“There’s bad, worse, and good news for financial advisors.”

First, the bad news: The majority of your clients are at risk of leaving you. How do we know this?

Investment Executive’s research shows 6 percent of clients felt their financial advisors fell short of expectations, and only 59 percent of clients felt their advisors met expectations. A miniscule 35 percent felt their advisors exceeded expectations.

That doesn’t sound too bad, until you combine this research with that of the Harvard Business Review, which found that at the midpoint of satisfaction, where clients are neither dissatisfied nor highly satisfied, the client retention level was only 20 percent. Bottom line: Satisfied customers leave, successful ones stay. The problem is, most financial advisors have only a remote idea of what success means to each of their clients.

Next, the worse news: Clients leave their financial advisors for primarily three reasons. Although the most frequent reason is the pursuit of a better return, two other reasons carry almost equal weight: Thirty-five percent leave looking for an advisor who is better at communicating, and 25 percent leave because they feel they are taken for granted. Bottom line: The majority of clients feel they’re not understood by their advisors.

Realize that your competitors today are not just other advisors, but financial-planning software programs. Most advisors and planning software programs ask really poor questions that don’t allow for a deep level of understanding, such as, “What is your risk level tolerance?” 

Let’s dissect this question so we understand where we have allowed for miscommunication. Since it appears to the client that you ask this question all the time, he or she assumes the answer must be simple. Trying not to appear inept, the client says, “Medium,” or gives some other sort of trite answer. Your dilemma then is, “Medium compared to WHAT?”

A better question would be, “How much volatility would you feel comfortable with?” You could then explain it in depth so the client knows exactly what you’re trying to understand: “Over the long term, markets have been a safe place to invest. Over the short term, risks are higher. During a market cycle you can expect that the market could conceptually go up or down by as much as 10, 20, or even 50 percent in one year. Many people want to take extreme risks in hopes of having the highest possible returns, while others are willing to sacrifice substantial increases to have peace of mind. Either can be a good strategy, depending on one’s risk tolerance. Compared to the market, how much volatility are you comfortable with?”

Another problem with most questioning processes is they don’t find out what’s really important in the relationship and what the client’s expectations really include. For example, without exception, you should ask, “What is important to you in our relationship as advisor and client?” 

Consider this example: Edna, an elderly woman, has had her account with the same financial planner for the eight years since her husband died. Every quarter, she goes in to review the results. Her April review is much like the others. Compared to similar investment scenarios, she is doing exceedingly well.

The account grows well and pays more than the necessary income for her needs, and it’s all done with minimal risk. The financial planner glows as she explains this. As Edna leaves that day, she stops by the receptionist’s desk and asks to have her parking ticket stamped. The young woman at the desk tells her, “I’m sorry, we don’t do that anymore.”

Two weeks later, the financial planner receives Edna’s transfer papers. She has pulled her account. Why? She felt they didn’t care about her account because her expectations weren’t met. Why? Because the planner didn’t know that Edna left her last financial planning firm when it stopped paying for parking. Since her account was large and highly profitable, she felt violated by the need for this petty transaction. 

Stories similar to Edna’s are repeated everyday in financial planners’ offices because clients’ true expectations aren’t understood.

Asking, “What is important to you in our relationship as advisor and client?” leads to the client to address areas that might otherwise be missed, such as, “I really want to see you at least once per quarter,” or “I feel my phone calls should be returned within two hours,” or “I want you to understand that my father lost half of his money in the market and I’m very frightened to do this.” These and many other very important understandings can come only as a result of a well-worded question.

To discover a client’s deeper-level needs and wants, you must meticulously craft your investigations with questions that get your clients to tell you truths they were not even consciously aware of without your help in discovering them. 

Examples of good questions include:

• What are your priorities in investing?
  
• What are your challenges?
  
• Do you have worries about money? If so, what about?
  
• How would you prioritize the goals you listed?
  
• What did you like about your relationships with other financial advisors that you want to be sure we don’t miss?
  
• What didn’t you like about those relationships?

Notice that many of the questions you develop in the fly are not nearly as good at getting to the answers you need as those that you script. Gone with the Wind’s “Frankly, Scarlett” line might have lost a lot of punch had it been left to spontaneity. It might have been, “Let me tell you, Scarlett, I feel differently about this”—definitely short of the mark.

You, too, will fall short of the mark when you ask questions on the fly. Script your questions and make them a part of your interview form. As a result, your clients will stay—and you will serve them much better.
Our biggest need as humans is to be understood.

Give the gift of understanding to your clients, and you will prosper and grow together.