When I began as a financial advisor so many decades ago, our industry was awash with sales-training programs. Most of them, however, were product-centric: transactions with clients were typically built on getting the minimum information needed to make an effective presentation on the features of financial instruments \u2014 and how these would solve all problems.
Fortunately, that kind of advisor education then gave way to a more relevant approach, often called \u201crelationship selling,\u201d which tried to build greater rapport with clients by using deeper investigation to explore their needs. The outcome was a more useful matchup between products and client goals.
Regrettably, as the industry has moved to a more independent advisor model over the years, this type of relationship training has disappeared.
Good news, my friends: there is at least some hope in the latest edition of John Churchill\u2019s book, Creating Value Through Effective Relationships. <\/i> Churchill combines his considerable knowledge as a retired professor of finance at Acadia University in Nova Scotia with master\u2019s degrees in business administration and psychology to bring together the principles of relationships and financial advice. As the book\u2019s title implies, an advisor\u2019s role should be to create value for clients; not sell products. While the two roles necessarily overlap, it\u2019s through a focus on value creation that product recommendations become meaningful and relationships enduring.
The book is divided into modules that walk us through the concepts and practical examples likely to be encountered on the way to building long-term client loyalty.
The first module provides an outline of the financial planning process, as well as descriptions of fiduciary duty, duty of care, conflicts of interest, disclosure, confidentiality and \u201cknow your client\u201d requirements.
The second module is a primer on what constitutes good communication \u2014 confirming that what you meant to communicate is what was actually received. This section also highlights how the \u201cnon-verbal\u201d aspects of communication, including reactions to \u201cpersonal space\u201d violations, body language and voice elements convey information about how your client is reacting to you and your recommendations.
The third module features instruction on effective use of questions and \u201cactive listening,\u201d such as paying attention to details, analyzing the information and confirming the message by restating, paraphrasing or summarizing. The other side of the conversation \u2014 effective questioning \u2014 calls for the use of open-ended, closed-ended and indirect questions to gain a complete appreciation for your client\u2019s situation and ambitions. This section also provides a sample agenda for conducting client interviews.
The fourth module delves deeper into how people behave and why, particularly when it comes to matters of finance. One standout message that will guide you in your client presentations is how people absorb information differently. About 25% of the population are auditory learners who like to hear information; 35% of us are visual learners who learn best by seeing words or looking at diagrams; and 40% of the population are kinesthetic learners who gain more from hands-on experiences than listening or seeing.
This section also explores some of the irrational aspects of decision-making and touches on several of the familiar concepts of behavioural finance, such as rules of thumb, availability bias, representativeness, overconfidence and framing.
This book is not a ground-breaking study of client\/advisor communication. It is, however, a convenient compendium of principles and concepts that will be of most benefit to relatively new advisors who have yet to gain enough client experience to feel comfortable with their communication skills. Seasoned industry veterans may also find this book useful as a validation of their own methods of interacting with clients or, perhaps, as a handy reference to understanding that experience and \u2014 as a consequence \u2014 to get even better. \tIE<\/b><\/p>\n","protected":false},"excerpt":{"rendered":"
Book review: Creating value through effective relationships<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3013,3018],"tags":[3027,2750],"yst_prominent_words":[],"acf":[],"_links":{"self":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/334134"}],"collection":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/comments?post=334134"}],"version-history":[{"count":1,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/334134\/revisions"}],"predecessor-version":[{"id":363217,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/posts\/334134\/revisions\/363217"}],"wp:attachment":[{"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/media?parent=334134"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/categories?post=334134"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/tags?post=334134"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.investmentexecutive.com\/wp-json\/wp\/v2\/yst_prominent_words?post=334134"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}