Lyle Sussman, PhD

David Dubofsky, PhD, CFA

 

THE BEST WAY TO PREDICT THE FUTURE IS TO CREATE IT

Peter Drucker

 

INTRODUCTION

The way you treat clients today will determine your success tomorrow.  You could be facing a future where one or more clients fire you or a future where clients happily refer you, even without asking. This quiz will help you assess how you treat clients today and how that treatment puts you on a path towards client referrals or client resentment.

Might you be fired even if you are making money for a client?  Of course.  For example, if you underperform in the short run, you might be fired by a client who expected higher returns and doesn’t understand that your underperformance was due to (previously disclosed) risk factors out of your control. This quiz does not focus on the impatient client “shopping” for higher returns.  

Instead, we focus on what is under your control …. your behaviors that increase your probability of future success or future failure, regardless of market performance.

DIRECTIONS

The questions below are divided into two sections:  Communication and Professional – Fiduciary. Both have a significant effect on your future success as an advisor.

Each of the items below is followed by a Yes or No.  Choose the answer that best describes how you work with your clients today.

COMMUNICATION

1.   Before I meet prospective clients, I conduct an internet search to obtain background information about them.

Learning about your future clients in advance will help you bond with them.

Yes

No

2.   I ask open ended questions during initial stages of communicating with a new client (e.g., “Tell me about …. “, or “Give me an example of …. “).

Open ended questions provide insight about the client’s fears, dreams, and hopes, the human side of wealth.

Yes

No

3.  I provide scheduled, periodic updates to all my clients.

The schedule could be monthly, quarterly, semi-annually, or annually, depending on the client’s wishes. Proactively contact clients when market conditions change, to let them know you are aware of their concern.

Yes

No

4.  I ask every client about their preferred mode of communication.

Some prefer phone calls, others prefer email, text messages or face-to-face discussion. It’s their decision, not yours.

Yes

No

5.  When with a client, I spend about 60% of the time asking questions and listening, and about 40% talking. Yes

No

6.   When communicating with my clients, I use easily understood graphs and charts that I clearly explain.

Using complex graphs and charts may confuse your clients. Be sure you explain what each conveys. Ask your clients to tell you what they think the graphs and charts are saying.

Yes

No

7.  When communicating an opinion, I clearly say “I think….” to my clients. When communicating a fact, I have appropriate support for that fact.

Your clients are buying your judgment. But make sure your clients don’t take your judgment as fact.

Yes

No

8.   I carefully listen to my clients’ questions, repeating and rephrasing them to ensure that I understand what they are asking.   Yes

No

9.  If I’m asked a question and respond with a detailed and lengthy answer, I ask if I answered that question. Yes

No

10.  If I am asked a question and don’t know the correct answer at that time, I promise to get back within 24 hours with an answer.

Comply with the 24-hour policy, even if the answer is “We are still working on it.”

Yes

No

11.  I focus on the client’s nonverbal behavior (gestures, tone of voice, posture, fidgeting, eye contact) to help me listen deeply.  I try to hear not just what they are saying, but also what they are feeling.

Observing body language provides cues as to what a client is feeling and might be trying to tell you but is having difficulty doing so.

Yes

No

12. I repeat to the client not just what I think they are saying (e.g., You’re telling me that …) but also how I think they are feeling (e.g., I think you are feeling …).

Empathy is your ability to sense your clients’ emotions and what they are thinking and feeling. Reading nonverbal cues is empathic.

Yes

No

13.  At the end of a planning session, I repeat what we decided to do and why we decided to do it. Yes

No

14.  I never discuss a client’s personal and financial issues with anyone other than the appropriate individuals in my firm.

Preserve the confidentiality of the information you learn about all your clients, even your past clients. Be aware of possible accidental disclosures of private information.

Yes

No

15.   If I make an error that affects a client, I immediately inform the client about the error and the actions I have taken to ensure it doesn’t happen again. Yes

No

PROFESSIONAL AND FIDUCIARY
16.  My firm has a clearly written, accessible, and easily understood Code of Ethics and/or Statement of Values that I follow.

The Code or Statement of Values should be short, and stress trust, honesty, and integrity. Give that Code or Statement to all my clients and discuss it with them.

Yes

No

17. My fees are appropriate for the services I provide.

Make sure you know the “market rate “ for financial advising service in your locale. If you are unsure what fees are appropriate, see:

https://www.kitces.com/blog/independent-financial-advisor-fees-comparison-typical-aum-wealth-management-fee/

Yes

No

18. I have created an Investment Policy Statement (IPS) or similar document for every client, that addresses the client’s goals, needs, circumstances and constraints.

The IPS is the written connection between you and your client.

Yes

No

19.  I review every client’s IPS with that client, at least annually, and keep records of the review discussion. Yes

No

20.  I follow the instructions and guidelines laid out in every client’s IPS.

Only invest in securities that meet a client’s objectives and circumstances, as written in the IPS.

Yes

No

21.  Each of my clients has a well-defined and appropriate benchmark to measure performance that we agreed to use at the beginning of the advising relationship.

Every client deserves to evaluate your investment performance. The benchmark should fit the client’s strategy.

Yes

No

22. The range of service levels I provide is available to all my clients who pay the fee associated with the level.

Treat all your clients fairly. Clients should not be adversely affected or disadvantaged because they choose not to pay for the higher service level.

Yes

No

23.  I clearly disclose any conflicts of interest, both actual and potential, to my affected clients.

Reveal all forms of additional compensation you receive such as short-term incentives and bonuses, and fees you get for your decisions, referrals, and recommendations. Be sure your clients understand the nature of the conflict. If a client questions your integrity, you will lose that client and your reputation.

Yes

No

24.  My advice to my clients and the actions I take for them are based solely on what is best for them, and not what is best for me or my firm.

Emphasizing that you will always work in the best interest of clients builds trust. Failing to do so opens the door to doubt. If you are a fiduciary, let your client know that, and what it means.

Yes

No

25.  I keep thorough records of the communication I have with each client, and the decisions made on behalf of each of them.

Records will serve you well if a client ever questions your actions or if a client threatens litigation.

Yes

No

26. I let all my clients know what I am qualified to do, and what services I can provide, whether they are financial or nonfinancial. If I cannot provide the help or service needed, I refer them to trusted competent, honest, and qualified individuals who can help them.

Many of your clients have personal issues (e.g., family, health, etc.) that may come up during a planning session. If you don’t feel competent or comfortable dealing with those issues, refer the client to someone you know who can.

Yes

No

Congratulations.  If you answered “yes” to all these questions, you are on the road to building trust, behaving honestly, communicating effectively, and acting with professionalism. You are moving towards referrals, and away from resentment. Think about any “no” answers and immediately begin taking steps to turning them into “yes” answers.  Also use these questions for a constructive dialogue among your colleagues about best practices. If you are part of a larger organization your performance and actions affect them, and vice versa. You will then be enhancing your clients’ Total Wealth. For more tips, see: www.YourTotalWealth.com .

We created this assessment both for you and your team..The questions will prompt important self assessment, and discussions with others about improving all future contacts with your clients. Print it, Share it, Discuss It, Answer it, and reap the benefits of turning clients into a source of referrals!

John Drake

Author John Drake

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