Originally contributed to Advisor Perspectives
By Terri O’Halloran and Randy Leiker
Between persistently high inflation and ever-present fears of a recession, economists have been cautioning that “the economy faces headwinds.” At a minimum, advisors are grappling with an environment of volatility, uncertainty and unpredictability that has made clients more reluctant to invest in what they’re selling. If the economy does take a big hit, it will be the first significant slump most advisors have experienced in their careers.
Unfortunately, this volatility is being felt directly by many advisors and their practices. A recent study published by Carrier Management found an 8% drop in the number of finance and insurance sector employees – the highest drop across all industries – which means “quiet quitting” has hit our profession as well.
Whether it’s six months or six years away, mild or steep, the risk of a downturn has always been there, and that means the time to recession-proof your business is now. The advisors who are most successful at overcoming recessionary markets are the ones who are continually focused on building trust through deeper relationships with their clients. It’s a mindset and approach that not only sustains them in downtimes but pays dividends in any economic environment.
Let’s look at four keys to success for financial advisors by building trust through deeper client relationships.
Come from a place of service, not selling
On top of the fact that they have their own concerns about the economy, most clients are already resistant to anything that reeks of a hard-edged sales pitch. Instead of approaching client conversations from a place of selling, focus on understanding what clients need. What problems can you eliminate? Where can you add value today?
This mindset is rooted in a deep sense of purpose, which Lisa Earle McLeod defines as “the difference you’re trying to make.” The difference doesn’t come from selling a certain number of high-commission products, plans and services. It comes from helping clients better understand themselves and their dreams. It comes from knowing what they care about, fulfilling their needs and creating value that matters to them.
Purpose is also essential because so much of success is rooted in having the emotional durability to keep going through adversity. Purpose gives meaning to what you do, and that’s what keeps you moving forward in the face of setbacks or market ups and downs.
Clients will welcome hearing from advisors who’ve tapped into this kind of service-driven purpose. It grounds clients and shows that we’ve embraced our fiduciary responsibility to work in their best interest.
Ask Better Questions
Success for financial advisors hinges on understanding what their clients’ needs and issues are. To do so, advisors have to elevate their questioning skills. Often, clients themselves aren’t fully aware of what the real underlying issues are that they’re dealing with, which means a simple “yes” or “no” question won’t lead to a complete picture of the situation.
Good questions are open-ended and indirect, allowing the client to discover what their deeper needs are and to connect with their dream state. Sometimes these questions can be as simple as asking what they need from you. It sounds elemental, but you won’t necessarily find out if you don’t ask.
Successful advisors also know how to ask questions that will help their clients recognize urgency, risk and opportunity costs. Recessionary markets create roller coasters of emotion and asking the right questions eases those turbulent feelings – so long as the advisors then actively listen to the answers. There’s no point eliciting all this valuable insight if you’re tuned out or busy thinking about your next move.
Provide psychological value
The law of psychological reciprocity tells us that people are instinctively motivated to return to us the attitudes and behaviors we give them. When you give clients what they want – value that matters to them – then they’ll give you what you want – their business.
This dynamic communication concept is a powerful trust-builder at any time, but particularly in times of stress or unpredictability. Here are some guiding principles to make it tangible:
- The more genuine interest we show in clients’ needs, the more we subconsciously bond with them.
- The more we listen and give positive responses, the more they are unconsciously impelled to give us positive responses in return.
- The greater our desire to understand clients’ needs or problems, the less adversarial our relationship will be.
- The more we focus on creating value for clients’ needs or problems, the more clients will be impelled to create value for us (referrals, repeat business, etc.).
Coach Your Team Up
Leaders need to recommit to a consistent coaching practice. Our research shows that the more managers coach, the better the company’s performance is. Especially in a difficult economy, it’s important for leaders to understand what their advisors and producers are going through to help them navigate the tough waters.
Part of this is modeling and incentivizing the behaviors you want to see. If you want advisors and producers to listen to their clients and show genuine curiosity and empathy, then leaders need to do the same with their advisors and producers.
This is as much mindset as it is skillset. One of the most important things leaders can do is believe in their team until they believe in themselves. People rise – or fall – to the level of belief their leaders have in them. When you have confidence in their ability to persevere in tough times, they’ll rise to the challenge.
Success for Financial Advisors: Embrace Every Opportunity to Serve
Success for financial advisors doesn’t just happen when economies are booming. And difficult economic times, while new to a large percentage of the financial advisors in the market, are certainly not new. A proactive strategy allows you to take advantage of the relatively calmer periods to tighten up and optimize any areas of your practice that need attention, leaving you in good shape regardless of what’s going on externally. And when those tough times do strike, you’ll be well-positioned to seize on the unique opportunities that often present themselves during a downturn – instead of struggling to stay afloat.
See this full article on AdvisorPerspectives.com