Three essential client conversations

> The discovery conversation
Your objective in the discovery conversation is to establish trust, says Kevin Sullivan, vice president, portfolio manager and advisor with MacDougall MacDougall & MacTier Inc. in Toronto.

“You have to ask a lot of open-ended questions to elicit conversation about where [the client is] now,” Sullivan says, “and establish their emotional anchors, both good and bad.”

Sullivan advises engaging in casual conversation so you and the client can build rapport and get to know each other. The goal is to learn as much as possible about your clients and, he adds, “this should be an ongoing exercise.”

At this point, says Francis D’Andrade, vice president, private client, with Hahn Investment Stewards Inc. in Toronto, you can tell the story of how you got to where you are, in order to make your client feel comfortable in dealing with you. “If you want to learn something about people,” he says, “you have to tell them something about yourself.”

> The educational conversation
Financial information reaches your clients in various forms and through a variety of sources, such as print, the Internet and television. This flow of information provides clients with varying — often conflicting — views and opinions on financial products and strategies.

“The average investor believes they need to know everything,” Sullivan says. But it is your job to filter out the superfluous information, confusion and poorly informed opinion and focus on what clients need to understand about their finances.

“You have to put things into perspective” and stick to what is relevant, D’Andrade says.

When explaining products, strategies and concepts to clients, do not use jargon such as “price/earnings ratios” and “market capitalization,” Sullivan says. Keep the conversation simple and provide visual illustrations.

Make sure clients understand the value you bring to the table, and that it’s your job to take care of their investments, taking that burden off their shoulders.

> Emotional conversation
“Of all conversations,” Sullivan says, “emotional conversations are probably most fraught with pitfalls. Few things can stimulate clients emotionally more than their money.”

You have to instill patience when the market is down, and reign in client emotions when the market is doing exceedingly well. “Remind them,” Sullivan says, “that it is not always going to be like that.”

Your role on the emotional front is to keep clients on the right path by focusing on their long-term goals, Sullivan adds. “You have to connect with them emotionally,” he says, by showing that you understand their situation and that you are looking out for them. Remind them of their goals and the financial plan you have put in place to help them reach those goals.

D’Andrade adds that you must ensure that your clients “know there is process behind what you are trying to achieve.”