Can You Call Yourself a Trusted Advisor?

One of your goals as a successful Financial Advisor is to have a positive influence on your clients. You want to influence them to make smart choices about their money so they can achieve their goals and fulfill their values.

How you go about that is the subject of this article.

Over the many years of teaching advisors what does and does not establish high-trust client relationships , I have had advisors tell me how they establish trust. While it’s not appropriate for me to comment on whether or not an individual advisor I don’t know well is actually trustworthy, it is obvious to me that some ways advisors claim to build trust either don’t work very well or, at the very least, create detours to the high-trust client relationship destination.

My hope is that this discussion motivates you to be more of what helps your clients get results and less of what doesn’t.

Please understand that there is nothing intrinsically wrong with any of these approaches. The fundamental question is which produces the best results for your clients and for you? And, which is most likely to establish the high-trust client relationship?

The Educator

ed·u·ca·tion, noun , the act or process of imparting or acquiring knowledge.

The Educator is an advisor who might believe something like, “an educated client is a better client” or “it’s my job to educate people, give them information and options, and let them decide” or “knowledge is power.”

The Educator might also have been drawn down this path by responding to analytical clients who have a never-ending stream of questions. Perhaps they believe that if they can’t answer every single question a prospect or client could ever ask they are somehow not worthy. Or they could be driven by a fear of not being or appearing smart enough in the eyes of others.

It’s common that the educator-style advisor is someone who, they themselves, likes to learn or was a teacher in a previous career.

This education of the prospect or client can come in the form of financial planning basics like dollar-cost averaging or more advanced discussions about absolute returns, quantitative easing, and the fiscal cliff.

The education approach can create problems:

How do you know when the prospect or client has been educated to a sufficient level to make decisions?

The rationale that an educated client is a better client doesn’t hold water in the face of the truth that it’s action that produces results. For example would you rather own an investment you were educated about that loses money or own an investment that makes money, but you don’t know much about? (For the record, do not confuse legally required disclosures with education.)

Most educators could more accurately be described as over -educators. In other words, they get wrapped up in the teaching rather than what the other person is actually learning. Too much information creates confusion. And the confused mind says “no.” Remember, all the knowledge and information in the world does not produce a beneficial result for the client without implementation. When they get confused and decide to “think it over” nobody wins.

Not all of educator-style advisors are sincerely trying to educate anyone. Their “education” approach is more of a sales tactic designed to impress their prospects and clients with how smart they are. Most purveyors of financial seminars are not truly trying to educate the participants. They are sales and marketing tools designed to generate leads and prospects. You don’t really think that the “financial expert” on the radio would be buying all that air time if they weren’t selling financial products, do you?

Is it really education or is it the illusion of education? I think the proof that it’s more of an illusion of education is the absence of any testing for retention. Wouldn’t it be great if we could have passed our courses in school if all that was required by the teacher was our head nodding up and down and a smile on our face? I have yet to meet an education-style advisor who requires a prospect or client to take a test to determine what was retained. I hope it goes without saying that real, professional educators test for retention.

Related: Destination Checks for the Serious About Being Successful Financial Advisors

I am not suggesting that you would never answer a question, only that your best role for your clients is not their teacher. If they want to be educated you should refer them to take a class.

The Therapist

ther·a·py, noun, the treatment of disease or disorders, as by some remedial, rehabilitating, or curative process.

The advisor as therapist is likely to be someone who believes, “we all have issues or baggage about money and if I don’t address them I won’t be able to help this client” or “if I don’t learn their ‘money history’ I won’t be effective advising them about their future.”

The therapy oriented advisor might have been drawn down this path by interacting with prospects and clients who are highly irrational about money or because, they themselves, are attracted to psychology. They might have a background in social work, the ministry, or similar career.

The therapy approach creates some problems:

You end up with a clientele who needs therapy.

Unless you have an actual degree in this area and maintain your certifications, you are not really a therapist. Therefore, you are venturing into uncharted territory where you lack the qualifications and might cause more harm than good.

There is even a fairly new financial therapy association where real, licensed therapists who specialize in money issues teach financial advisors some of what they know. On the one hand, this information is interesting. On the other hand, it’s scary to think about the partially informed and unlicensed financial person who might attempt to practice therapy on their clients!

I am not suggesting that you would never counsel a client through a difficult time, only that your best role for your clients is not as their therapist. Your job is much more about their future than the past. If they really need therapy, refer them to a professional.

The Salesperson.

salesperson, noun, a person employed to represent a business and to sell its merchandise.

The salesperson advisor might believe something like, “nothing ever happens until someone sells something” or “everybody is selling something” or “we’re all salespeople.”

Given how pervasive products have been in our industry and how many of us began our careers representing a product manufacturer as part of their distribution force, it’s not surprising that, directly or indirectly, many financial professional still behave like salespeople.

The main problem created by the sales approach is that the fastest way to be distrusted is come across like a salesperson.

Hallmarks of the salesperson are:

fact-finding

features and benefits presentations preying on negative emotions like fear, greed, and guilt

handling objections (“The selling doesn’t really begin until they say ‘no.’”)

closing (“The ABCs of selling: Always Be Closing.” “Close early, close often, close late.”)

I am advising that you never come from the place of salesperson.

The Advisor

ad·vice, noun , an opinion or recommendation offered as a guide to action, conduct, etc.: I shall act on your advice.

The advice advisor tends to believe things like, “my primary value is to inspire people to action so they get results” or “my clients’ most valuable asset is time, so the less of it they spend with me, the more they can enjoy what’s important to them” or “my clients pay me to give them the best advice based on the wisdom and experience of myself and my team” or “the product is the advice.”

When the leaders of corporations and governments seek the highest level of input they turn to their advisors .

The incomes of educators, therapists, and salespeople do not compare favorably to the money earned by Trusted Advisors. Advice commands the highest compensation because it’s most associated with actual results and it’s highly time efficient.

The problem with this approach is the amount of confidence, skill, and leadership ability that’s required to be a great advisor. Only a small percentage of financial professionals are likely to ever evolve to this level. You could be one of them, but it won’t happen by accident.

The biggest benefit of this approach is that you end up with a clientele who is happy to pay you for your advice and follow it. They would be happy to pay you directly for your advice, without the intermediary of a product or assets under management. So, the advice advisor is not subject to the whims of product commoditization or market, economic, political, or world events outside of your control. In all environments advice is valued.

The term Trusted Advisor has become common in our business. Have you ever heard the term “Trusted Educator,” “Trusted Therapist,” or “Trusted Salesperson?” There’s a good reason why you haven’t.

Related: Helping People: The Best Part of Our Business

Trusted advisors ask great questions, especially the tough questions. They listen with empathy. And when it’s their turn to speak they give their advice with conviction so their prospects or clients are inspired to take the action that will get them where they want to be for the reasons that are important to them.

My advice: Do less educating, less therapy, and less selling. Be a Trusted Advisor .