Improve engagement by making clients feel smarter

One of the constant challenges advisors are plagued with is getting around the “alphabet soup.”

Advisors agree that they’re inundated and tasked with the challenge of effectively communicating critical information to clients, thanks to industry jargon and complex terminology.

But it doesn’t have to be that hard. Dinon Hughes, financial consultant at Nvest Financial, emphasizes being an active listener as the most crucial point.

“I'm not saying anything groundbreaking here, every advisor knows that,” says Hughes. “You have to meet the client where they're at. If they're a highly analytical person, they're going to want to understand the ins and outs of how a Monte Carlo simulation works.”

While he notes that for a majority of clients, advisors will still need to explain these concepts at a high level, but they should also know “the right amount of detail to go into, so that the client understands the concept without their eyes glazing over and then falling asleep during the discussion,” he added.

In a similar vein, Jordan Sowhanger, wealth advisor at Girard, a Univest Wealth Division, asserts that “being a chameleon” is key, tailoring one's communication style to the individual client's needs and preferences.

“When I'm starting to meet with a client, a question I ask off the bat is, ‘Tell me about your investment experience, or ‘What has your investment experience then like?’ That usually opens up enough information for me to know how to start talking to that client and whether it's okay to use some jargon or not at all.”

Sowhanger admits some of her experiences dealing with clients consist of them feeling afraid to ask questions when they're in a meeting, especially if they feel like they don't understand the industry, she says.

“They're afraid to look stupid, or look like they’re uninformed, or they didn't plan properly. I’ll usually try to compliment what they've done so far. Letting them know they did a great job saving in this bank or retirement account.”

When clients do ask a question, Sowhanger reiterates to them informing them “it was a great question.”

“I make sure they know these are all smart things to be asking because what I want is for them to open up so that we're having a good education session about an industry that is sometimes overly complicated,” she added.

Even though Colin Day considers himself a “gregarious" advisor, he emphasizes the power of visual aids.

"Whenever possible, I try to provide some kind of visual representation of what I'm referring to," the financial advisor at Correct Capital Wealth Management explains.

Years ago, after answering “a thousand questions” about contributing a pretax basis to retirement accounts or on a post tax Roth basis, he created a chart and explained the most simplest forms.

“Here's where it makes most sense to do one or the other. I find taking the time and putting in the effort to create some kind of infographic like that is much more impactful and something that they could take away from the meeting and revisit afterwards,” he acknowledges.

Day also recommends using relatable scales and metaphors. For risk, as an example, he uses a 5-point scale.

“When I try to describe [to clients] why we're a five out of five here, versus another account that’s a three out of five, it's all relative to their risk tolerance, but also the fact that we don't want to look the same everywhere,” he explains.

“By putting us on a scale and maybe providing a weighted average [or something else], it's an easier way for somebody to judge themselves on a risk basis.”

For the younger, tech-savvy clients, advisors should leverage educational videos and post on social media and other digital platforms.

“It's why I do the videos that I do because I think it's an easy way to communicate to folks,” he says. “That's how I'm mostly explaining to our next gen clients some of the heavier concepts.

“If I'm dealing with somebody in their 20s or 30s, they’re more likely to be better educated from a personal financial planning perspective, because they just have more knowledge available to them,” notes Day.

Finally, another strategy advisors can use to engage clients is by using metaphors and real-life examples when it comes to valuations of an investment.

“We buy things as consumers constantly,” says Hughes. “If someone offered you a Maserati for a Volkswagen price, you'd say ‘Great, I'll take two. But if someone offered you a Maserati for $5 million, no one's going to pay $5 million for it,” explains Hughes.

“That sort of metaphor is really helpful for clients in understanding it can still be this great thing, but am I going to pay that ridiculous price for it?”