Advisor or Confidant?

by Raphael E. Lapin

While on a late summer afternoon outing with my children, we suddenly came across an Apple Store in all its technological seduction and splendor. Upon entering this modern-day wonderland and playing with all the latest gadgets, I found the atmosphere and environment quite disconcerting. Perhaps the best way I can describe it is like being amongst a crowd that suffers severely from attention deficit disorder and at the same time is very high on caffeine! It was a frenzy of people running from one piece of Apple wizardry to the next, attempting to experience all without mastering any; entirely focused on the technology with little acknowledgement or even awareness of the people around them. It suddenly dawned on me with a stark clarity that technology with all its glitz and glamour has insidiously robbed us of authentic, genuine, rich and meaningful human connectivity and interaction.

The financial services industry at its core is a relationship-based industry. To remain competitive, we must restore the very crucial human component to a technological world. As professionals in the field it is imperative that we are equipped and armed with the techniques and skills to establish, manage and sustain our client relationships effectively.

In this month’s column I will address the contracting phase of engaging with a new client. It is in this phase, long before any services contract is presented, that the client relationship is initially negotiated, crafted, and established. Done well, it can build a firm foundation and set the tone for a strong working relationship. Done poorly or not at all will deem you a commodity in the financial services space, and will result in weak client relationships with serious threats from competitors.

Engage the Client

We tend to see a first-time meeting with a potential client as an opportunity to “sell” ourselves and “pitch” our services. We allow ourselves to launch into a monotonous monologue about our expertise, successes, and how our products are sure to realize their every dream. We become so absorbed in our enthusiastic rhetoric that we fail to notice the visual cues that convey utter boredom and lack of interest on the part of our prospective clients. We are quite oblivious to the fact that we have, in all probability, already lost them.

The first principle in contracting is that when a person feels imposed upon and pressured, he will likely push back and resist with an equal and opposite force. To avoid this we need to, figuratively speaking, walk alongside them rather than face them so that they have nothing to push back against. They should feel like collaborative partners and joint problem-solvers rather than suspicious adversaries.

To achieve this we must engage them in productive dialogue. This means asking well-crafted questions and listening skillfully, rather than talking incessantly. The more we can get them to talk about their fears, concerns, dreams, and expectations, the more information we will have and the more effectively we can respond. In addition, the potential client will feel like an equal partner rather than an inferior subordinate––an active participant in the process with a sense of ownership over the outcome.

Good opening questions to ask are: “Talk to me about your perceptions with regards to financial advisors in general and their roles in particular.” “How specifically do you see my role?” “What do you see as the client’s responsibilities?”

Other very useful opening questions are: “In engaging the services of a financial advisor, what might be your greatest concerns?” and “What kind of working relationship do you envisage?” Or, “If you could design the perfect client-advisor relationship, what would be some of the key components?”

If they have previously engaged financial advisors, you might ask, “Tell me about some of your best and worst experiences in working with financial advisors?” These kinds of questions will generate very productive dialogue and induce useful and meaningful information. This interaction also goes a long way in building rapport with the potential client.

Negotiate the Relationship

Having a better understanding of what our potential clients’ concerns and expectations are, we are better equipped to negotiate a working relationship with them. Having felt heard, validated, and understood, they will be more willing and participatory in the process. Bear in mind that people are unique and as such, desire different kinds of relationships with their advisors. Don’t be afraid to think innovatively as you work to customize a framework for a particular client.

Propose (don’t impose!) a kind of relationship that appears to address their concerns and respond to their needs. Be clear on what your role is and what you are able to do as opposed to that which goes beyond your role as an advisor. Invite their input and ideas for enhancement and improvement.

You might say, for example, “Having understood some of your concerns, needs, and expectations, I would like to propose a framework for a working relationship between us that I think will be tailored to you and your situation. I would also like your thoughts for how we can make it even better.”

This charter should include elements such as frequency and methods of communication; information-flow efficiencies; decision-making processes; how problems will be dealt with and how conflicts will be resolved. It should provide clients with a sense of comfort, trust, and security in their relationship with you. Ask them if there are any further elements that they feel should be explored that you have not mentioned.

It is always a good idea to formalize the agreed-upon relationship points in writing and to incorporate them into the services contract agreement. This provides a useful record that can be referred to later if necessary. In addition it also adds a more gentle touch to an otherwise cold and clinical services contract agreement—an important and often neglected aspect in relationship-based professions.

Be vigilant in the contracting phase by engaging the client and negotiating a working relationship, separate and distinct from the professional services being rendered. This will differentiate you in that your potential clients will “experience” you rather than just “meet” you. They will feel an authentic human interaction in an otherwise very technological (inhuman) world. Far from a mere financial advisor you will become a true confidant—a competitive edge in a competitive world.

A version of this article originally appeared in Research Magazine and is reprinted with permission.