Everyone agrees that communication is a key to building a successful practice as a financial advisor, but not all communication is equal.
Tweets, for example, may be great for letting your friends know what you had for breakfast, but they’re not always great as relationship builders. The same goes for Facebook. And email, while it might be great for sending someone an alert or a link to your newsletter, is not the best way to have a conversation.
“It turns out that with all the new ways we have of communicating, the face-to-face interview and the phone are still the best ones,” argues Rick Rummage, principal of the Rummage Group of Herndon, Va., a consultancy that specializes in training advisors.
Rummage is not opposed to using Facebook, Twitter, LinkedIn and other social media, but “if you want to build a relationship with your clients, there’s nothing like a face-to-face meeting, and second best is a phone call, where you can have an actual back-and-forth conversation,” he says.
He recommends that advisors have at least one phone conversation with each client every quarter and at least one in-person meeting every year. In the phone conversations, he says, the advisor should give the client an update on her or his investments, an outlook on the economy and the markets, “and then the advisor should ask general stuff about the client’s family.” A personal meeting, in the office or at a restaurant, would go into financial matters in more detail, while also delving into nonbusiness matters.
“When you email a client or send out a newsletter,” Rummage says, “you’re not really communicating. It’s one-way. When you make a phone call, you hear a kid in the background, and then you can ask about the family. It’s a much different thing.”
“Don’t get me wrong,” he adds, “newsletters are great. You should send them out at least quarterly, and every two months is even better, though I find only about 5% of advisors actually use them. But to be of any use, a newsletter has to be not just information, but interesting writing—something the clients will want to read.”
He has a broad warning about reaching out. “If you aren’t really communicating with your clients, eventually they’re going to cheat on you,” he says. “Your client will be in a restaurant where Fidelity is holding a luncheon investment seminar, and he’ll drift over there to listen. You don’t want that happening.”
Rummage says even younger advisors, who think texting their younger clients is a good idea, are making a mistake. “Texting is great for letting someone know you’re going to be late for an appointment,” he says, “but it’s not the way to build a relationship.”
Dave Lindorff has contributed to Businessweek, The Nation and Salon.com.
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