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John Bowen

Do You Really Understand Your Clients?

Bridging the gap between what clients want and what you think they want.

January 5, 2009
by John Bowen, Jr.

How well do you and your colleagues really understand your clients? Our firm’s research suggests that financial advisors on the whole — including many CPAs — carry some surprising misconceptions about their clients’ financial worries and goals. Such misapprehensions are bound to turn off prospective clients and to impede advisors' relationships with their existing clients.

For example, our research finds that only about 15 percent of financial advisors believe that 20 percent or more of their clients are very concerned about losing their wealth. In fact, almost nine out of 10 affluent investors say that they're very concerned about losing their wealth. That stark disconnect between clients' concerns and advisors' understanding of them suggests that many advisors don't craft plans that address the issues that truly worry their clients. Such misunderstanding severely undermines the development of the all-important client relationship: It's easy to picture an unsatisfied client leaving his advisor's office, muttering "he just doesn't get me" under his breath.

Likewise, only about eight percent of advisors say that mitigating estate taxes are important to their clients — but about half of investors with at least $1 million in net worth say they are concerned about that issue. On the other hand, about a fifth of investors on the lower end of that spectrum, those with net worth between $1 million and $3 million, call mitigating estate taxes a concern.

Advisors might argue that such investors shouldn't worry about estate taxes because their estates may not exceed the taxable threshold. The advisors would be right — but that's beside the point. Clients are concerned about estate taxes, whether they should be or not, so advisors who want to build strong client relationships must address the issue.

Financial advisors also misapprehend affluent clients' financial interests and responsibilities. For example, only 40 percent of advisors say that making sure heirs are taken care of was very important to their affluent clients — but our research shows that about 80 percent of affluent investors call that a concern. Advisors also underestimate affluent investors' worries about being sued, losing their job or business, having enough money in retirement and other important issues. What's more, financial advisors significantly overestimate affluent investors' desire to work with a high-quality investment advisor.

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John J. Bowen Jr. is founder and CEO of CEG Worldwide, LLC, a global training, research and consulting firm dedicated to helping advisors and the institutions that serve them become more successful. Bowen just published a new book, Breaking Through: Building a World-Class Wealth Management Business, which provides a clear road map for advisors to take that next step. He has 26 years’ experience as a financial advisor.