Advisors often focus more on selecting investments for their clients’ portfolios than on educating those clients about their choices and the markets in general. But neglecting to educate your clients would be a mistake, according to Francis D’Andrade, vice president, private client with Forstrong Global Asset Management Inc. in Toronto.
“Clients need help to navigate the flood of information that is out there,” D’Andrade says.
The more education you provide to your clients, D’Andrade says, the better they will understand what you are doing for them. They will have a better grasp of the basis of your investment decisions, the behavior of the markets and what they should be doing to meet their investment objectives. Ultimately, educating your clients helps to ensure they stay with you.
Here are five ways to educate your clients:
1. Collect and send relevant information
Selectively compile informative articles, videos and information in forms that would be of interest and send them to clients on a regular basis.
Such information, D’Andrade says, adds “third-party credibility” to what you are trying to get across to your clients. Highlight key points you would like to bring to their attention.
2. Create your own content
Develop some educational material of your own. Just make sure your material focuses on education rather than on products or sales. Discuss various strategies and concepts that enhance your clients’ understanding.
Make sure the information you provide is relevant to their interests.
“Clients are more concerned about risk management than about returns,” D’Andrade says.
3. Hold educational events
Organize seminars, lunch-and-learn sessions and one-on-one discussions with clients on various relevant topics to enhance their knowledge.
You might focus on a single topic, such as risk management, and give clients sufficient time to ask questions and to facilitate discussion.
Tell stories demonstrating what you have done in a particular subject area for anonymous clients. This technique makes the education experience more practical, believable and understandable.
When clients leave the session, you should be comfortable that they have a good grasp of the subject.
4. Go beyond investments
Help your clients understand all aspects of their finances, D’Andrade says. For example, help them manage their personal household balance sheets and talk about choosing the most appropriate insurance policy or mortgage.
5. Educate in digestible bites
D’Andrade says clients would rather not attend a one-time, full-day event where they receive a hand-out that will remain, unread, on their shelf. They prefer more “bite-sized information,” he says.
Hold shorter, but regular, events. If clients have to wait until their yearend review to learn something, D’Andrade says, “you have failed in your role as an advisor.”