Investors are more skeptical now than ever about the financial advice they're getting - and the professionals giving that advice. This is not just a financial services industry trend. A significant number of Americans now view the government, the media, corporations - even nonprofit organizations - with rising suspicion and distrust. Author Michael Maslansky calls this a "post-trust era."
When prospective clients first meet you, they won't give you the benefit of the doubt right off the bat. Instead, the starting point is uncertainty and skepticism about whether you are someone they can trust.
The good news: By adapting the ways you put your ideas out there, you can build trust and get investors to engage with you from the first interaction.
Maslansky recently presented his insights and strategies to elite advisors at one of our firm's roundtable coaching sessions. Here's an overview of what he shared with the group.
There are plenty of reasons why trust is so low. One key factor is the massive shift in how we consume information. Simply by connecting to the Internet or turning on CNBC, investors can feel like they know as much as the pros about the markets and investing. They might not actually be more sophisticated, but they think they are, because it has become so easy to access high-level information. Anything that your clients or prospective clients hear from you has a conflicting argument that's been made by someone else - and is instantly obtainable online.
Armed with all this "knowledge," people enter into conversations with less trust than ever. In the past, if you made a point that sounded rational, listeners would give you the benefit of the doubt. Now you have to actively overcome skepticism just to start a relationship.
A few things you should expect clients and prospects to do:
*Question your motives: Affluent investors assume that advisors get higher commissions for the investments they recommend. They believe that your motives aren't true - even when you explicitly say, "I only recommend investments I believe in and am never influenced by anything other than what is best for the client."
*Challenge your facts: There is no objective view of the truth anymore. Just because you've got data to support a statement doesn't mean that you are persuasive. Investors will question the facts you give them - including the truths about how the markets work.
*Respond emotionally, not rationally: When the topic of advisors is brought up in focus groups, Maslansky says, many investors still think of Bernie Madoff. There's an emotional narrative from that scandal that still affects how people enter into conversations with advisors.
CHANGE THE CONVERSATION
How can you change the conversation to be more effective?
Start with the content itself. Shift your approach from one that is focused initially on data to one that stresses narrative and context. Instead of starting with a bunch of facts, tell the person why you are going to give them the facts. Focus on the person's goals, or long-term plans, to create a context for a conversation that can later include facts and figures.
Next, reconsider your tone. Move away from big and bold statements that might not sound credible - don't overpromise or puff up your abilities. And focus on outcomes, not intent.
You don't need to tell investors why they should like your motives. You just need to tell them about the things that you will help them accomplish.
Don't ignore any elephants in the room. In fact, bring them up yourself. Anticipate objections that prospective clients may raise, and address them proactively.
Think about areas where you have weaknesses (real or perceived) - such as high fees or a confusing investment process - and address them directly.
Try following what Maslansky calls the four principles of credible communication:
1. BE PERSONAL
The more time you spend talking about products and services and focusing on yourself, the less personal you will seem. By contrast, the more time you spend talking about the goals, interests and preferences of your clients or prospects, the more personal you will seem.
Sounds obvious, right? But advisors often tend to focus on the business side of client interactions - asset allocation decisions and the like - and shortchange personal aspects. There is no client conversation that couldn't be improved on by spending more time on the personal side and less on business.
2. BE PLAINSPOKEN
Expectations for clarity are higher now. There was a time when, if people didn't understand you, they might think you were smart - and they'd tend to go along with your suggestions. But if they don't understand you now, they are going to find someone else they do understand.
In one recent session, Maslansky cited as an example the variable annuity business. Every brochure you see mentions longevity risk - but although that concept may be crystal clear to most advisors, it does not resonate with clients.
The solution: Reframe the discussion around a simpler idea that does connect with potential buyers - that is, not outliving your money.
Think about how much jargon is in your daily conversations with clients. Do they really know what correlation is, or alpha? Unless your clients deeply value the intricacies of the market, they probably don't. Ask yourself: If people don't really understand what you are saying to them, can you be clearer?
3. BE POSITIVE
Negativity can work well in politics, but in financial services it only leads to rejection or paralysis.
Maslansky surveyed a group of investors about whether they wanted investments that helped them "take advantage of opportunities" or investments that helped them "avoid threats." The vast majority wanted options that helped them capture the opportunities. Yet threats and scare tactics are common in messaging aimed at retirement savings.
Wealth managers tend to talk about how they manage risk, but most clients are not investing to avoid loss; they want to generate some kind of return. If you focus too much on risk, you miss an opportunity.
4. BE PLAUSIBLE
Nothing else matters if prospects and clients don't believe you.
When Maslansky worked with a food company trying to change its image, he started with a message that the company was now making healthy food - but in testing, no one believed it. So he began saying instead that the firm was striving to make healthier food. That subtle shift got people interested because it was a more plausible message.
Here's an example from our industry. If you ask people to put their portfolios into an investment - versus putting a portion of their portfolios in an investment - they'll show more interest when the word portion is used. By reducing what you ask for, you can gain more credibility; in fact, you may stand to capture more assets than if you ask for all the assets.
Of course, you might never ask directly to manage all of a prospect's money. But Maslansky's research shows that unless you specifically use the word portion, people will indeed assume that you are asking for all of it - and they will back off.
Anything vague will be interpreted negatively, so be specific to be more believable.
Trust is earned by actions over time. But the seeds of that trust are planted from the first moments of contact. Focus as much on how you communicate as on what you communicate; that way, investors will engage with you and take your advice.
John J. Bowen Jr., a Financial Planning columnist, is founder and CEO of CEG Worldwide, a global training, research and consulting firm for advisors in San Martin, Calif.
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