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Prospecting Tips for Financial Advisers

Financial advisers are approaching a critical juncture. A confluence of factors has intensified the already considerable challenges of the job, prompting advisers to rethink how they will prospect to build their client base.

These factors are three-fold:

  1. Technological innovation has introduced competitive alternatives to traditional in-person consultation. The rise of digital-only offerings has circumvented the connection between financial advisers and clients, accelerating a trend toward fee compression in which more products and services are expected at near-zero costs.
  2. Economic factors, namely volatility, have renewed anxiety among investors. The pandemic, increasing globalisation, and geopolitical tensions have all contributed to a pervasive sense of rising uncertainty.
  3. The breadth and depth of available financial solutions have introduced heightened complexity into the client’s world. These clients, representing different risk tolerances, time horizons, and incomes, struggle to tie these products together into a cohesive solution designed to meet their individual needs.

While each of these characteristics presents significant challenges, they also represent opportunities for financial advisers who are equipped to use open dialogue and collaboration to connect with prospects.

Here, we offer prospecting tips to empower financial advisers to position themselves for success.

Understand the Range of Needs

The same body of research from PwC determined that “when it comes to life’s big financial planning decisions, people want empathy that machines can’t provide.” This finding is becoming apparent in the context of clients who seek solutions to the kinds of sophisticated financial needs that emerge later in life. Consider that the use of fintech solutions drops dramatically after the age of 44, according to a study from Ernst & Young. In fact, approximately 88% of those who are the age of 45 or older do not use fintech solutions.

This finding is important because additional data from Gallup shows that Americans aged 65 and older are among the few that have not seen their stock ownership levels drop since the 2008 financial crash. In contrast, those within the 18-64 age range have all seen their stock ownership shrink to varying degrees.

Simply, fintech adoption appears consolidated among those with fewer assets and basic needs. Those, however, with more assets and more complex circumstances are still in need of individualized financial solutions.

Connecting with this demographic means understanding their range of needs in three ways:

1. Engage in Active Listening During Prospecting Conversations

One of the financial adviser’s most powerful tools is not a programme or piece of technology — it is active listening.

When someone engages in active listening, they are focused on the other person’s words. They are making a concerted effort to understand the other person and respond in a meaningful way. Customers who receive active listening are more likely to enter into a business relationship with the financial adviser

2. Foster Self Awareness

Self-awareness is about recognising one’s own emotional tendencies and how they impact the customer. By recognising these tendencies, a financial adviser can manage them. Moreover, self-awareness changes the financial adviser’s mindset by focusing them on how well they are meeting the client’s needs. As a result, they ask more and better questions, which illuminate otherwise overlooked needs. Self-awareness gives the financial adviser an accurate, honest read on how well they are addressing the client’s challenges and what more they can do to handle the full scope of their needs.

3. Avoid Anchoring

The anchoring bias is a reliance on too little information. Succumbing to this bias can lead a financial adviser to jump to a solution without a complete understanding of the problem. One might make assumptions based on the client’s communication style or age. In doing so, it becomes easy to falsely assume that the customer is not interested in a broader solution. Uprooting anchors means having an open mindset in which all solutions, even new ones, are on the table when attempting to solve a challenge. The solution is to ask more questions and listen to the responses. In doing so, the financial adviser creates a dimensional picture of the needs

Address the Client’s Emotions

Personal finances and emotions are inextricably linked. Research published in the Journal of Consumer Research determined that “financial well-being is a key predictor of overall well-being and comparable in magnitude to the combined effect of other life domains (job satisfaction, physical health assessment, and relationship support satisfaction).

Recent circumstances have made financial well-being more tenuous. The pandemic has had an outsised influence on perceptions of risk and expectations for the future. A recent survey conducted by the National Financial Educators Council shows that over one quarter of respondents believe that the spread of COVID-19 has had a “very negative impact” on their personal finances. While equities recently enjoyed their longest bull run in history lasting more than a decade, today’s market is characterised by muted returns and increased volatility. This low performance and uncertainty have made investors less optimistic.

Meanwhile, recent decades have been characterised by eroding trust among investors. Upheavals like the global financial crisis have made investors more reticent to seek the assistance of an adviser. However, those advisers who are able to foster meaningful relationships with clients see considerable rewards. Research from Deloitte shows that investment managers who build a deep level of trust with their client “command a 19 percent fee premium relative to competitors.

This finding should alert financial advisers to the crucial task of trust-building, which happens in three ways:

1. Adopt the Role of a Trusted Adviser

A trusted adviser has a set of skills that go beyond an in-depth understanding of the solution’s capabilities. Many financial advisers do not ascend to this status. Many are classified as either a technical expert or a product provider.

A technical expert is largely a resource for information. They might enjoy strong relationships with customers, but these relationships are limited to specific products or specialised technical needs. A product provider has less of a connection with the customer than a technical expert. They are often welcomed on the strength of the company they work for or a product name.

A trusted adviser does all of the things the product provider and the technical expert don’t do. They are more than the product they sell — they are a strategic partner who can see the customer’s big picture. They see how and why the solution fits, what the capabilities mean for long-term success, and how it can be implemented in the best possible way.

2. Execute Better Preparation

Building trust starts with extraordinary preparation. This kind of preparation is not episodic — it is ongoing. With consistent preparation, a financial adviser is always ready to add value to an unexpected conversation with a customer. They can engage individuals with a level of detail that reflects a deep understanding of current issues. Doing so sets up the financial adviser to engage in a strategic dialogue. A strategic dialogue adds value by looking at the client’s objective from multiple angles.

Financial advisers can ease into these questions with a funnel approach. They begin with broad but informed questions, then they go deeper. Each successive question seeks more detail. Initially, questions center on long-term objectives. Then, questions move to challenges like factors standing in the client’s way.

3. Foster a Relationship of Openness

In a piece published in The Journal of Consumer Research, Harvard Professor Leslie K. John and others found that using less formality in asking for sensitive information yielded better results.

Financial advisers, therefore, should foster a relationship of openness rather than resort to formality. This idea does not mean taking a casual approach to the sale. Financial advisers still need to engage in plenty of preparation and follow-through. The takeaway from this research is that there is value in developing a relationship with a customer to a point where the conversation flows. Reaching this point requires the financial adviser to gain more self-awareness. That is, they must observe their presence and understand not only how they appear to themselves, but how they appear to clients.

Offer Simplified Solutions in Clear Language

Financial products are inherently complex. This complexity often places a burden on the client who must untangle technical language to understand the product. Therefore, financial advisers should communicate the value of the solution in clear terms free of jargon.

The value of this approach is clear from research that explores the use of technical vs. ordinary language. Researchers examined how people perceived an author’s credibility. Their results showed that “technical language use negatively affected authors’ integrity and the credibility.

Jargon and technical language will distract or overwhelm the listener. Clear, direct communication in accessible language is effective because it is honest and free of pretension. Finding this communication means being specific in observations. Doing so shows means demonstrating attentiveness to details. Moreover, specificity gives more direction to the conversation because the financial adviser and the client can address underlying challenges rather than vague, surface-level issues.

Keeping the message clear means doing three things:

1. Focus the Customer on What is Important

Clients want a solution that either addresses a problem or helps them accelerate toward a goal. When listening to a financial adviser, they are searching for that singular characteristic that speaks to their needs.

Effective financial advisers seize that opportunity by drawing the customer’s attention to the aspect of the solution that most directly addresses the client’s top priority or that highlights the solution’s key differentiator.

Stories are effective in this context because they represent a simplified template in which the financial adviser must edit their messaging to only the pieces that fit a narrative structure. Doing so helps keep the delivery tight. The absence of structure invites opportunities to “tack on” additional product features that distract from the core message.

2. Provide a Vision of What is Possible

Provide a clear example of how the solution will unfold. Technical details provide a blueprint, but a description provides the house. In these circumstances, the visual properties of a story are not only helpful, they’re necessary. Researchers have learned the power of this effect. Anthropologists studying approximately 300 people across 18 villages found that “camps with a greater proportion of skilled storytellers, were associated with increased levels of cooperation.”

Clients need the clarity that only a good story can provide. A lot of a client’s hesitation with moving forward stems from uncertainty surrounding outcomes. A fully formed narrative eases this discomfort. Consider a brief narrative citing how the solution successfully addressed another client’s needs.

3. Create a Plan to Move the Customer Forward

A client’s decision to partner with a financial adviser is a long process, and it’s getting longer. The availability of limitless information and conflicting data create confusion for the client. Financial advisers need a method for steering clients through the labyrinth.

The problem: over the past five years, their ability to do so has diminished, and sales productivity has fallen from 41 percent to 36 percent, according to research from Accenture. The same body of data concluded that 59 percent of sales professionals reported that “they have too many sales tools.

Falling productivity is not a resource problem — it’s a strategic one. Financial advisers need a smarter way to bring the customer through the buying process. They need a momentum methodology.

They need a way to:

    • Assess: Financial advisers must gauge their strengths, vulnerabilities, and gaps. They must know where they can add value above and beyond competitors, where they’re lacking, and what areas represent incomplete knowledge.
    • Strategise: Financial advisers need a strategy as much as clients do. A strategy helps make better decisions and builds the confidence that comes with being prepared.
    • Prepare: Strategy is nothing without execution. Strong execution comes from preparation. Too often, financial advisers take the strategic plan and reach out to the customer. In their enthusiasm to meet with the customer, they move ahead without proper preparation.
    • Engage: To advance the sale, every engagement must add value to the client. Engaging with the client requires dialogue and questioning skills. Financial advisers must also seek feedback from the client.

Developing a modern approach to building a client base is more crucial than ever as financial advisers face multiple fronts. While technology, volatility, and complexity have left investors in a difficult position, these factors also have provided opportunities for financial advisers to show their unique value that is unmatched by even the most advanced alternatives.

To fully apply their consultative skills, financial advisers must take full measure of the client’s needs and understand every facet of their situation. advisers must also remain mindful of the customer’s emotions in helping them navigate the sensitive topic of financial wellness. Finally, clients need simplified language that clearly articulates a path forward.

About the Author

Richardson Sales Performance is a global sales training and performance improvement company. Our goal is to transform every buyer experience by empowering sellers with critical skills so they can create value to buyers and drive meaningful conversations. Our methodology combines a market proven sales and coaching curriculum with an innovative and customizable approach to learning that ensures your sales teams learn, master, and apply those behaviors where and when it matters most — in front of your customers. It’s our job to anticipate change in your industry so that your sales team can focus on fostering long-term relationships, becoming indispensable partners for their buyers.

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