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Practice Management

In today’s world, you can count on clients and prospects to question your motives, challenge your facts and respond emotionally, not rationally.

This Practice Management article is intended for financial advisors only (registered representatives of broker/dealers or associated persons of Registered Investment Advisors).
 

Investors are more skeptical today than ever before about the financial advice they’re getting—and of the professionals offering that advice.

Of course, it’s not just the financial services industry that has people wary. The government, the news media, and corporations are viewed these days with rising suspicion and distrust by a significant number of Americans.

The result: We live in what Michael Maslansky, consultant and author of The Language of Trust, calls a “post-trust era.” When prospective clients first meet you, they won’t immediately give you the benefit of the doubt (as investors in “the old days” did, we like to think). More likely, their starting point will be uncertainty and doubt about whether they can trust you.

But by adapting how you present yourself and your ideas, you can start to build trust and get investors to engage with you from the first interaction. Maslansky has presented his insights and strategies to elite financial advisors at our Roundtable mastermind sessions. Here’s an overview of what he shared with that group.

Trust can be hard to come by these days, for a variety reasons. One key factor is the massive shift in how we consume information. By connecting to the internet or turning on CNBC, investors can feel as if they know as much as the pros about the markets and investing. The key word, of course, is feel. They might not actually be more sophisticated, but they think they are because of how easy it is to access high-level information. What’s more, no one has a monopoly on a point of view anymore. Anything you might tell your clients or prospective clients—anything—has a conflicting argument made by someone else, and that viewpoint is instantly obtainable online. And those opinions are often presented as “alternative facts,” rather than a point of view.

Armed with all this “knowledge,” people enter into conversations with less trust than ever before. So now you have to actively overcome skepticism just to start a relationship and persuade people. In today’s world, you can count on clients and prospective clients to question your motives, challenge your facts, and respond emotionally, not rationally.

So how can you more effectively say what you want to say in a way that builds trust from the beginning?

Start with the content itself. Shift your approach from one that is initially focused on data to one that stresses narrative and context. Instead of starting with a bunch of facts, for example, tell the person why you are going to give them the facts. Give them a belief—a focus on the person’s goals and long-term plans—that creates a context from which to have a conversation that later includes facts and figures.

Next, consider your tone. Avoid big and bold statements that might not sound credible—don’t overpromise or puff up your abilities. And focus on outcomes: you don’t need to tell investors why they should like your motives. You just need to tell them about the things you will help them accomplish.

Try following what Maslansky calls the four principles of credible communication:

1. Be personal. The more time you spend talking about products and services and focusing on yourself, the less personal you will seem. But the more time you spend talking about the prospect, the client, their goals and preferences, their children and interests, and so on, the more personal you will seem. Sounds obvious, right? Too often, advisors focus on the business side of client interactions—getting through the numbers and the asset allocation decisions and the like—and short-change personal aspects of the conversations. Keep in mind: any conversation you could have would benefit if you spend a bit more time on the personal side and less on the business side.

2. Be plainspoken. In the past, if people didn’t understand you they would think you were smart—and they’d tend to go along with your suggestions. Now, if they don’t understand you, they’re going to find someone who they do understand. In one recent coaching program, Maslansky cited an example of the variable annuity business, where every brochure mentions longevity risk—a concept that, while crystal clear to the advisors, did not resonate with clients. The solution was to reframe the discussion around a simpler idea: not outliving your money.

Think about how much jargon is in your daily conversations with clients and how much of it they probably don’t understand. Do they really know what correlation is? Or alpha? Unless your clients have a personality type that deeply values the intricacies of the market, probably not—which means those relationships are at risk. So ask yourself: Do people really understand what you are saying to them, or can you be clearer in your approach?

3. Be positive. Negativity may work well in politics, but in financial services it only breeds contempt that leads to rejection or paralysis. Maslansky surveyed a group of investors about whether they wanted investments that helped them “take advantage of opportunities” or investments that helped them “avoid threats.” The vast majority wanted to capture the opportunities. And yet, threats and scare tactics are common when it comes to messaging aimed at retirement savings. And wealth managers have a tendency to talk about how they manage risk. But most clients are not investing to avoid loss. They want to generate some kind of return. If you focus too much on risk, you miss an opportunity to build trust.

4. Be plausible. You have to find ways to build credibility, because nothing else matters if prospects and clients don’t believe you. When Maslansky worked with a global food company trying to change its image, he started with a message that the company was now making healthy food. No one he tested that message on believed it. So he began saying that the firm was striving to make healthier food. That subtle shift got people interested in learning more, because it was a more plausible message.

In our business, if you ask people whether they will put their portfolio in an investment or put a portion of their portfolio in an investment, interest is much greater when the word “portion” is used. By reducing what you ask for, you can gain more credibility and potentially capture more assets than if you ask for all the assets. Of course, you might never directly ask prospects to manage all of their money. But the research shows that unless you specifically say the word “portion,” people will assume that you are asking them for all their money—and they will be turned off. So be plausible and specific.

Ultimately, you will earn trust by your actions over time. The seeds of that trust are planted the moment a prospective client comes in contact with you. Given the uphill battle we all face in today’s post-trust and “alternative facts” world, it makes sense to focus as much on how we communicate as on what we communicate so investors will engage with us and take our advice.

–by John J. Bowen Jr.
John J. Bowen Jr., a Financial Planning columnist, is founder and CEO of CEG Worldwide, a global coaching, training, research, and consulting firm for advisors in San Martin, California. Follow him on Twitter at @CEGAdvisorCoach.

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The information provided is not directed at any investor or category of investors and is provided solely as general information about Lord Abbett’s products and services and to otherwise provide general investment education. None of the information provided should be regarded as a suggestion to engage in or refrain from any investment-related course of action as neither Lord Abbett nor its affiliates are undertaking to provide impartial investment advice, act as an impartial adviser, or give advice in a fiduciary capacity. If you are an individual retirement investor, contact your financial advisor or other fiduciary about whether any given investment idea, strategy, product or service may be appropriate for your circumstances.  

The information contained herein has been provided by sources other than Lord Abbett which are believed to be reliable; however Lord Abbett cannot guarantee the accuracy or completeness of this information.

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