Let us face it. Often, the only thing between you and that much desired cheque from a client is a few tough questions. Hence, a key skill that advisors need to master is to deal with tough questions.
In fact, at all stages of dealing with a client - prospecting, gathering client data, preparing a plan and servicing, you face a number of questions, sometimes simple and sometimes tough questions which can catch you unaware. We asked a few advisors to find out which were the toughest questions asked by their clients.
Why should I hire you?
Clients have many advisors to choose from and you have to stand out from the crowd.
While not many people asked this question to advisors in the past, now, advisors say that some discerning clients have already started asking them as to what is their ‘differentiating factor’.
So what is the differentiating factor? Basically, clients look for advisors who have strong professional expertise. They are looking for an advisor who can take leadership and be able to use his expertise to guide them through sound financial planning. They want you to apply your knowledge to their unique circumstances.
To set yourself apart from your competitors, you need to be a guide and able to understand your clients on where they want to go, which is the safest and the most effective route to be there and help them in leading that way.
Even if you learn any course that teaches financial planning, your unique value proposition comes from within. Your work ethics, your ability to empathize to certain situations differentiates you from your peers.
You need to clearly distinguish yourself others. Explain to them your style of work and the services offered by you which others don’t offer. Share with them some testimonials which will prove your credibility.
What if I don’t get my expected returns?
This is perhaps the toughest question asked by clients. In a country like India where majority of the population prefers to invest in bank deposits and other safe instruments, selling a market linked product like mutual fund can be a tough task.
Advisors need to explain this as practically as possible. Suresh Sadagopan of Ladder7 Advisories says, “I have always faced this question and it cannot be answered in a simple way. Clients are impatient. They even expect us to give data of returns after 4-5 months. We make them understand that diversification will protect the portfolio from downside risks and offer good returns.”
One way to deal with this question is to ‘underpromise and overdeliver’. It is common human psychology to get overexcited when you see things going as per plan. You then start overcommitting which raises expectations from the clients.
Let us say, in a bull market, your recommended funds delivered 25% in a year. In such a scenario, some take the easy path and start extrapolating from a one-off result. Moral of the story: While you may not be in control of the fund performance you will do well to set client expectations right from the beginning. Show your clients the past returns by all means and how equity mutual funds can outperform other asset class over a long term. However, you have to caution them that the returns from mutual funds are not guaranteed and come with attendant risks.
Why are you recommending fund A over B?
Clients may feel that there is some personal benefit of the advisor in making them choose a particular fund over another one.
Rajesh Hattangady of Thiink says, “While choosing funds, an advisor follows various processes to track the history and the performance of the schemes before recommending it to any client. He needs to convince clients that the suggested products will help in fulfilling the financial goal as desired. Every product is unique and has its core strengths and will add value to the portfolio when chosen and combined with other funds intelligently.”
You should tell clients that a fund is not good or bad in itself. Each fund is different from other and the fund recommended by you is according to the risk profile of the client. Also, unlike insurance agents who are tied to a single company, you can tell them that you are empanelled with a number of fund houses which gives clients a wide variety of choices. This will establish that you are unbiased.
Do you invest in the funds which you recommended us?
Practice what you preach. Interestingly, this is the most common thought among clients. Clients always expect you to invest in the products you recommend to them.
The answer differs for different advisors depending on the circumstances. “Every advisor has a different philosophy which he needs to explain to his clients. It depends on how you pitch the products to them. Though, I believe investing in products before recommending them to my clients. I make them understand how I evaluate and filter schemes. This makes my work simpler,” adds Paresh.
However, it is not a thumb rule that you have to invest in all the products which you recommend to clients. For instance, if you are recommending a PMS or real estate investment, which entails high ticket investments, it won’t be feasible for you to invest your money.
But you can tell them that you have invested your money in mutual funds and you recommend the same schemes to them.
In fact, many advisors who have just started their practice are increasingly adopting this practice to gain the trust of prospects. For instance, Gajendra Kothari a Mumbai based advisor shows his personal account statements when he meets prospects.
Amit Bivalkar, a Pune based advisor says, “Invest client money in products which you would have sold to your family members. We invest our own money in schemes which we recommend to our clients.”
To conclude, every advisor deals with different types of clients. Thus, anticipating and preparing your script well in advance will help you deal with some of these questions.
We hope the above points will help you deal with some of these questions posed by your clients.
Key Takeaways
- Distinguish yourself from your competitors. Make your brand clear.
- Manage unrealistic expectations of the clients
- Substantiate that your advice is unbiased and not for the purpose of selling products
- Try to invest in the funds you recommend
Do let us know what kind of questions clients ask you.
