Contrary to what one might expect, I have found communicating financial planning topics does not become easier with an increase in technical knowledge. It is a challenge to know how much information to share and whether or not what I am saying resonates with the client. This often occurs when I participate in client meetings with a more experienced advisor; a client will ask a question, and I will quickly attempt to think of how I expect the advisor to respond. My mind immediately races to rules and regulations related to the topic I think the client is asking about – be it early withdrawal penalties on 529 plans, maximum contribution limits to tax-deferred accounts or whatever else I can think of.
And then after a co-worker responds I begin to realize that simpler is always better.
After dozens of meetings almost identical to this (I am a slow learner) I am beginning to understand that learning the academics is one thing, effectively communicating, building empathy and trust, and truly connecting with someone are completely different.
Most feel comfortable taking advice and instruction from someone that resonates with them, someone who gets them. We can’t be like all of our clients, most of us are from different generations, educational and geographic backgrounds; can this be overcome? Should this be overcome?
I recently had some conversations with various advisors regarding the challenges of client communication. The way I see it, the financial planning body of knowledge can be learned fully in a matter of years, learning how to use empathy and effectively deliver takes a lifetime.
Mark Astrinos CPA/PFS, CFP® is a Wealth Advisor at a fee-only RIA based out of Palo Alto. Mark has nearly a decade of experience in the field. I asked him several questions relating to communication, generational divides and what he wished he knew.
Q: In your experience, what is the most challenging thing to explain to a client?
A: In terms of technical topics, the most challenging topic would be items related to tax or investments. With tax, there are the obvious challenges of being riddled with numbers and rules. With investments, people seem to have more experience and comfort with the topic, but the challenge is that sometimes what we're explaining may be counter intuitive. Adding more fuel to the fire may be the client's preconceived notions or "investment education" which may differ than what you're describing. This is even more challenging because not only do you have to explain the topic at hand, but you have to convince the client to overcome their biases, be open to a new way of thinking, or challenge what they know. The use of examples or analogies are often great tools to assist with these conversations. If you can tailor these to make them personal to the client then they're even more powerful.
Equally challenging, but not technical are conversations around qualitative topics because often times there are no right or wrong answers. These conversations may have some element of data/evidence to assist, however ultimately most of these conversations are personal choice. I'm not trying to make the case that all conversations are challenging! I am just saying that there are challenging aspects to all conversations for various reasons.
Q: Do you find yourself confronted with generational divides? If so, do you confront them?
A: When I first started in this field I thought age was a big deal. I think it's probably because of all the industry old adages you hear or maybe your own fears. "Who's going to trust someone this young with their money" is one that you often hear. Over time, you begin to realize that it all comes down to trust, not age. How do you build trust, regardless of age? You establish credibility. If you are deemed as competent and you provide value to your clients, I think they overlook your age. I have clients my age and twice my age. The only common factor is that they needed help and I was able to establish confidence and trust in their mind that I could help them.
If you're young and your age is a factor, there are plenty of reasons why this is an advantage in my opinion. In 30 years, when I'm old, I will of course explain all the reasons why this is an advantage :).
There of course will be some older clients that prefer to work with an older advisor and that is fine. You cannot be suitable to everyone. I would focus on learning your craft and adding value to people's lives and your age as a factor will slowly disappear.
Q: What are some of the things related to client communication that you wish you had known when you started your career?
A: When I first started in this industry, I remember being a lot more nervous when I spoke with clients. I think that's natural because it's new and you're not as confident in the material. I wanted to speak with the same ease as my peers who had 10 or even 20 years of experience, which in hindsight was crazy! You don't get really good at anything overnight. I wish I would have had more of this perspective because I would have been more forgiving of myself when I wasn't perfect. Not that I'm perfect now by any means. I think as an advisor you're constantly evolving and growing; and that's the beauty of it. If we weren't, then we would get bored and lose interest. It's this constant iterative cycle of learning more about yourself and your clients and maintaining great communication along the way. With that in mind, I would encourage those just starting their career to practice! Find friends or family and start teaching them about anything. This is a great simulation of a real client meeting. Notice how I didn't say "find other advisors". While I think this is more of a natural inclination and other advisors can give you great feedback because they speak the same language, don't just limit your practice to like-minded people. It is rare that your clients have the same depth and knowledge about your craft that another advisor would, so this can (and should) affect your communication style. You want to eventually have the flexibility on your communication skills to adjust the delivery style, content, approach, and examples used based on who you're talking with. When you start practicing with people outside your profession, you'll notice that it's a lot easier and you'll gain more confidence, which will then in turn help you with clients.
Another client communication tip is to slow down! My mind tends to move a million miles an hour and this same pace sometimes carries with me when I talk to clients. This is exasperated when I'm excited about a topic (note: I'm excited about most topics and tend to be just more excited about things in general) I always have to remind myself to slow down when speaking to clients. Remember, these are topics that we deal with day in and day out. Clients aren't exposed to the same daily rigor and verbiage as advisors. Talking to your peers should be different than talking to clients. Speak in a way that they understand. Don't use industry jargon or acronyms unless you're dealing with a sophisticated client. I remember I used to feel a need to sound "smart". I don't anymore because I've realized the best way to connect with a client and gain their trust is to have them understand what you are saying. To be honest, this is a lot easier and more natural.
Lastly, I've always been detail oriented and excited about the numbers because that is what my training has been in. However, I learned over time that not all clients share the same enthusiasm. Just because you have a spreadsheet that you may have spent countless hours on and are very proud of does not mean you need to walk the client through every corner of the page. That's why they hired you! Your job is to make things easy on them. Make sure this reconciles in what you communicate (content) and the how (the words you choose).
I was also fortunate to have a chance to speak with Sarah Creath, CFP®, co-founder of BCK Partners, a fee-only RIA located in Upstate NY. Sarah has 16 years’ experience in the field.
Q: In your experience, what is the most challenging thing to explain to a client?
A: The most complicated thing to explain to any client is anything they’re not interested in learning about. But, probably the complexities of health insurance – and Medicare in particular. The process of selecting Medicare supplemental plans has so many moving parts and varies so much by person. Where they live, whether they travel, their overall health, the prescription drugs they take, their choice of doctor and pharmacy all play into the equation. On top of that is the fact that almost no one likes to learn about or deal with insurance companies! It’s hard to explain that to a client when they don’t want to learn about it.
Finally, the process of enrolling in a Medicare supplement plan requires the client to state (over the phone to the insurance company) that they understand the plan. The process of enrolling takes between 45 minutes and a couple hours per person! I find that this area of help we provide clients is among those that they’re most grateful for.
Q: What are some of the things related to client communication that you wish you had known when you started your career?
A: The most important part of communication isn’t talking it all – it’s listening! The more I can know and learn about my clients, the better the result I can deliver.
One of the many differences between this profession and most is that it requires a wealth of knowledge on a broad range of topics and the ability to explain those topics to the laymen. For this reason, the main differentiator between advisors may not be level of knowledge, but ability to effectively listen, and communicate.
I always find that I learn the most through observation and experience. I have had my share of extensive drawn-out book learning. But speaking with someone who has dedicated their life to a specific field, and watching how they operate, is invaluable.
“I believe in the discipline of mastering the best that other people have ever figured out. I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart.” – Charlie Munger