What makes someone decide they need a financial adviser? As you might expect, answers are plentiful to this question. Each client will have reasons unique to them.
More generally, commentary suggests people seek advice for a particular financial need. Whether it’s retirement planning, considering how to manage a windfall or taking a more considered approach to an increase in income.
These examples and more like them may be motivators for many of your clients. And, of course, when clients come to you looking for help, you offer practical solutions for each scenario. Those of us familiar with advice know just how valuable it is. I won’t be the first or last to say more people could benefit from it.
It’s a big deal when someone realises it would be in their best interests to turn to a professional. But if they’ve never had advice before, choosing an adviser could seem a daunting prospect.
Those looking will need to weigh up a host of factors. If a financial need has prompted them to act, they will likely consider fees, the adviser’s track record, success with previous clients and what financial gains they could expect.
Yet that’s not the whole story. For many others, their hiring decisions will be very different. Rather than wanting to solve financial problems, the reason could be more emotive.
They may feel discomfort around financial issues and want someone to take the headache away. Or need clarity and reassurance to find the right track and then stick to it. If an emotional reason has encouraged them to seek advice, they are more likely to consider other qualities an adviser possesses. This is where your soft skills are put to good use.
Those skills can be enhanced by a better understanding of what motivates clients to hire an adviser in the first place.
Do financial considerations outweigh emotional factors? Or is it the other way around? Our research into current adviser clients reveals emotional factors account for 60% of decisions while 40% are financially related.
Good to know. The only problem is new clients may not always be willing or able to express the emotional needs they hope a financial adviser can meet when they seek one out. This is why aligning clients’ requirements and your services may seem straightforward in theory but the final decision to work together can be anything but at times.
So, when a potential client walks through your door, you’ll assess what it is they are really looking to achieve and how you can help them reach their goals. By demonstrating how you propose to support both their financial and emotional concerns, you may get them to open up more.
The value advisers provide their clients is evolving and goes far beyond monetary terms. It’s the peace of mind, the coaching, the getting people to reveal their aspirations for the future and helping them stay the course when their instincts might tell them otherwise.
With a changing regulatory environment, there is a greater need for advisers to demonstrate the value they provide. But despite your great work, it can be difficult to define. How can you better articulate that value to potential clients?
One way might be asking your existing clients to explain what your work means to them in their own words. What made them choose you, why have they stayed and why do they have no intention of going elsewhere?
You can then use that as a springboard to bring up some of the common concerns clients have in a bid to get prospective clients to think about theirs.
Drilling down into what motivates clients, such as a lack of confidence in their ability to reach financial goals, or building rapport with their adviser, can help firms position their offerings in a way that drives client engagement.
If you’re wanting to grow your client base, it’s worth addressing financial and emotional drivers in your value propositions and prospective client touchpoints, such as the initial meeting, your website and other content forms.
You probably already factor in emotions with your existing clients and know that ignoring them can be costly. But it’s important to recognise the emotional needs of prospective clients, too, especially as they may not reveal them at the outset.
Financial needs might be easier to solve; emotional needs require a more tactful, subtle and personal approach.
Ryan O. Murphy is global head of behavioural insights at Morningstar
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