Profit from a Consultative Approach

As I write this, we’re again briefly reminded of market volatility.  China’s main stock index has fallen 8.8%, allegedly caused by rumours of a planned tax on capital gains on shares in China. The reverberations are being felt worldwide. Whilst the investment generalists among us will probably be isolated from most market events, thanks to this financial year’s superannuation window, financial cycles must be respected by those wanting to build a world-class advisory firm.

The financial advisers achieving the greatest success in our industry are those who are true consultants to clients.

These advisers work in real partnership with their clients over time. They use an in-depth discovery process to uncover clients’ most important financial values and goals, enabling them to learn how to best serve each client. While working in close consultation with their clients, they build lasting relationships and cultivate enduring trust.

The consultative approach stands in direct contrast to the investment generalist approach still employed by many advisers. After using a relatively brief fact-finding process—typically a checklist of questions about the client’s investment goals, time horizon and risk tolerance—the investment generalist makes appropriate product recommendations. The transaction is completed, and the adviser-client relationship usually never goes any deeper.

The success of the consultative approach hinges on the adviser’s ability to understand the client on a deep level. This understanding goes beyond the facts that investment generalists gather—that the client wants to send his daughter to University and to retire in ten years, for example—and instead goes to what really makes the client tick—the biggest motivators, greatest joys, and hidden fears.

David Carney, principal of Aspect Partners with offices in Newcastle and Balmain, is an expert at consulting to his niche clients converting their financial potential into a financial reality.

“To really provide the direction and leadership that our most valuable clients are seeking, we have to fully understand their values and philosophies regarding money. Our best clients already have multiple advisers in the form of accountants, lawyers, bankers, stock brokers and insurance agents. We quickly differentiate our value from most of their current advisers by the quality of the questions we ask. We are also quick to identify those prospects that aren’t interested in a long term relationship, who are only after a quick win from a transaction. We can’t afford to play that game.”

Advisers like David use a comprehensive discovery process to gain a deep level of client understanding.  They create a total client profile covering seven critical areas of understanding you need to serve your clients well.

  1. Values. What’s most important to the client about money?
  2. Goals. What are the client’s personal goals? Professional goals? Where would the client ideally like to be at age 45? 55? 65? 75?
  3. Relationships. What family member relationships are the most important? How important are relationships with co-workers? With people in the community? Are pets important to them? Is religion important to them?
  4. Assets. What are the client’s holdings? How are they structured? What new assets does the client expect to receive in the future?
  5. Advisers. Does the client have a lawyer? An accountant? What have been the best and worst experiences with other professional advisers?
  6. Process. How involved does the client want to be in managing his or her money? How often does the client want to hear from you? Does the client prefer contact via phone, email or face-to-face meetings?
  7. Interests. What are the client’s hobbies? Charitable causes? Favourite sports teams?

Core to successfully building a trusted consulting relationship with clients is the industrialisation of determining their values and goals. Unfortunately this is too often left up to ‘experience’, which usually means someone picking up someone else’s good and bad habits over far too long a period.

In my opinion the current world class thinkers regarding the determination of values and goals for our clients are: in Australia, Ian Hutchinson (; and from overseas, Bill Bachrach (, Bruce Wright ( and Dan Sullivane (

Being successful on purpose means getting the right client on the right conversation, whilst setting the right expectations regarding the value you are going to add. Long term profits will be guaranteed to those advisory firms who consistently develop deep financial relationships with their clients.  Relationships based upon financial products will not sustain inevitable financial cycles.

Image: Francesco Marino /

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