Though five years have passed since the global economic meltdown began, the public remains wary of the financial services sector. More than half of people polled by Harris rated the overall reputation of the financial services industry as negative, and only 46% of respondents identified themselves as trusters of the global financial services industry.
Although these figures are slightly more positive than previous years, they remain a major concern for advisors trying to grow and succeed in this industry. Events like large-scale financial fraud, the severe market downturn, and losses in the housing market caused many investors to lose much of their wealth and retirement savings. This also caused the public to grow more skeptical of investing or entrusting their money to financial professionals.
Due to the negative industry perceptions, advisors must establish transparency and honesty as top priorities. Clients financial goals must be carefully evaluated and objectively appraised to ensure their investment portfolios and objectives are aligned.
By looking at some of the most successful financial advisors best practices, we can learn valuable lessons on how to strengthen trust with existing clients and build greater public confidence in our industry. Successful advisors need to implement the following five industry best practices as part of their standard protocol:
- Listen to Clients. Let clients know their interests are your first priority by being a good listener. Pay careful attention to both verbal and nonverbal communication cues and allow clients to tell you their stories, voice their needs and present their goals and concerns. By encouraging this type of open communication, clients will sense their interests are foremost in your mind. Prospects know when they are being sold to they want sound advice that aligns with their unique needs, not a cookie-cutter sales pitch. Prospects understand they can get products anywhere, including online, but what they cannot get elsewhere is the advice and valued counsel their financial advisor can bring to the relationship.
- Communicate Frequently. Clients want frequent interaction, especially during periods of challenging market performance and tough economic times. Clients are exposed to a daunting array of opinions regarding the health of the financial industry, and they need to know their advisor is reliable when concerns arise. Scheduling regular communication to properly meet each of your clients expectations, encouraging an open door policy when it comes to communication, and being a dependable resource for advice and recommendations are keys to building a trusting and successful advisor-client relationship.
- Get Involved. Volunteer to speak at a local university, high school or industry-related event. Be proactive in reaching out to the media by agreeing to do an interview or offering a featured quote. Start a professional blog, utilize social media forums for business exposure or volunteer with a local charity and sponsor their events. This kind of exposure demonstrates that you are a prominent voice in the industry and that you are credible, reliable and professional. Becoming active in the local community also shows that you take a personal interest in your neighbors and clients.
- Always Put Your Client First. Your value as an advisor must exceed client expectations. Provide a financial plan tailored to their needs. Every decision you make should help your clients achieve their financial goals and objectives and their portfolio should be catered to their unique circumstances. Often, advisors are presented with two scenarios the first scenario involves presenting a product or service in which you, the advisor, will make the most money yield to broker. It may be a good product, but not the greatest option for your client. The second scenario involves presenting the product that you, the advisor, may end up making less, but is a much more suitable option for your clients needs and circumstances. In order for a collaborative, long-term relationship to form, every recommendation must be held to the highest ethical standards and moral practices must be manifested in the advisor-client relationship.
- Be Trustworthy. You must constantly work on building deeper relationships with your clients and prospects. The foundation of the advisor-client relationship is not built on market performance, but on trustworthiness and the total client experience. Even if the market takes a turn for the worse, your clients will feel confident that their financial decisions were sound and that they can rely on you for your trusted advice and counsel.
Some studies show that existing clients tend to highly trust their own financial advisor in spite of their views on the industry as a whole. A 2012 study found that affluent U.S. investors tend to trust their financial advisors more than they do their doctors or accountants3. Both of these statistics reveal that maintaining a positive personal reputation is more important to the majority of the public as opposed to what might be occurring across the industry as a whole.
Financial professionals need to focus on what they can personally do in their own practices to raise the positive perception of the industry as a whole. If every financial professional takes the time to incorporate these best practices into his or her business, the public will begin trust again and confidence can be restored in our industry. It is only after the public has observed and experienced the ethical expertise of the financial services industry, will the trust and confidence be fully restored.eved from JohnHancock.com.
Keith Johnson is vice president of practice management for Curian Capital He works closely with its broker-dealer partners offering business consulting and coaching programs that enable financial advisors to improve the efficiency, productivity and profitability of their practices.