What Really Matters and Why Financial Advisors Should Take Note By Cammy Smith & Ella Radice
July 7, 2020
2020 has served as a time of reflection for us all. Between the global pandemic, the weakened economy, the upcoming election, and Black Lives Matter, we find ourselves asking the tough questions: Is our current trajectory sustainable?
What does the future hold? What changes can we make for a better future?
And most importantly: What really matters?
These questions are especially relevant for financial advisors as advisor-client relationships continue to evolve. For example, according to a new research study, there seems to be an obvious misperception of client values. The report from Money Management Institute and Aon shows that while 76% of clients want one or more of their values incorporated in their investment portfolio, only 44% of advisors see value-based investing as a priority to clients*. This shows us that advisors are losing touch of what really matters to clients. Here are a few tactics for how to bridge this disconnect and better calibrate to your clients’ needs.
Be a Relationship Manager
In the past, financial advisors were the ones directing investment advice with minimal input or instruction from their clients. However, clients are now becoming increasingly active in the financial planning relationship and taking charge of their investment strategy with a stronger emphasis on values. As the industry evolves, we recommend that advisors rethink their role so that it caters to the more personal and intimate side of client relations.
Start by focusing on client values. Listen to your clients and understand how they think and feel. In doing so, advisors will shift from a strictly portfolio management role to one more akin to relationship management. Rather than simply prioritizing asset optimization, relationship managers will create portfolios that reflect client values. As a result, advisors will better serve their clients and increase customer satisfaction and retention.
Lean into Discomfort
Advisors may be hesitant to talk about values with their clients because it often involves uncomfortable subjects such as politics. Lean into this discomfort. It is okay if these types of conversations do not come naturally at first, but understand that the payoff is worthwhile in the long-term. You will better understand your client, they will better trust you, and your advisor-client relationship will improve as a result.
Practice Empathy
Adding empathy to your culture will be key in the current climate. Take the time to understand who your client is, where they are coming from, what their current situation is, and get personal with them. During this time of general volatility and increased virtual communication, it is common for people to feel disconnected from others and uncertain of the future. Be there for your client by reaching out, being empathetic, and serving as that much-needed human connection.
The bottom line is this: clients have values, values which they want incorporated into their investment portfolios. Redefine your function as a financial advisor, get uncomfortable, get personal; have these conversations to better understand what truly matters to your client.
