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In the Netflix series “Ozark,” a sleazy financial adviser converts an initially skeptical prospect into a client. His sales pitch falls flat, but as he’s leaving he compliments the prospect’s artwork on the wall. That does the trick.
The scene exposes the faulty reasoning that drives some investors to make foolhardy financial decisions, like giving money to an adviser who ladles out flattery.
This raises the issue of how a savvy shopper should evaluate and select a financial planner. The basics of vetting advisers includes: check background and credentials; ask if they’re a fiduciary and find out how they get paid (such as on commission or as a percentage of assets under management).
Recommendations from friends can be useful, or perhaps the adviser specializes in serving a niche of clients who fit your profile. Maybe you want an adviser to use cutting-edge technology and run a virtual practice. Then there’s pure gut instinct, which is influenced by rapport and personal chemistry.
“Trust your emotions and, if possible, involve your spouse and your [adult] children to get their perspective when interviewing advisers,” said Donald Moine, a sales and marketing psychologist in Palos Verdes, Calif. “If you sense the adviser is only interested in the size of your wallet or is just going through a fairly robotic discovery process, that’s a red flag.”
As a test, ask a question and note how the adviser responds. Examples include, “How do you conduct investment research?” and “Can you give me a rough breakdown of the type of clients you work with?” Ideally, you should receive a succinct, specific answer.
An adviser who strays far afield from your question — and rattles on about extraneous matters — may leave you bored and impatient. Beware of people who force you to interrupt to get a word in.
As for advisers, Moine, the author of many books on sales and persuasion, urges them to slow their voice tempo and listen attentively. Frequent pauses allow prospects to chime in and steer the conversation. “Because there’s a lot of pressure to convert prospects into clients, advisers sometimes rush and do too much talking,” he said. Advisers may also revert to technical jargon that sows confusion.
In introductory meetings, Moine suggests that advisers ask open-ended questions of prospective clients, such as “What would you like to know about me?” This enables prospects to discuss what matters most to them, while also giving the adviser a sense of the individual’s concerns and needs.
Another informative question is “What are you ideally looking for in your next relationship with a financial planner?” “The answer may give advisers a sense of what went wrong with the last one,” Moine said. “Switching advisers can be very stressful, and most investors don’t do it unless they’ve had a bad experience.”
The most professional advisers establish trust and then show how they can meet your needs. While there’s no single way to earn someone’s trust, advisers who understand what’s required will listen attentively, maintain friendly eye contact (avoiding distractions such as glancing at a phone or computer screen) and cite their experience (including mistakes and lessons learned).
Patrick Brewer, chief executive of the Model FA, a platform that supports advisers, encourages clients to “ask good questions to identify, clarify and meet the prospect’s need. Listen and diagnose their problem on a practical and emotional level before you try to solve it. Don’t jump to giving advice.”
Brewer also coaches advisers to offer a freebie to potential clients they would consider valuable. That’s what he does with prospective clients in his own financial advisory practice. “We call it a ‘give to get’ offer,” Brewer said. “We give them something for free, such as a Social Security analysis, to demonstrate our credibility. It may be just one element of a bigger picture, but they appreciate it.”
Read: The coronavirus recession is destroying millennials’ retirement dreams and they need to act now
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