Why Relationships are Imperative to Your Financial Advising Business

The term “financial advisor” suggests that financial advising is only about offering financial advice, right? However, taking this one-sided approach to the profession could leave you struggling to make ends meet.

The job of a financial advisor consists of so much more than showcasing your knowledge about financial matters. Becoming a successful financial advisor is more about establishing individual relationships with your clients and less about flaunting fancy finance terms or selling investments.

Selling Investments vs. Establishing Relationships

While it is true that financial advisors are often referred to as investment professionals, the best financial advisors will do far more than discuss types of investments. Relationships are at the heart of financial advising. Let’s use two scenarios to showcase why.

Imagine that a young couple with limited knowledge about wealth management seeks out the help of a financial advisor. They know very little about the various kinds of investment opportunities available, but they are eager to learn how to make the most of their hard-earned money.

  • Scenario #1 – The couple sits down for their first meeting with their financial advisor and the financial advisor jumps right in and asks, “What kind of investments are you interested in? Stocks? Bonds? Real estate? Mutual funds? I think with the current status of this volatile stock market, you should only consider X,Y, and Z.”

    The financial advisor does not know the couple’s short-term or long-term financial goals. There is no discussion about their family plans or career paths. They do not talk about retirement or taxes. Instead, the financial advisor leads the conversation by jumping headfirst into investment possibilities.

  • Scenario #2 – The couple sits down to begin their first visit with their financial advisor. The financial advisor opens the meeting with some get-to-know-you questions. Those questions shed light on the couple’s income, debts, assets, and expenses.

    But more importantly, the questions allow the financial advisor to understand their concerns, worries, goals, and future plans. Armed with this essential information, the financial advisor offers personalized advice and creates an individualized financial plan of action for the couple.

While it might seem obvious that the second scenario is the ideal first meeting, this type of approach to financial advising may not come naturally to every financial advisor. The best financial advisors are not in the business to sell investments. Rather, the best financial advisors realize that forming a client-advisor relationship is the real investment.

When you focus on formulating a relationship with your clients, your clients will feel the difference and your business will see greater success. You need to establish trust from the get-go, and establishing trust is not just about making your client aware of your expansive knowledge of the financial industry.

How to Develop a Client-Advisor Relationship

So what can you do to create meaningful relationships? Ask questions. Ask lots of questions, then listen. Asking and listening go hand-in-hand. You cannot offer personalized advice if you don’t know your clients goals, wants, and wishes.

Knowing what questions to ask and when to ask those questions is a skill that you must develop as a financial advisor. Consider asking questions such as:

  • What do you hope to accomplish from meeting with a financial advisor?
  • Do you have any current financial concerns or pressing financial issues?
  • Have you set short-term or long-term financial goals?
  • What is your present-day financial situation?
  • Are you a risk taker?
  • Do you prefer to scrimp and save or do you like to spend big?
  • Is money a source of stress?
  • What are your retirement plans?

Client-advisor relationships are founded on clear communication. If your client hopes to retire early, you need to know. If your client has four children and wants to pay for college for each one of them, you need to know. If your client has major life changes coming down the pipeline, you need to know in order to advise them financially.

Questions lead to valuable information, so be prepared to ask follow-up questions. Answers can change as interests, desires, or life circumstances change.

When You Focus on the Relationship

The quality of your financial advising will improve immensely as you work to base your services around what your clients truly need, not what you think they need.

Creating a client-advisor relationship makes you relatable. So when you are tempted to throw around complex financial jargon, don’t. Explain complicated financial concepts in an easy-to-understand way. And when clients discuss personal matters near and dear to their hearts, show sympathy.

Trust will come easier when a client feels connected to you. Clients want to feel heard. They want to feel that you understand their situation. When you make opportunities to have honest discussions, you build trust. Just because you are considered the financial expert, you don’t need to do all the talking. There is power in listening.

Deep client-advisor relationships lay the groundwork for long-lasting relationships. Loyal customers are the best customers. They will carry your business forward with their word-of-mouth referrals and return business.

Financial Advisor Life Coaching

If you feel you could improve how you operate as a financial advisor, hiring a coach for wealth advisors is an excellent starting point. Look for an independent financial advisor coaching program and get ready to learn how to create more meaningful relationships.

While establishing a client-advisor relationship takes work, it is well worth the energy, effort, and time. Individualized advice will always surpass generalized advice.