“Have you been asking your clients to get naked on the first date?” is the provocative question raised in today’s posting in Michael Kitces’ thoughtful financial planning blog, “Nerd’s Eye View.”
Kitces’ point: planners expect potential clients to reveal intimate details of their financial lives at their very first meeting. He writes:
There are few things in life we are more uncomfortable exposing and sharing than our deep dark secrets and sins about money; in some studies, money is even more of a taboo subject than sex, religion, or politics. Yet what do we as planners do? We literally tell clients they must expose all of their assets to us at the first meeting, so we can judge whether they’re worthy of being a client or whether we will reject them!!
To say the least, if you asked your date to expose all of his/her “assets” on the first date so you could judge whether the relationship was likely to be a long-term fit, you’d probably bring an end to the date right there!
Understanding the advisor/client relationship from the client’s point of view is an essential practice management skill. “In the new world, it’s about the client perspective,” said Gabe Garcia, a director at Pershing Advisor Solutions, who spoke this week at a Pershing program in Manhattan on how advisors could run effective referral programs.
The referral process has the same risks that Kitces writes about. Garcia said that 91 percent of clients say they’re willing to make referrals to their advisors, but only 4 percent actually do. Why such a discrepancy? Just asking the question can set off a broad range of reactions in the clients’ mind that makes them squirm, Garcia said. If I say no, will the advisor hate me? Will I be uncomfortable when I’m in the advisor’s office at the next quarterly meeting? How would it affect me if the relationship between my referral and the advisor goes poorly? What's in this for me anyway?
Getting clients to pass along names of people they know “doesn’t happen in one conversation in one setting,” Garcia said. Advisors need a structured process that involves multiple meetings, a gradual establishment of trust, and even involvement with everyone on the advisor’s staff. (Paraplanners engage with clients, too.)