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How to Keep Your Clients Coming Back

Lovaii Navlakhi CFP IndiaBy Lovaii Navlakhi, CFP

Trust is the cornerstone of the planner-client relationship and the single most important thing that can make or break this relationship. But where does it start? The client does not come to you on day one and say, ‘I trust you; you are my financial advisor for life’— it is something that evolves and has to be earned.

3 Levels of Trust

A new client, having done the research on you (the financial planner), reading about you or what you say in the media and on personal finance websites and magazines, or hearing about you from a friend, colleague or relative, might trust you when he comes to you to know what you are doing – this is the first level of trust which is a function of your expertise and experience and the foundation on which a financial planner has to build trust. There is just no compromise possible on knowledge and skills. If you don’t know your stuff, there’s no way you can wing it in the long run.

The second level of trust comes when the client believes you are not going to short-change him. This will take some time and though you may have been referred highly by someone the client knows, it will be his own experience that he will ultimately depend upon. He needs to believe that you are not using him for your own gain and that you have his interest at heart.

And finally the last and often invisible component that makes up the trust a client honors you with, is that you are mature and sensitive enough to understand him, his personal needs and ambitions and can deal with it effectively. As successful financial planners tell you about clients they have had for a long time, it is less about which mutual fund or stock you picked for them and more about holding their hand through the ups and downs of their lives.

That in a nutshell is what trust between a financial planner and his client is all about.

Easy? No; because it takes skill, knowledge, time, patience, maturity and understanding to get to that level.

Difficult? Again, a resounding no; because the only way to get there is to make financial planning your way of life. What I mean is that financial planning should not only be your career choice but a way of life which you practice and preach. If this happens, then building client trust will come naturally to you.

So how do you go about it?

Financial Planning as a Way of Life

I repeat myself but only to re-emphasise: believe in financial planning as a concept, as a methodology and a way of life. You need to have the passion and conviction that financial planning can change lives for the better. Here are some tips to accomplish this:

  • Equip yourself with skills and knowledge; become certified and qualified.
  • Continuously grow your knowledge as learning never stops, especially in the present dynamic environment with new products, markets, regulations and policies.
  • Experience is a great teacher. Learn from each interaction, whether with a client, a broker, or an analyst. Attend workshops and conferences, interact with other financial planning professionals, gain from their experience and exchange ideas.

This will help you mount the first step in the ladder of trust with your client.

You are here in the profession not to make money but to help your client make money. If this is your approach, money for yourself will follow.

You are good for your client; your intervention with financial planning will change his life for the better. He will be better prepared to take on the risks in life; he will have a well diversified portfolio made up of assets that suit his objectives; his portfolio will have investments that have been well researched to be in line with his asset allocation strategy. You are giving him the best opportunity to maximize his returns while minimizing his risks.

The second step is realizing…

It’s All About the Client  

Everyone is looking for a relationship in their personal finance space – someone with whom they can discuss their ambitions for tomorrow, the next year and every year of the 50 years thereafter; someone who would understand their aspirations and help make them a reality. You need to be that someone for your client.

Life is all about choices and often unpleasant ones at that – giving up on desserts to lose weight, avoiding alcohol and smoking for a healthier heart and other decisions in the finance space as well. Resisting from purchasing that awesome television set; foregoing frequent dining out to buy that health insurance cover and so on. A client often needs someone who will enforce tough decisions. Someone who tells him in polite but firm terms that he cannot do that and he needs to do this instead. Someone who holds him accountable for his decisions.

You need to have empathy – sensitivity to the client’s feelings, beliefs and his fears. You need to be mature to handle this with his ambitions and ensure that he does his best to get the most out of his life. Basically, enjoy the journey through his setbacks and advances.

So what do you do when a chink develops in this trust somewhere?

Go Back to the Basics

If the problem stems from the first level of trust, work on it. Regularly build yourself and your team. New regulation, change in product architecture, new opportunities – you should know about it. Cultivate relationships with analysts, traders, bankers, fund managers, government officials – know your profession in and out.

If there is a mistake made by you or your team – don’t hide it, openly admit it. Reimburse the client and don’t repeat the mistake. We all make mistakes, just don’t make it a habit to repeat the same error.

Remember that in your relationship with the client, your team also plays a very crucial role, because on a day-to-day basis, they probably deal with your client more. Ensure that your team is an extension of you – in competency and efficiency.

Be upfront and transparent about your fees and commission structure. Do not be defensive about it. You must tell your client that the only way he can continue to get high quality advice is if you survive first – and convince him to pay your fees. You are definitely not working for charity. When talking about your fees, don’t complicate it but don’t oversimplify it – give the topic due importance, explain it in clear and precise terms, and have a straightforward and easily understandable structure.

Even if you have a good team looking after a client’s affairs, touch base with him directly from time to time. You do not want to him to feel that at one time he could talk to you about anything, anytime; but now you are too busy for him.

Everything is a reflection of your own self. If your actions are consistent with your words, and you deliver what you promise and demonstrate strong ethics, you will have no problem keeping your clients.

3 comments to How to Keep Your Clients Coming Back

  • Ankit Desai

    Dear Sir,

    Your article surely gives some basics about financial planning profession without which a financial planner cannot have either work satisfaction or financial satisfaction.

    I wanted certain questions in my mind and was hoping your guidance would help me.
    My name is Ankit Desai and I belong to Vadodara, Gujarat
    I am currently working with Kotak Mahindra bank,Privy League department dealing with Investment portfolios of HNI segment.I have decent knowledge in Mutual funds, insurance and structured products field. I have almost 5 years of banking experience. However, I want to start my own practice of financial planning and investment advisory in near future.

    By education I am a MBA from Mumbai and currently pursuing CFP. My father has been LIC advisor for last 20 years and has a current base of 300 clients who are in regular touch with him. He has his own office at our residence.

    As stated above, I am planning to start financial planning and investment advisory. I am planning to approach my father’s clientele base initially and provide them complete financial planning and investment advisory services (which would include Mutual funds also).

    Kindly suggest, if I should pursue as Independent financial advisor as my career? Will my father’s existing setup and goodwill help me in kick starting this practice?

    Thanks and Regards,
    Ankit Desai,
    +91 9558805636

  • DEAR SIR,

    THANX , GRA8 INSIGHT AFORESAID ARTICLE.

    WITH REGARDS

    AJIT SRIVASTAVA,CFPCM

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