You don’t know what you don’t know—but as an advisor offering a luxury service to clients, it’s critical that you do know. With three governing bodies overseeing your practice, dedicating time upfront to understand your clients’ preferences is essential. Not only does this help you provide exceptional service, but it also ensures you’re staying compliant and attentive to their evolving needs. Advisors work with a wide range of clients, each with unique goals, financial priorities, and personal preferences. The key to outstanding service lies in understanding what truly matters to each client and building strong relationships that allow you to offer tailored, personalized advice.
Let’s explore how you can gain a deeper understanding of your clients and stay ahead of their changing needs.
Why Does Understanding Clients Matter?
Personalization is the cornerstone of any quality client-advisor relationship. Clients want to know that their advisors understand them and will provide unique recommendations to meet their needs and help them reach their financial goals. That personalization starts by understanding your clients and what matters to them.
Advisors also have an obligation to work in their client’s best interests. But if you don’t know your client, you can’t fully understand their best interest. The SEC’s Regulation Best Interest (Reg BI) established best practice standards for advisors when recommending investment strategies, accounts, and products to clients, all designed to ensure advisors act in their client’s best interests. Staying compliant requires knowing what matters to clients and providing excellent care.
The more you know your clients, the more trust you build. Trustworthiness is consistently ranked as one of the top characteristics clients look for in an advisor. Clients want to know that their advisor is working with their needs in mind, not for their own benefit or the benefit of their firm.
Use Data to Understand Preferences
Today, advisors and firms have access to more client and industry data than ever. They can access data from a client’s onboarding forms, public information, industry and market data, and much more. That information is crucial to understanding clients and diving deeper into their behaviors, preferences, risk tolerance, and more.
At a high level, data can provide patterns and insights into investors’ preferences and financial behavior in your client’s demographic. For example, aggregate data can show general risk tolerance or investing preferences for young professionals, which you can then apply to clients in that demographic.
For more personalized insights, advisors can lean into the power of AI and machine learning to analyze clients’ spending habits and know where they spend their money and how they save. This information is critical to understanding each client’s unique risk tolerance, as well as their goals for the future. It may also discover discrepancies between what clients say they want and what they actually do with their money — something clients might not even realize is out of order. If a client says they want to save aggressively for their child’s college fund but has outstanding credit card debt, an advisor can help them get their finances sorted and aligned with their goals and values.
Ask the Right Questions
Data is powerful, but it doesn’t always tell the full story of a client’s preferences or values. Some of the most useful insights come from taking the time to talk with clients. Every client fits into a demographic, but they are more than their wealth and age. By asking the right questions, advisors can build a strong relationship, truly understand their clients’ interests and preferences, and open the door for communication as client needs change over time.
Basic questions about a client’s financial goals and lifestyle are important, but you can also dig deeper with more thought-provoking questions. Here are few examples:
- What is your most pressing financial concern right now?
- What kind of legacy do you want to leave?
- What was your relationship with money growing up? How has that impacted you as an adult?
- What mistakes have you seen other people make with money?
- How would your life change if you didn’t have any financial worries?
- How confident do you feel about today’s markets?
While many of the questions discussed in this blog are best reserved for in-person conversations — where you can elaborate as needed and observe non-verbal cues like tone and body language — there is a scalable way to gather essential client information that doesn’t require face-to-face interaction. Using a tool like PreciseFP allows you to collect the necessary data efficiently, helping you arrive at meetings better prepared to ask insightful follow-up questions and uncover the details that will prove you to be a trusted, successful advisor. Try a free trial and customize the pre-built fact finders to fit your needs. Strategy is key, and with PreciseFP, you can streamline your process while still delivering a personalized, high-touch experience.
