personal values, and unique circumstances. Ask questions, listen actively, and show empathy. Your aim should be to understand their needs rather than just to generate more revenue.
Provide Guidance and Support: Offer guidance and support even when you have no immediate financial gain. Be willing to spend time educating clients, answering their questions, and helping them make informed decisions. Your role is to be a trusted advisor, not just a salesperson.
Prioritize the Client's Best Interests: Always prioritize your client's best interests, even if it means recommending products or strategies that may generate less revenue for you. Be transparent about potential conflicts of interest and take steps to manage them to benefit the client. Let’s assume you had a client who wanted to discuss whether she should pay off her mortgage using funds from her investment account. Paying off the mortgage would reduce the assets under management and decrease your revenues. If you believed it was in her best interest, then you’d advise her to pay off the mortgage, because it would significantly reduce her overall debt burden and provide her with greater financial security in the long run. By transparently and ethically managing the potential conflict of interest, you will benefit the client and maintain trust in your professional relationship.
Build Long-Term Relationships: Build long-term, trust-based relationships with your clients. Show genuine interest in their lives, celebrate their successes, and support them through challenges. Regularly check in with them, even when there's no specific financial matter to discuss, to demonstrate your ongoing care and commitment.
Offer Personalized Appreciation: Express your gratitude to your clients in personalized and meaningful ways. Send handwritten notes, remember important milestones, and tailor your appreciation to their preferences and interests. Avoid generic gestures that may come across as insincere.

By demonstrating genuine care and conducting yourself in a way that prioritizes your clients' well-being, you can build solid and lasting relationships that go beyond mere transactions. Your clients will come to trust you as a valued advisor and partner, leading to greater satisfaction and loyalty over the long term.

Dan coaches evidence-based financial advisors on how to convert more prospects into clients. His digital marketing firm is a leading provider of SEO, website design, branding, content marketing, and video production services to financial advisors worldwide.

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