Jeffrey Daly, chief designer of the Metropolitan Museum of Art in New York City, once said, “Two monologues do not make a dialogue.”
Daly’s message rings true today. A conversation is as much a matter of listening as it is about talking. And if you are not being understood, talking is a waste of time.
But Alan Middleton, executive director at the Schulich Executive Education Centre at York University in Toronto, says many financial advisors now speak in “finance” rather than in a language their clients can understand.
Making yourself understandable “doesn’t mean dumbing down,” Middleton says. It means forcing yourself to think and explain concepts in a way that your clients can relate to.
Communicating well to clients is key to client education and client retention. To help you become a better communicator, Middleton recommends you follow these “golden rules”:
> Ask questions, listen — and don’t talk!
It might sound simple, but you should discuss your client’s financial situation and their short- and long-term goals before making any recommendations.
There is a misunderstanding, Middleton says, that clients will articulate exactly what they need. They are more likely to articulate what is concerning them. Your role is to help define a plan that will address those concerns.
Don’t be afraid to ask your clients tough questions, Middleton says, such as, “How are you living your life, and how would you like to live your life in retirement?”
Your goal is to elicit discussion, not to tell your clients what they should be doing.
> Use clear language
Avoid jargon and speak to your clients in a language they can understand. Part of your job is to explain the terminology on documents such as insurance policies.
“Being able to get your message across,” Middleton says, “goes a long way in establishing trust and credibility as a trusted advisor.”
In this way, you present yourself as a problem-solver rather than another person muddying the waters.
> Know your client’s financial literacy level
Going beyond the standard KYC requirement, it is important that you understand your client’s financial needs and his or her level of financial literacy.
If your client or prospect is well-versed in financial affairs, you might consider taking the discussion to a higher level. Moving too quickly with a less financially literate clients could cause the client to become anxious, Middleton says.
> Be realistic
Don’t be afraid, Middleton says, to tell your clients the truth about what is happening in the economy and how conditions may affect their finances.
Some advisors always try to put a positive spin on market news — even when the news is bad. That can damage your credibility.
Says Middleton: “Sometimes I just want to say, ‘Get real!’ An ounce of reality helps sometimes.”