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Great advisors are problem solvers; they are ‘fixers.' When it comes to managing money, that’s a good thing. But when it comes to managing client emotions and concerns, that natural tendency may get in the way of engagement.
Earlier this year Absolute Engagement invited 1,000 high-net-worth clients to rate their level of concern on thirteen different issues. Understanding those concerns is clearly important when it comes to driving deeper engagement.
And there is no shortage of concerns to address. Humans are funny that way. But it turns out that while you may want to address problems, you don’t have to fix every problem.
1. Clients are human; it’s natural to worry.
As part of the work with we do with advisory firms, we often calculate a Concern Index for individual prospects and clients. The AE Concern Index provides a snapshot of how worried people are feeling, if that is changing over time and if there are differences within couples.
Using that same process at an industry level, we discovered that two thirds of clients scored as ‘moderate or high’ on the AE Concern Index, a composite score across all thirteen potential concerns. Rising to the top were:
- Dealing with the rising costs of health/long-term care
- The impact of current market volatility on my ability to reach my long-term goals
- Personal or family health
- Ensuring my children make good financial decisions
- Ensuring my family is taken care of when I pass away
2. Wealth mitigates some, but not all, concerns.
Sufficient wealth has a way of ‘softening the blow’ of some concerns but we cannot assume that is always the case. For example, clients with $5m or more in investable assets are less concerned with the rising costs of health/long-term care and the impact of current market volatility on reaching their goals. However, they are equally, or more, concerned with ensuring their children make good financial decisions, feeling fulfilled in retirement and caring for elderly parents or family members.
3. There is a critical difference between ‘having’ concerns and ‘sharing’ concerns
While most clients have some concerns that keep them up at night, far fewer have shared those concerns with their advisor. Fully 40% of clients said they had not shared their concerns and this creates both a risk and an opportunity. Those concerns are often tied to planning needs yet clients may not see the connection. Further, lurking concerns may create stress and stop clients from making effective decisions or taking action on issues related to their financial futures.
4. Sharing concerns drives confidence and referrals.
The Absolute Engagement Confidence Index is another key Index that we measure on behalf of advisors. It's a snapshot of how clients feel about their financial futures. You can read more about this important index here. It turns out that clients who are higher on the AE Confidence Index experience many of the same concerns as others. A high level of confidence does not mean a client does not have concerns.
The big difference, however, is that concerns were shared. Across every concern, clients with higher confidence were more likely to have shared their concerns with their advisor. The same held true for those who provided referrals. My parents used to say ‘a problem shared is a problem halved’ and that old adage may hold true here.
5. The job of the advisor is not to fix clients by eliminating concerns.
It’s clear that concerns are part of what makes us human. While advisors can support clients in increasing confidence, they cannot eliminate concerns entirely, nor should they try. Rather they can provide prospects and clients with a safe place to identify, understand and articulate their concerns in order to align back to the plan.
Your Action Plan
The steps toward embracing concerns to drive engagement seem simple and natural, if we can just shake the need to fix everything.
- Provide clients with an easy way to identify and share their concerns.
- Allow them to see that others share their concerns and that they are real (even if their financial plan suggests they shouldn’t be)
- Give clients the space to discuss or examine those concerns.
- Provide them with examples of how their plan will mitigate those concerns (but not necessarily eliminate them).
- Rinse and repeat.
Related: Client Engagement Report Card: How Do You Stack Up?