Why Knowing Your Client Is Key to Success

There’s a hairdresser in Arvada, Colo., who likely knows more about her clients than their doctors. She listens to them and makes them feel valued. She’s honest with them when pixie cuts aren’t right for their face frame and her referral business is booming.

Getting to know your clients and making them feel you are in tune with their needs is key to more referrals and more business growth, according to a 2018 study. Also key is being comfortable with tension.

The “Know Your Client” benchmarking study by FPA, Capital Preferences, and T. Rowe Price found that clients might respect and like you more when you are a “behavioralist”—someone who tells them in a diplomatic way when they say one thing yet do another.

A behavioralist, the study noted, is a planner who has “will, skill and means” and can handle tension productively. This leads their clients to appreciating their honesty, referring them to more people and it results in more business growth, the study found.

But planners have to know their clients well in order to pull this off.

“The better we know and understand our clients, the better we are at providing financial planning services,” Frank Paré, CFP®, chair of the FPA board of directors, told InvestmentNews. “Having a deeper understanding of our clients helps us to point out where there might be some inconsistencies in terms of what they do versus what they say. I’ve seen that where clients are looking to the future but still going to Vegas on a regular basis.”

He added that clients want to be called out when they are not acting in alignment with their goals. And although that might be tense, if a planner is a behavioralist with will, skill and means, they thrive in that situation.

“In identifying behavioralists, we’re looking, for example, at how planners deal with the tension that creeps into a client relationship. Behavioralists are comfortable with that tension,” said Pat Spenner, chief marketing officer at Capital Preferences, in an InvestmentNews article.

The takeaway is to put in the time to get to know your client, their partner and their families—including pets (ever talk to a 30-something millennial with only fur kids? Hello, unsolicited dog pictures.)

A Financial Planning article reporting on the survey noted that the sweet spot is to spend around six extra hours working to know your client and their loved ones in the first year of the relationship. That six-hour commitment led to a referral rate of 27 per 100 clients and a net growth rate of 24 percent.

Editor’s note: This article originally appeared in the August issue of the Journal of Financial Planning in the Observer section. The Journal of Financial Planning is a member benefit for Financial Planning Association members. Not a member yet? Become one today.

Ana Trujillo Limón is senior editor of the Journal of Financial Planningand the editor of the FPA Practice Management Blog. Email her at [email protected], or connect with her on LinkedIn. 

Categories: Client Communication, Client Meetings, Client Skills | Permalink.

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