5 reasons clients don’t like their financial advisor – and what to do instead
It’s no secret that financial advisors are not in the most liked or trusted industry. In the past, many financial advisors shrugged off concerns about likeability, confident that as long as clients were posting positive returns, they would remain loyal to the advisors that got them there. Now that robo-advisors are becoming increasingly popular, getting positive results with portfolios simply isn’t enough to keep clients. Independent financial advisors need to forge a strong personal connection with clients if they want to retain their loyalty. Taking a closer look at the top reasons why clients don’t like their financial advisor is the first step to overcoming these failings and building a stronger relationship.
Insights from CFA Institute’s From Trust to Loyalty: A Global Survey of What Investors Want, reveal that lack of communication and responsiveness is one of the primary reasons that clients are likely to leave a financial advisor. Failures in communication can significantly damage the relationship between independent financial advisors and their clients, yet many financial advisors fail to monitor how clients perceive their interactions. Taking a closer look at the top reasons clients don’t like their financial advisor and what to do instead will help you build a stronger relationship with your clients.
Failing to listen
Understanding your clients’ reasons for investing is a key step to building a strong relationship with them. When your clients explain why they want to invest, pay attention. Clients are looking for financial advisors who understand what they are passionate about and why. Instead of focusing simply on getting the highest yield ahead of all else, take into account why clients want to invest and find investment opportunities that fit within their goals.
Speaking down to clients
It can be frustrating to see clients disregard advice or make financial mistakes that they could easily avoid. Avoid taking clients to task or lecturing them on poor financial decisions. Don’t mistake their lack of financial know-how as a reason to act superior to your clients – remember they are not children, but successful adults who are knowledgeable in their own spheres of influence. Instead of speaking down to challenging clients, successful independent financial advisors focus on what to do going forward to get investors on a more stable financial footing.
Using industry jargon
In their desire to appear knowledgeable, many financial advisors turn to industry jargon, using financial acronyms and terms that their clients may not understand. Rather than building trust, this practice actually can damage your relationship with clients. According to an Investor Trust Study by CFA Institute and Edelman, clients have more trust in financial advisors who give reports in simple metrics and language they can easily understand. Taking the time to discuss results in clear, easy to understand language without condescending will help clients to see you in a positive light.
Lack of transparency
Avoiding questions or hedging your responses to clients is one of the biggest mistakes that independent financial advisors can make. Talking to clients about fees and bottom lines is never comfortable, but giving vague answers breeds distrust and leaves clients feeling as though you have something to hide. Discussing fees and results openly and transparently with clients will build a stronger, more trusting relationship.
When a client expresses interest in new investment opportunities such as cryptocurrency or socially responsible investing, do you honestly listen and evaluate their ideas or simply dismiss them? It can be tempting to stick with investments that you are knowledgeable about and trust to deliver strong returns, but you also need to consider clients’ desires about investing. Next time your clients come to you with an investment they are interested in, don’t be dismissive. Instead, research the feasibility of their idea and look for safe ways to implement it.
Understanding why clients don’t like financial advisors and what to do instead can help you build a better relationship with your investors. For more tips on how independent financial advisors can build strong relationships with clients, visit www.SummitBrokerage.com.
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About Summit Brokerage Services, Inc.
Summit Brokerage Services is part of Cetera Financial Group. Summit Brokerage provides a broad range of securities brokerage and investment services to primarily individual investors. Summit Brokerage also sells insurance products, predominantly fixed and variable annuities and life insurance through its subsidiary, SBS Insurance Agency of Florida. Summit Brokerage also provides asset management services through its investment advisor, Summit Financial Group, Inc.
About Cetera Financial Group
Cetera Financial Group® (“Cetera”) is a leading network of independent retail broker-dealers empowering the delivery of objective financial planning advice to individuals, families and company retirement plans across the country through trusted financial advisors and financial institutions. Cetera is the second-largest independent financial advisor network in the nation by number of advisors, as well as a leading provider of retail services to the investment programs of banks and credit unions.
Through its multiple distinct firms, Cetera offers independent and institutions-based advisors the benefits of a large, established broker-dealer and registered investment adviser, while serving advisors and institutions in a way that is customized to their needs and aspirations. Independent financial advisor support resources offered through Cetera include award-winning wealth management and financial planning and advisory platforms, comprehensive broker-dealer and registered investment adviser services, practice management support and innovative technology. For more information, visit www.ceterafinancialgroup.com.
*”Cetera Financial Group” refers to the network of retail independent broker-dealers encompassing, among others, Cetera Advisors, Cetera Advisor Networks, Cetera Financial Institutions, Cetera Financial Specialists, First Allied Securities, Girard Securities, and Summit Brokerage Services.
All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy.
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