The power of open-ended questions

Some closed-ended questions are necessary. The know-your-client (KYC) questionnaire asks important closed-ended questions. But, Jodhan says, those questions alone are not enough to help you find out as much as you should about your clients. The KYC document does not provide the opportunity for clients to express their true emotions. For this reason, you should dig deeper with open-ended questions to establish clients’ true risk profile.

“Open-ended questions can generate long-winded answers,” Jodhan says. “You must allocate sufficient time to listening to clients.”

> Learn about your clients through conversation
The longest conversations you have with your clients usually take place during the discovery process and periodic client reviews. In the case of the discovery process, your goal is to learn as much as possible about your clients. Asking closed-ended questions during this process can “bring conversations to a halt,” Jodhan says.

For example, asking a prospect, “Are you happy with your current advisor?” could elicit a meaningless “yes” or “no” answer.

However, if you frame the question as: “Tell me why you are unhappy with your current advisor,” you could get the client to share his or her experiences and expectations, allowing you to gauge the type of client you are dealing with.

> Build trust and confidence
Open-ended questions can facilitate a deeper relationship with clients, allowing you earn their trust and confidence, Jodhan says.

“[Open-ended questions] are more inviting and give clients the opportunity to tell you their story,” she says.

With these questions, you are giving clients some degree of control over the conversation, so it doesn’t feel like an interrogation, Jodhan says. She suggests that, where appropriate, you might share your own or other similar stories, creating a bond between you and your client.

For example, you might ask a client a personal question such as, “How many children do you have?” The answer would be a number.

Alternatively, if you know the client has children, you might say, “Tell me about your children.” You would get a different, much more detailed answer. This could give you an opportunity to talk about your own children, deepening the bond with the client.

“The stronger the bond,” Jodhan says, “the greater the trust.”

> Ask follow-up questions
Some clients, by nature, might not tell you as much as you would like, Jodhan says. In such cases, asking open-ended follow-up questions can help you get more.

For example, you might follow up an unsatisfactory, one-word answer by asking, “Can you tell me more?” or “How did you react?”

Never “lead” clients by making suggestions within your questions, Jodhan says. For example, you should not ask: “What are your thoughts on achieving a 10% return?” Such questions steer clients away from expressing their true feelings by referring to a stated benchmark.

Talk about your client – not yourself

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