WASHINGTON -- Success in financial planning hinges on developing a rapport with clients and building confidence and trust, according to a panel of advisors speaking here at the Investment Company Institute's general membership meeting.
The panelists suggested that the human side of the practice has been somewhat overlooked among some advisors who have tended to limit their interactions with clients to providing financial advice.
Melissa Scott Paine, a partner with Krosnowski & Scott, said the high-touch approach for advisors could become a "growing market niche" that delivers clients a unique value in the form of trusted advice and reassurance about their investment positions, particularly in times of market upheaval.
"I definitely think referrals and relationship building is key. I think people have gotten away from that. One of the biggest complaints from a lot of clients that we had back in '08 and '09 was during the downside a lot of people don't hear from advisors, they don't get feedback, they don't get that constant contact," Paine said. "That's when you really need to be in contact with the clients the most, is when things are going south. You know, when the market's doing well and things are going up and things are calm, the client likes to hear from you, but they're more confident."
Sue van der Linden, first vice president and a wealth advisor with Morgan Stanley, takes it a step further. Van der Linden said she goes to lengths to arrange social outings with clients, orchestrating settings where feelings about succession planning or other matters of family finances might come up naturally in the course of a conversation that would never take place in a business setting.
"We do a lot of social time with our clients," she said.
"There are so many things about what I as their advisor need to provide that I am never going to find out within the confines of my office or an accountant's office or an attorney's office," van der Linden said. "I've got to get them out -- I need them at my house. I need them at their house. I need them at the pool. I need them somewhere not business-related so that they can let their guard down and tell me the stuff that's keeping them up at night."
Then, too, the reality on the financial side of the business is that investment products have grown increasingly complex, which, coupled with an aging demographic and the still-fresh shock of the financial crisis, argues for advisors to take a more hands-on approach with their clients, particularly as they begin to grapple with retirement planning and wealth-transfer issues.
"People are aging, people are in need. As more products develop, the complexity of our industry has grown," said Christine Emond, a private wealth advisor with Ameriprise Financial.
An integral part of the financial advisor's trade is, of course, managing expectations, not over-promising. But at times it is also important to be available to talk clients back away from the ledge, to reassure them that the latest natural disaster or remote conflict does not presage a market collapse or their personal financial ruin, according to Paine. Many of her clients are retirees, who she says are often spooked by the reliably dramatic reports of tumult and unrest that permeate the Internet and cable news, leaving it to the advisor to offer reassurance.
"We've gone and told a lot of our clients to try to tune out the noise," Paine said. "I think from an emotional standpoint, the fact that you have the Internet, you have the media attention 24/7 to everything, does create a lot of concern in the market, and people spend too much time, especially retirees, a lot of times, that don't have other volunteer activities, watching the news and being reactive to that. And I think that's one of the reasons that there's that much more volatility in the market than there was 10 years ago, because as soon as something happens, within three to five minutes, it's already being reacted on in the market."
