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Communication clarity is vital to assess clients’ needs

David Patchen

Wealth managers need to use words clients will understand rather than relying on jargon that can be opaque to those outside the finance industry, especially when helping people plan for the lifestyle they want as they get older.

Over the years, I have worked with approximately 2,000 wealth managers and have successfully coached many financial advisers.

Through my conversations with these wealth managers, I have noticed that there is a disconnect in our industry. This lies in our tendency to use words we are comfortable with as practising wealth managers rather than words that are easy for investors to understand. This ultimately boils down to one question: are we using the right words for our clients?

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To ensure you are using words clients will understand, focus on four solid foundations: connection, clarity, strategy and communication. Keeping these at the forefront of our minds provides a framework to building productive, trusting relationships with our clients.

Let us look at connection. We should ask whether the use of complex industry jargon is helping us connect with existing and prospective clients. After all, like and trust (clients liking and trusting their wealth manager) are the drivers of connection, and it is harder to like and trust someone if you do not understand the words they are using.

For example, the process of building and managing a client’s investment portfolio represents a complex task that needs to be effectively and clearly communicated to them, but perhaps we need to do so without using words such as ‘asset allocation’, ‘par value’, ‘alpha’ and ‘structured product’.

We should also be asking the right questions; one issue with client communication is that it can be too one-sided. Our clients naturally come to us with a range of questions, but what questions do we have for them? A useful acronym to use as a tool for this connection process is ‘Form’: we should ask questions about family, occupation, recreation and motivation. It centres conversations on the client and helps to build up a solid level of trust in the relationship.

Clarity is another cornerstone of any working relationship; I call this the ‘one word value proposition’. Clients should be able to answer the question: “Why do I need a wealth manager?” with ease. Gaining clarity requires that we fully understand our clients’ goals and needs. The more both parties have clarity, the better the individual and collective outcomes will be.

To put it another way, clarity is about ‘why’ (the client’s purpose) and ‘what’ (his or her goals). Those visiting a financial adviser have a specific idea about what they want to get out of the relationship and so do we; we must successfully combine these aspects seamlessly and embed the ‘why’ and the ‘what’ elements of the relationship in our communications.

It is fair to say that the demand for wealth managers has increased as more and more people are building their own wealth as opposed to inheriting it. People are coming to financial advisers because they believe we can impart the best level of advice with our specific knowledge. Our focus should be on maintaining this belief and proving our worth. To do this we need to know what our customers know and we should also know what they do not know. Putting our knowledge within these parameters allows us to channel it in the best possible way and means that clients can get the most out of a clearly defined relationship.