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John Bowen

Profit From a Consultative Approach

Itís not where your clients want to invest. Itís understanding what makes them tick.

July 7, 2008
by John Bowen, Jr.

CPAs and other trusted advisors who are achieving the greatest success in a financial advisory capacity today are those who are true consultants to their clients. How do they do it? They work in real partnership with their clients over time. They use an in-depth discovery process to uncover their clients’ most important financial values and goal. This enables them to learn how best to serve each client. As they work in close consultation with their clients, they build lasting relationships and cultivate enduring trust. If you’d like more of your own client relationships to be like this, read on.

The consultative approach stands in direct contrast to the investment generalist approach which is still employed by many advisors. 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 recommends various financial products that he or she deems appropriate. The transaction is completed and the advisor-client relationship usually never goes any deeper.

The success of the consultative approach hinges on the advisor’s ability to understand the client on a deep level. This understanding goes beyond the facts that investment generalist gather — that the client wants to send his daughter to an Ivy League school and to retire in 10 years, for example — and instead goes to what really makes the client tick — the biggest motivators, greatest joys and hidden fears.

To gain this level of understanding, use a comprehensive discovery process to create a Total Client Profile. This is a picture of the seven critical areas in which you must have a thorough understanding of your clients in order to serve them well.

  1. Values. What’s most important to your client about money?
  2. Goals. What are your client’s personal goals? Professional goals? Where would your client ideally like to be at age 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?
  4. Assets. What are your client’s investment holdings? How are they structured? What new assets does your client expect to receive in the future?
  5. Advisors. Does your client have a lawyer? A banker? Another accountant? What have been the best and worst experiences with other professional advisors?
  6. Process. How involved does your client want to be in managing his or her finances? How often does your client want to hear from you? Does your client prefer contact via phone, email or face-to-face meetings?
  7. Interests. What are your client’s hobbies? Charitable causes? Favorite sports teams?

The discovery process pays a substantial dividend: more satisfied clients who are more likely to provide both additional assets to manage and qualified referrals. This in turn leads to greater revenues and ultimately, higher net income.

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John J. Bowen, Jr. is the Founder and CEO of CEG Worldwide, LLC, a leading research, publishing and consulting firm serving independent financial advisors, CPAs, insurance representatives and registered investment advisors. Download the latest research from CEG Worldwide or learn more about our coaching programs for financial advisors.