Being a financial advisor is quite challenging as there are many professional advisors trying to sell the same product. So what would set you apart from your competitors?
Although asking questions is the first step to break the ice with the new clients, it is crucial to ask the right set of questions at the right time. You generally have to prepare a list of questionnaire for various stages of dealing with a client - prospecting, gathering client data, preparing a plan and servicing. We asked a few advisors to find out which are the important questions they feel advisors should ask the clients.
What does money mean to you?
An interesting way of starting a conversation is by asking the importance of money in your client’s life. The answers to this question can vary substantially. Nitin Sawant of NS Wealth Solution says, “Before understanding their financial goals and aspirations, it is important to understand their value of money in their life. We meet different clients, some maybe facing financial crisis, and some maybe living a very luxurious life. Asking this question at the very first meet will help you in making the financial plan more effectively.”
What are you saving for?
Try to figure out the motive of the client and assess what are they are saving for. “Generally, we ask this question which helps us in making a flowchart of the needs and desire a client has. Suggesting a financial plan becomes easier when the goal is clearly defined,” suggests Shifali Satsangee of Fundsvedaa.
What is your risk tolerance?
Alan Parisse and David Richman in their book ‘Questions great financial advisors ask’ write, “Great advisors not only manage the client’s portfolio but also recognize their tolerance for uncertainty and loss as it relates to money, and then successfully use that risk to their client’s financial advantage.”
Ramesh Bhat of Aniram advises, “Ask your clients what percent of loss in your overall portfolio will cause you great personal discomfort? Both the advisor and the investor need to understand how much risk he (investor) can tolerate before making any investment.”
However, it is important to understand that some degree of risk is a necessary part of successful investing. “Explaining to clients about risk makes them restless. You need to comfort them by explaining that it is an essential element for the portfolio to grow. Educate them about diversification, and prepare a right mix of products in the portfolio. This will also help you in preparing the right asset allocation,” adds Ramesh.
Go deeper: ask questions that engages clients emotionally
A financial advisor should possess many skills. Your business relies on how effectively you communicate and persuade the clients. Ask questions that engages clients emotionally. What was your biggest financial win/loss? How did you feel about it? Can you recall your earliest memory of money and of investing? Does anything about money keep you up at night? By asking such questions, clients feel satisfied that you are interested in listening to their stories.
While addressing at Cafemutual Confluence 2015 event, Karan Datta, CBO, Axis MF said, “When you talk about financial planning, you are talking to them about money and finance which relates to numbers. But instead of confusing the clients, you should communicate with them in terms of lifestyle and dreams. We cannot acquire clients if we do not communicate with them emotionally. Numbers will only make sense when we relate them with the everyday happenings in our lives.”
Ask questions related to the client’s background
“Another great way of understanding a prospect is by asking questions something of a background nature, about his business or career. For entrepreneurs, the question could be, how did you build the business? Similarly, for doctors, how did you establish your practice? If the client has a family, start the conversation by asking about their family,” states the book, ‘Questions great financial advisors ask’.
Thus, the art of asking the right questions is important, satisfying and rewarding at the same time. This will create an atmosphere of trust and satisfaction for the investors.
