This is the first in a series of three articles about changing the financial advice conversation, and was published in International Adviser magazine in December 2017.
I joined the financial services industry in the 1980’s and, like most people, I fell into it. I didn’t go to financial adviser training school, or do a degree in financial planning, and unlike other professions, I wasn’t trained to be an adviser or a planner before being let loose on the public.
I became a “broker” and my job was to distribute the industry’s products. The conversations with customers (they weren’t clients) were about financial products, and what I learned was how to have sales conversations.
Being a broker
I learned to prospect through creating fear, building rapport and finding common points of interest to make people feel comfortable, then learning how ‘disturb’ them, and overcome objections. I learned how to “always be closing” at the earliest opportunity. I learned how to manage my day so that I could fit as many sales meetings into it as possible. I learned how to fill in a fact find form and find gaps in coverage to sell into. I learned how to follow a linear sales process and check all the boxes along the way. I learned how to disclose only what needed to be disclosed for compliance purposes.
I learned how to have transactional conversations and transactional relationships, and how to tell the story that the industry wants to tell people. “You’re under-insured and you’re under-saved, and you need to buy our products, or you’ll regret it.
With the benefit of hindsight, I wasn’t building a business and I wasn’t building client relationships. The truth is I wasn’t listening to my clients and I wasn’t asking the right questions. I was asking the questions that I wanted to ask, without thinking about what was important for the client. These are typically loaded questions, often suggesting to people what they should aspire to want.
As a result, my conversations and my relationships were superficial and I struggled to get client engagement, I struggled to get referrals and often, I struggled to get paid for work I had done. In the early days, the shallowness of these conversations didn’t bother me, but as time went by, I felt flat and unfulfilled. I was always interested in helping people, but I really hadn’t learned how to do that properly, and I certainly wasn’t incentivised to do so.
Does this sound familiar? For most brokers this is still the current reality, because the conversation fundamentally hasn’t changed in the last thirty years. Sure, over time some things have developed. Many brokers have moved away from selling insurance products to selling investment products, mostly as a means of generating recurring business revenue, but still the conversations haven’t materially changed.
From a marketing perspective, some of our language has changed. We now describe ourselves as financial planners, or wealth managers and we purport to help people achieve their important lifetime goals, or words to that effect, but the truth is that we’re still not paid to do that. We’re paid to distribute products and gather more assets to ‘manage’.
Why there’s a lack of trust
We’re still incentivised by the industry and we’re still conflicted by it. Despite the industry’s fancy marketing language, conversations behind closed doors almost always revert to ‘more distribution’.
Studies frequently demonstrate that the public perception of trust in financial services providers is low. When I talk to people outside of financial services, they often groan and are happy to share bad-news stories. My own personal experience of observing advisers in action tells me that we’re not asking the right questions or listening to people.
I really believe we’re having the wrong conversations.
If we don’t have the right conversations, we may soon find ourselves disintermediated, and wondering what happened. In the next article, I want to explore what we can do to have the right conversations, and then share some stories about what happens when we do.
In the meantime, here’s 10 signs that you’re having the wrong conversations:
- Clients are are guarded with information and they don’t seem to be engaged
- You struggle to get referrals from existing clients
- Your pitch is all about you, your company and how great you are
- You have pre-conceived ideas about what people should want, and you don’t know why some things are (or are not) important to your clients
- You typically ask few questions, loaded questions or closed questions
- In the first meeting, you do all the talking
- You close sales within the first two meetings
- You spend most of your time talking about products, product terms, filling in forms or writing reports
- You don’t have time to spend with people. You rush from meeting to meeting and fill every available space in your diary with short meetings
- You’re more interested in what you want than what your clients want. It’s all about ‘getting the business’