One of the proudest days of planner Blair duQuesnay’s career came in March 2020 when a “very risk-averse” client invested an inheritance windfall toward their long-term goals, despite the fact that stocks had “just cratered in six weeks,” she said.
“That was just one of those moments like, ‘Wow,'” the lead advisor with New York-based registered investment advisory firm Ritholtz Wealth Management said in a panel about pursuing excellence in client relationships at this week’s CFA Institute LIVE conference in Chicago.
“That person, literally anytime the market was down at all, would want to sell out,” duQuesnay said. “So it can happen, but it’s an education and a hand-holding process. It’s actually harder to deal with the ones who want to take more risky positions.”
She and three other experts shared some of their secrets to one of the classic so-called relationship businesses. Every aspect of starting, expanding and nurturing client ties represents one of the key business goals of the industry and a highly rewarding aspect of a profession that fosters relationships lasting up to multiple decades and generations in some cases. But those aims pose a lot of complications and the need for a great deal of specificity with every client household.
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Getting it right at the beginning
One important step comes in the first call with a new client, according to Jason Pasquinelli, the head of client solutions at RBC Global Asset Management. While he works with institutional investors, this tip would apply to financial advisors with individual retail clients, too.
“Each client is different, in terms of how they want to be serviced, what type of information they want to receive and how they want to receive it,” Pasquinelli said. “Part of that kickoff call is contact. How do you want information to be delivered to you? How much time do you want to spend with the key decisionmakers? … Do you want me to call you? Do you want to receive an email instead? What’s the best way of communicating? How frequently do you want me to reach out? When do you want me to reach out? So, having that baseline of understanding of how a client wants to be connected with during the relationship is a super-important part.”
Another key part of setting the right tone stems from being open with clients about why they are right to be skeptical of some industry professionals and how their new or prospective advisor is different from them, said Michael Pompian, the founder and chief investment officer of St. Louis-based RIA firm Sunpointe Investments.
“There are conflicts of interest in our industry, and I don’t really like that very much,” Pompian said. “And so when I started my firm, I chose the name ‘Sunpointe.’ And the reason for that is, we shine the bright light of transparency on fees, conflicts of interest and being completely transparent about performance. That builds trust, when you’re always on the side of the client. We don’t get paid by anybody except our clients. And I think it goes a long way.”
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Coaching clients in market swings
Another area of potential problems stems from some clients’ sense of fear or panic during steep slumps in stocks or bonds that always come up in capital markets. Richard Stott, CEO of Oslo-based Connectum Capital Management, operates his advisory firm from Norway, and his firm’s clients have received coaching about the doomsday headlines that come up all over the world during macroeconomic turmoil.
Coaching ahead of those periods “eventually” leads clients to the point that they ignore the daily noise to focus on their long-term plans, so they “just don’t call because they’re not worried” about the momentary drops in asset values, Stott said.
“I think the longer you persist with that education process, the easier it becomes,” he said. “It makes it a lot more comfortable when they know that they can disregard the headlines in the financial press. You know, some of the things that were written a couple of weeks ago, you’d have thought we were going back to 2008. But that’s what the media does. It wants people to read things. It wants people to react. It wants people to click. And we can educate people just to disregard that.”
Self-coaching and mindset shifts
Advisors may benefit from evaluating themselves or working with a coach of their own to help them with that process as well. A video method developed by companies to train employees decades ago calls for filming a pitch or interaction with a hypothetical client, duQuesnay said.
“If you start your own YouTube channel, you can also pain yourself by watching replays of how you sound and how you look on camera, which is definitely brutal,” she said. “That goes back to some training that I heard used to be very common in the ’70s and early ’80s in corporate America. There was a lot of training where it was a brutal way to learn, but probably very, very interesting.”
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One additional mindset shift that often proves beneficial for advisors trying to boost their skills in client relationships could come from altering how they view the word “sale,” according to Pasquinelli. Planners are not some sort of “oily car salesperson” who’s intent on “trying to sell them something that they don’t want,” he said.
“We also have to get this idea that ‘sales’ is a bad word out of our brains. We all have to sell ourselves in some capacity, whether it be in our careers or to keep businesses going. But the reality is that when it comes to a need, we’re just helping identify a need with an outcome,” ” Pasquinelli said. “We’re talking about building long-term partnerships up here, and when things become transactional, you’re not going to have a long-term partnership. They’re not going to value the content that you bring out. It’s going to be commoditized.”
Give them the TLDR
On the other hand, advisors may want to look again at some facets of the car dealership example when trying to understand clients’ motivations for choosing and sticking with their wealth management firm for the long haul, Stott said.
“By definition, pretty much everybody who’s in this audience has a slightly nerdy bent, and we all love the details,” he said. “I’m sure all of us could spend hours talking about the investment strategies, the benefits, why they’re so smart, why they’re so clever, why they’re so refined. And I think it’s a mistake that I’ve made in the past. Certainly, the majority of clients couldn’t really care less. Do you go, when you’re buying a car and actually quiz the people in the dealership about the engine, the technicalities of the engine? Are you really interested? Or do you want that car to get you comfortably and safely from A to B?”
To that point, advisors can drop the giant investment research reports, Pompian said.
“We produced like a 40-page research report on the quarterly market environment, and one of our clients said, ‘You know what? Can you summarize what you’re trying to say in like one page, please?'” he said. “We did that, and now that’s our main talking-point page. So that’s been great.”
