SAN DIEGO -- For the first half of his presentation before a panel of millennial and new-retiree investors, an unnamed planner scored highly with his audience. Listening to him explain his services, they moved dials upward to indicate their approval.

Then he got to the subject of how he is paid.

The 14 members of the investor panel then started to turn their dials down ever further as he provided a long-winded explanation that never got to the point.

“I still don’t feel I understand how he is paid,” said one of the millenial panelists, a young professional with a background in economics, in a follow-up interview conducted by well-known advisor Ron Carson, who presented the findings at LPL Focus in San Diego.

It can be a shock for planners to discover what their clients really think of them, says Carson, whose Omaha-based Peak Alliance group provides consulting for 1,000 advisors nationwide.

“It was pretty uncomfortable for some of them,” he said, but eye-opening.

Here are seven crucial takeaways from the panel Carson assembled last fall, together with his own separate findings:

  • Be precise. When it comes to talking to clients about compensation, don’t be vague. Be precise. One member of the audience said that after he put his fees up on his website, clients stopped asking about them. Carson says he tells his clients upfront that he strives to maintain a 40% annual profit margin, a number he says he failed to hit last year.
  • Never talk down to clients. One message from the investors was clear: “Don’t make me feel stupid.” 
  • Word choice matters. “A poor term can have a big impact,” he says. Terms like asset allocation, diversification and controlling expenses “really play well,” he adds, while the term “alternatives” doesn’t. Carson uses “specialized strategy” because, he says, “It’s not alternative, it’s a specialty type of investment.”
  • Skip the 'fluff.' Millenials don’t want numbers thrown in their face all the time. “This surprised me,” Carson says. Nor do they want to be schmoozed the way older investors do. But they want the essentials when they want them. “If they want to know how they are doing at 2:30 in the morning on Christmas Eve, they want to know,” says. “They don’t want a lot of fluff.”
  • Contact clients first. Don’t fail to communicate by making your clients contact you. When, for example, a government shutdown happens, let them know how this will or will not affect them.
  • Focus on clients, not the firm. Don't talk too much about your firm. Talk about what you will do for your clients. Carson says he’s given up on the traditional elevator pitch in favor of something he calls the “stair step question.” Now when a prospect asks him what he does for a living, he says, “Can I answer that with a question?” And after receiving the go-ahead he asks them, “When you think about your wealth and all you’ve got going on with your life, what would you change?” Immediately, he says, the prospect begins describing the “pain points” in her life and how she wants to fix them. And Carson responds to those concerns by saying, “That’s what we do.”
  • Ask what clients need. Once he’s got a prospect interested, Carson says he asks them, in order to become a client, “What information would you need to move forward?” Asking and answering both the stair step and the second question gives prospects exactly what Carson says his panels have said they want out of advisors.

To get similar insights into their own practice, Carson urged all the 50-some attendees at his talk to form client advisory councils at their practices and ask them for detailed feedback on their practices.
“You will get more referrals from them,” he said, “and they will tell you exactly what you need to do to improve.”

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