Client Goals Meeting

3 Steps to Show Value

April 24, 2018

LPL Financial

Many advisors think investment management is their primary value, but some prospects may be looking for something else: someone they can trust, who understands their unique circumstances, and who is focused on their goals. Learn the three simple steps you can take to demonstrate to today’s investors that you offer the value they seek.

The trust factor, a focus on goals, and an individualized plan for every client are the three things that matter most to consumers.

- Financial Consumer-Advisor Survey, SourceMedia Research 2015

Show Your Value in 3 Simple Steps

As a financial advisor, you know the ins and outs of your business—and more than likely, it’s exciting for you to talk about it! But discussing your technical expertise in investment management, for example, may not be the best way to connect with new clients. Instead, focus on the three things that matter most to consumers:

  1. The trust factor
  2. A focus on goals
  3. An individualized plan for every client

By focusing your attention on these three key areas, you’ll be able to more clearly demonstrate your value and boost your referability. Learn more by downloading the white paper, 4 Reasons the Demand for Advice is Booming.

The Trust Factor

According to one survey, when thinking about working with an advisor, consumers said they’re looking for someone they can trust. “The ‘trust factor’ is hard to overcome,” one consumer said about working with an advisor.1

Advisors may not understand consumers’ anxiety because that might not be their own experience with clients. In the survey, advisors cited qualities like objective advice and being client-focused as most important. While those are both key aspects of trustworthiness, clients and prospects are more concerned with transparency, communication, and a genuine concern about their well-being.

Building trust takes time, and what works for one client—transparency on fees, for example—may not be what another client needs. If trust isn’t established, clients may never appreciate your credentials and track record.

As one advisor respondent pointed out, “Without [trust], we have found that prospective clients are not totally forthcoming about their financial situation, which can result in advice that may not be the best for their given situation and a liability for the advisor.”

Being seen as a steward of trust helps you strengthen your current client relationships, attract new clients, and increase referrals.

A Focus On Goals

Once you’ve built trust with your clients, their next focus is going to be on what you can provide them. But there seems to be a disconnect in how consumers and advisors rate the importance of return on investment (ROI). In fact, 49% of consumers said that increasing ROI is a top objective. However, just 1 in 10 advisors listed high ROI as being one of their clients’ top objectives.1This discrepancy may not be due to advisors misunderstanding client needs, however, but more so about the way you present this information.

For example, a yearly performance number says nothing about whether a client is able to send their child to college or take a special trip with their family. It can’t express what their quality of life will be in retirement. For ROI to be a meaningful barometer of an advisor’s value, it must be more than a number. It must be something that connects clients to what they hold most dear.

Solid portfolio performance is important, to be sure, and you can reassure clients that you’re someone with experience in investing through different market cycles, explain your investment philosophy, and lay out your plan for investing in the current market environment. You can also take a broader view and educate clients about what real ROI is and how it applies to their overall financial health.

Assure prospects that you’re a trusted ally who will keep their portfolio aligned with what matters most to them. You can help them invest according to their goals and risk tolerance, both of which might shift as market conditions and life circumstances change.

In addition, you can educate clients about all the other financial decisions that contribute to lifelong wealth accumulation. Adopt a holistic planning approach that encompasses insurance, estate planning, college financial planning, healthcare, long-term planning, and debt.

An Individualized Plan for Every Client

Clients want a financial blueprint that’s tailored to their specific financial goals and priorities, not an off-the-shelf solution that addresses only a few narrow areas. Advisors who emphasize as their core mission creating a financial plan that meets a client’s diverse needs are positioned stay more competitive.

Consumers clearly crave this service: 25% said they’re looking for help in reducing their financial stress and 26% want help in improving their quality of life. However, only 15% and 18% of advisors, respectively, believe those to be their clients’ top objectives.1

You can help prospects see that they must have a clear idea of what purpose it will serve to get the most out of their money. Emphasizing how personalized financial advice helps them get to the heart of their hopes and dreams will help provide the laser focus they need to reach them. “I have not made any investments,” one consumer respondent in the survey said. “I am just trying to get out of debt first.”

Knowing the details of clients’ lives lets you interweave the different financial planning steps they need to take. For example, estate planning decisions impact investments and retirement planning. Likewise, retirement plans must take into account the client’s health status and caregiving responsibilities.

In order to get the important insights to build a personalized plan for your client, you need them to provide relevant information. Again, it’s about trust. Only when clients trust you will they be forthcoming with what’s going on in their lives, which allows you to make the best recommendations for them.

Best Practices: Putting it Together

By understanding the new consumer mindset, you can articulate your value in the ways that resonate most with new clients and prospects.

  • Transparency is critical. New clients may want extra clarity on fees. Don’t shy away from engaging them on this topic. Explain your fees clearly so prospects understand exactly how much they’ll pay. Explain what the fees cover and what they don’t. Clients will appreciate you tackling this thorny issue head on, even if your fees aren’t the lowest.
  • Put clients first. If you’re an independent advisor, emphasize that you can provide solutions that are the most appropriate. Working with a broker/dealer that doesn’t push proprietary products can help reassure clients that they aren’t being sold a product that enriches their advisor at their expense.
  • Educate clients and prospects. Finances are complicated for many consumers. Understand that they may have limited knowledge of the subject and need an objective partner to help them understand it. Create a client portal for personal finance articles relevant to the majority of your clients, conduct workshops on budgeting or debt management, and use the annual review as an opportunity to educate your clients on an important financial topic.

In an evolving industry, it’s imperative that advisors connect with clients and prospects by being attuned to these shifts. You may need to take several steps back, focusing on trust, transparency, and education, before you launch into a conversation on asset allocation.

By being a trusted ally who’s willing to invest the time in determining what’s important to them, these clients can become the core of your client base in time.

1. Financial Consumer-Advisor Survey, SourceMedia Research 2015