Chicago— “You’ve been researching the affluent for a long time,” Jarrett told me. “What is it that we really need to know about them?”
I found myself chuckling. Jarrett’s question was typical; just tell me “the secret.” So I decided to answer his question with a few of my own. You might want to take yourself through the following as I laid it out for Jarrett…
First, I asked him to take a few minutes and review his list of top 25 clients. The idea here is to be critically honest as you address the following questions:
· When was the last business contact you had with each spouse?
· When was the last social contact you had with each spouse?
· On a scale of 1 to 10, with 10 being excellent, how strong is your relationship with each spouse?
If you could have seen Jarrett’s expression as these questions were asked, you’d have recognized a couple of “a-ha” moments. Like many advisors, he needed to develop relationships with a number of affluent spouses. If this happens to be an issue for you, “affluent spouse engagement” can be initiated in a couple different ways.
1. Call the non-relationship spouse. You’re calling to say hello, make mention of the fact that it’s been a while since you last spoke, and ask if there’s anything on their minds regarding their family’s finances. Let them know from this point forward, you’d really like to see them more frequently. Ask a topical personal question such as, “What did you do for the Fourth of July?”
2. Call the relationship spouse. In this instance you’re calling to set up the next business/social interaction and stressing the importance of their husband/wife being involved. They may claim that the spouse doesn’t want to be involved. Whenever this occurs, and it does, you must work through this objection by explaining the importance of both parties having a working knowledge of the family’s entire financial picture. Why? In case something happened to incapacitate him/her, it’s important that the spouse knows what to do and feels comfortable with the family’s advisor.
This simple initiative is good for the client, it’s what they want— and deep down, every advisor knows that both spouses should be involved. It’s also good for the advisor— you’re strengthening the relationship and opening another door for further sphere-of-influence penetration. By the way, it’s not unusual for the non-participating spouse to be the one who manages the family’s social calendar.
As many advisors discover, meeting with both spouses for an annual review, and communicating effectively with both spouses to the extent that you understand their real concerns, aren’t necessarily one and the same. I concluded by sharing with Jarrett a quick story from one of our coaching clients.
This financial advisor was conducting an annual review with one of his affluent clients. He was very proud of himself, since this client’s $3.5 million portfolio was up 15 percent over the past year. During the review, the advisor carefully explained how he had made his investment decisions. He then outlined his game plan for the upcoming year, and concluded by asking the couple if they had any questions.
They had no questions, and the review ended on a very professional note as the advisor escorted them to the elevator and the couple departed.
Two weeks later the advisor received a call from the husband. “I’ve got some bad news. My wife is taking out $3 million because she has a financial planner she wants to use.”
As this financial advisor relayed the story to his coach he was in a state of disbelief. It was unconscionable to him— “After earning over $500,000 on their portfolio, my client’s wife moves $3 million out of the account and gives it to a planner!”
Only after a lengthy discussion with his coach did this advisor realize that he was never really connecting with the wife. His relationship was with the husband, and he didn’t understand the affluent female of the household. As it turned out, she was far more risk-averse than her husband, yet didn’t feel comfortable expressing herself in front of their advisor. Behind the scenes, she expressed herself quite clearly.
There are numerous lessons to be learned from this advisor’s experience:
· Talking isn’t communicating. This financial advisor talked about his investment acumen throughout the entire review, failing to create an environment where his clients (husband and wife) felt comfortable expressing their true feelings.
· Managing risk is a critical issue for today’s affluent.
· Affluent women are even more concerned about managing risk than affluent men.
· Today’s affluent don’t give their financial advisor credit for their portfolios being up when the markets are also up.
· The affluent female of the household is the key to the strength of the relationship.
· Advisors must make it a priority to fully understand the concerns and expectations of the affluent female of the household— there’s no simple formula.
· Advisors need to socialize with both couples of an affluent household at least twice a year.
Jarrett received more than he bargained for with his question. However, there are a lot an advisor needs to know when it comes to addressing the two Mega-Affluent Trends—gender and relationship. The affluent female of the household must not only be involved in the advisor-client relationship, but must be understood. The advisor-client relationship must expand from purely business to business and social.