Profit From a Consultative Approach

Itís not what your clients want to invest in. Itís understanding what makes them tick.

July 12, 2007
by John J. Bowen, Jr.

CPAs and other advisors who are achieving the greatest success in a financial advisory capacity today are those who are true consultants to their clients. How do they do it? They work in real partnership with their clients over time. They use an in-depth discovery process to uncover clients’ most important financial values and goals — which enables them to learn how to best serve each client. As they work in close consultation with their clients, they build lasting relationships and cultivate enduring trust.

The consultative approach stands in direct contrast to the investment generalist approach still employed by many advisors. After using a relatively brief fact-finding process — typically a checklist of questions about the client’s investment goals, time horizon and risk tolerance — the investment generalist makes appropriate product recommendations. The transaction is completed and the advisor-client relationship usually never goes any deeper.

The success of the consultative approach hinges on the advisor’s ability to understand the client on a deep level. This understanding goes beyond the facts that investment generalist gathers — that the client wants to send his daughter to an Ivy League school and to retire in 10 years, for example — and instead goes to what really makes the client tick — the biggest motivators, greatest joys and hidden fears.

To gain this level of understanding, use a comprehensive discovery process to create a Total Client Profile. This is a picture of the seven critical areas where you must have a thorough understanding of your clients in order to serve them well.

  1. Values. What’s most important to the client about money?
  2. Goals. What are the client’s personal goals? Professional goals? Where would the client ideally like to be at age 55? 65? 75?
  3. Relationships. What family member relationships are the most important? How important are relationships with co-workers? With people in the community?
  4. Assets. What are the client’s investment holdings? How are they structured? What new assets does the client expect to receive in the future?
  5. Advisors. Does the client have a lawyer? A banker? Another accountant? What have been the best and worst experiences with other professional advisors?
  6. Process. How involved does the client want to be in managing his or her finances? How often does the client want to hear from you? Does the client prefer contact via phone, email or face-to-face meetings?
  7. Interests. What are the client’s hobbies? Charitable causes? Favorite sports teams?

The discovery process pays a substantial dividend: more satisfied clients who are more likely to provide both additional assets to manage and qualified referrals. This in turn leads to greater revenues and ultimately, higher net income.

John Bowen is the Founder and CEO of CEG Worldwide, LLC, a leading research, publishing and consulting firm serving independent financial advisors, CPAs, insurance representatives and registered investment advisors. Download the latest research from CEG Worldwide or learn more about our coaching programs for financial advisors.