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To be successful, financial advisors must work tirelessly to master their craft while putting in countless hours to build their business. Some have an easier time of it than others because they avoid the many missteps that can drive prospects and clients away. Even the most well-intentioned advisors can sometimes engage in behaviors that unintentionally repel potential and existing clients, creating an enduring uphill battle to grow their practice.
You spend a lot of time and resources to gain a foothold in this business. But if you’re not aware of the crucial mistakes many advisors make in trying to build relationships, you are less likely to avoid them yourself, making your job much more difficult—maybe even impossible. Here are seven common missteps many advisors make that you must avoid to have any chance of success.
#1. Jargon overload
The financial world is laden with technical terms and acronyms. While using precise language is essential, bombarding clients with jargon-filled explanations can make them feel overwhelmed, intimidated, and ultimately disengaged if they struggle to understand your message. At best, it creates a communication barrier you might or might not be able to overcome. At worst, it will drive prospects into the arms of another advisor. It’s critical to always focus on what you say and how you say it, striving for clear and concise communication and explaining complex concepts in ways that resonate with your prospect’s financial literacy comfort level.
#2. Focusing on products over people
While generating business is essential, financial advisors are not salespeople. Financial products are tools, not the solution. Indeed, it’s vital that you be knowledgeable about financial products. But discussing products before thoroughly understanding your prospect’s needs, goals, and risk tolerance creates a salesy, transactional, and inauthentic experience, making them feel like they are being pitched to rather than receiving personalized financial guidance.
In building a financial advisory practice, it’s crucial to remember that the profit is not in the product sale but in the relationships you build. Your initial focus must be on building trust and establishing a genuine connection.
#3. Lacking empathy and personal connection
Some advisors come across as aloof, impersonal, or overly focused on the technical details while neglecting to acknowledge the emotional aspects of financial planning. Most people crave a human connection with their advisor—someone who understands their anxieties and desires regarding their financial well-being. A lack of empathy for what a prospect or client feels can lead to disengagement and a reluctance to share personal information.
Skilled advisors acknowledge the emotional weight of financial matters and create a safe space for clients to express their concerns and aspirations. This holistic approach fosters trust and allows for a more comprehensive financial plan.
#4. Neglecting the power of listening
Building a solid client relationship starts with active listening. Advisors who constantly talk over clients, interrupt, or fail to understand their financial concerns risk creating a one-sided dynamic. By actively listening and engaging in open-ended dialogue, advisors can gain valuable insights into the client’s unique financial situation and tailor their advice accordingly.
#5. Using the “One-Size-Fits-All” approach
Every client has unique financial goals, risk tolerances, and life circumstances. Applying a generic strategy to every client disregards their individual needs and aspirations. Effective advisors take the time to understand each client’s specific situation and tailor their recommendations accordingly. A more personalized approach fosters trust and demonstrates a genuine interest in the client’s financial well-being.
#6. Lack of transparency regarding fees
This may seem obvious, but many advisors, unintentionally or purposely, tend to obscure or downplay the cost of services. Fees are a crucial aspect of any financial relationship, and even the appearance of a lack of transparency can erode trust and leave clients feeling misled. It’s vital to be upfront and transparent about your fee structure, providing detailed information about your services and how fees are calculated.
#7. Limited communication and accessibility
Building a trusting relationship requires consistent communication and accessibility. Regular communication is vital for building trust and making clients feel important. It’s critical to prioritize client communications, offering multiple communication channels and timely responses to inquiries. Establish clear communication expectations at the outset, whether it’s weekly updates, quarterly meetings, or some combination based on your client’s preferences.
Also, clients who struggle to reach their advisor or experience lengthy response times may feel neglected and unimportant. Clients want to feel comfortable reaching out to their advisors with questions or concerns. Limited accessibility, whether due to inconvenient scheduling, slow response times, or impersonal communication channels, will most definitely drive prospects and clients away.
The Bottom Line
We spend a lot of time in this space and our workshops, focusing on the skills and best practices financial advisors must develop to be successful. It’s equally important to be mindful of the common pitfalls that can derail your career. By prioritizing clear communication, personalized advice, transparency, and genuine care, you can position yourself as an invaluable partner and win more clients.
Related: Becoming the Leader Clients Seek: Strategies for Financial Advisors