"As important as values are, most people are not particularly good at articulating them."

Digging Deep

By John Bowen

The financial advisors achieving the greatest success in our industry are those who are true consultants to their clients. These are advisors who work in real partnership with their clients over time. They use an in-depth discovery process to uncover their 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.

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All of this 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 for the advisor.

The consultative approach stands in direct contrast to the investment generalist approach so many advisors still use. After undertaking 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 the appropriate product recommendations. The transaction is then 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. Investment generalists gather facts—that a client wants to send his daughter to an Ivy League school and retire in 10 years, for example. Consultants discover what really makes their clients tick—their biggest motivators, greatest joys and hidden fears.

THE TOTAL CLIENT PROFILE

To gain this level of understanding, advisors should use a comprehensive discovery process to create a total client profile. This is a picture of the seven critical areas in which you must have a thorough understanding of your clients in order to serve them well.

Values. What's most important to the client about money?

Goals. What are the client's personal goals? Professional goals? Where would the client ideally like to see himself or herself at age 55? 65? 75?

Relationships. What family member relationships are most important to the client? How important are relationships with co-workers? How important are relationships with people in the community?

Assets. What are the client's investment holdings? How are they structured? What new assets does the client expect to receive in the future?

Advisors. Does the client have a lawyer? An accountant? What have been the clients' best and worst experiences with the other professional advisors in their lives?

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?

Interests. What are the client's hobbies? Charitable causes? Favorite sports teams?

You'll notice that assets—the one topic on which investment generalists do well—doesn't come first on the list. Instead, it's after the other areas that are more important to clients: their values, their goals and their relationships.

TALKING VALUES

In fact, one of the most important conversations you can ever have with your clients is about their values. Why are values so powerful? Because they are one of the core motivations for everything we do in our lives. They have a profound impact on every important decision we make, from what we choose to do for a living to whom we marry to how we spend our free time—in short, who we are as people.

For example, most people who are parents would tell you that they value their children above almost everything else in the world. As a result, they want to protect them, to educate them well and to set them off on a smooth path in life. Financially speaking, one of the things many of these parents want to do is build an adequate college fund for their kids' higher education. This is a common goal known to most advisors. But underlying that goal is the fundamental value of parents loving their children.

However, as important as values are, most people are not particularly good at articulating them. While they act definitively on their values, most people have not necessarily thought deeply about exactly what those values are. So when you ask your clients to identify their core values, you not only uncover exactly where your own focus should be in assisting those clients, you also help them to clarify their own direction and what it is they want to achieve in life.

This can be an enormous benefit to clients. Most find it personally fulfilling. While they may have been drifting before in some aspects of their lives, many find that they develop a laser-like focus on the things that most deeply matter. And they are able to assess whether what they are currently doing really aligns with their values. Some find that change is called for. Others receive welcome confirmation that they are on the correct track.

DRILLING DOWN

Because people are not good at articulating their values, you need to use a systematic process to uncover them. This process grew out of work done by social psychologists and developmental psychologists during the late 1960s and early 1970s. As an industry, we're indebted to Bill Bachrach and his "values-based selling" approach for making this work on values clarification accessible to financial advisors.

The process begins with the question, "What's important to you about money?" Assume, for this example, that the client answers, "Security." You would then ask, "What is important to you about security?" If the client responds, "Knowing that I can take care of my family," you would then ask, "What is important to you about taking care of your family?"

You continue uncovering the client's values in this way until you think you have heard his or her final answer. Then you ask the confirming question: "Is there anything more important to you than (the last value mentioned)?" If the client says "Yes," then ask, "What is more important?" and continue with the questioning format. Once the client answers "No," you will most likely have uncovered the client's single most important value.

While this is straightforward on the surface, it's important to realize that it takes skill to drill down to the client's most important value. In fact, most advisors tend to be able to conduct only partial values conversations, ending them before the core values have been identified.

It's useful to know that there are generally three levels to every values conversation:

Level one. This level is about the lower self, including issues such as security, financial freedom and freedom from worrying about having enough money to pay the bills.

Level two. This level is about how clients feel toward others, including family, friends and community.

Level three. This level is about the higher self, including issues of faith, destiny and reasons for being.

Many advisors end the values conversation at level two, or even level one. However, you have to persevere to level three, where a client's deepest motivations are to be found.

You can encourage the client to move to the next level by matter-of-factly observing, "We're not done." You'll usually know that the client has reached level three and that the conversation is nearly over when he or she moves into abstract, or even esoteric, territory. You want to reach a point where you are talking about something that deeply inspires the client.

PRACTICE MAKES PERFECT

Conducting conversations that effectively clarify a client's values requires good inquiry skills. The best way to sharpen these skills is through role play and practice. Walk through the values discussion with your spouse (you may be surprised at what you learn), with trusted peers and with your staff.

As you do this, be conscious of the emotions that come up in the conversation, both in you and your practice partner. Most of us have a tendency to veer away from topics that arouse deep feelings—thus the unwritten rule: Never discuss religion or politics in public. But in the values conversation, you need to pay close attention to the client's feelings because they are the best indicator of what is most important to the client. So when your partner uses "feeling" words—happy, sad, worried, afraid, relieved—take these words as your cue to inquire more deeply into that topic.

While you practice values clarification through role playing, strive to remain open to whatever you are hearing. The last thing you want to do is argue with someone about their values. Listen—don't judge. The values conversation is about the client—it's not about you.

Another way to improve your values clarification process is to enlist the help of a professional coach. Because coaches are trained to help their own clients to clarify their values, they are well suited to pass these skills along to you. If you don't already work with a coach, you can certainly hire one specifically for this.

Once you are proficient at helping clients determine what their deepest values are, you'll have a solid basis for building trust and lasting client relationships. At the same time, it will enable you to uncover what's most important to your clients so that you can help them make the best possible choices. This is where a true consultant excels.