In a previous blog, I talked about how financial advisors achieve exceptional client outcomes when they have a unique combination of great technical and communication skills, along with radical honesty.
Last week, I wrote on the subject of technical skills, and this blog will be addressing what great communication skills look like.
I’ve been reading, thinking, writing, and working on listening and communication skills for many years. I have said, and continue to believe, that it is the single most misunderstood, underdeveloped, and underutilized skill in the world.
I don’t know why that is, but I’m guessing it’s because we were trained in “presentation skills” and, therefore, spend most of our time in “presentation mode” when we really should be in “counseling mode.”
When you listen and allow others to talk more, they get a neurological buzz! And it allows them to tell their story and find their own best answers.
By applying the below communication skills, you’ll be much better positioned to serve and help your clients because you’ll understand them so well.
To find out about a person, you ask questions and they talk. You can find out more about them by the stories they tell. You can find out what’s important to them and what they’re worried about.
- Who are they as people?
- Are they ego-driven or fear-driven?
- Are they talkative or withdrawn?
- Are they relationship-focused or outcome-focused?
- What have their experiences with financial services been like?
- Are they dominant or submissive?
- Are they trusting or more reticent?
- Are they warm or standoffish?
These characteristics give you, the advisor, important information about how to engage with each unique client.
The Art of Discovery is all about asking great questions. And not just to discover their tangible needs (i.e., I need enough income to live on in retirement), but intangible ones.
- Do I need to respond to their fear or their overconfidence?
- Are they looking for someone to rationalize their current position or to challenge the status quo?
Regardless, 95% of people’s decision making is based on emotions, not facts, figures, and charts. According to some recent research1, allowing people to talk about themselves stimulates the same region in the brain that is activated by good food, sex, and cocaine. This can create powerful outcomes because you’ve listened to their story!
Develop a Solution
With props to an article by Morgan Housel, one of the most important things for all financial advisors to understand is that there is no one correct academic answer for any financial planning question.
In fact, there are multiple correct answers for every financial planning question. The best answer will be determined by you and your client through the discovery process. This is because it all depends on your client—their dreams, fears, hopes, biases, and prejudices about saving, spending, investing, and debt. As one of my friends is fond of saying, personal finance is way more personal than finance!
Deliver the Solution
Here is where things get really interesting.
- Dilemma #1: Extraordinarily complex world with far too many choices: more than 6,000 open-end mutual funds, over 1,500 ETFs, and literally hundreds of separately managed accounts, not to mention more esoteric offerings like structured notes and equity indexed annuities.
- Dilemma #2: Communicating these options in a way that gets results—one that does not overwhelm or condescend.
How do we manage these two competing dilemmas?
These competing dilemmas require a different kind of advisor/client relationship—one that I believe is described extraordinarily well in a book, interestingly enough, about the doctor/patient relationship.
In Atul Gawande’s book Being Mortal, he recounts reading a paper by two medical ethicists (Ezekiel and Linda Emmanuel) about the different types of clinical relationships doctors might have with their patients. The corollary is astounding!
These are the roles Gawande wrote about:
1) Paternalistic – Authoritative
We (the doctor or advisor) have the knowledge and expertise. We make the critical choices. We only tell you what you need to know. If there were a red pill and a blue pill, we would tell you “take the red pill, it will be good for you.”
2) Informative – Opposite of Paternalistic
We will tell you the facts and figures—the rest is up to you.
- “Here is what the red pill does.”
- “Here is what the blue pill does.”
- “Which one do you want?”
We are the technical experts, you are the consumer. We supply knowledge and you make the decisions, which works great when:
- The choices are clear.
- The trade-offs are straightforward.
- People have clear preferences.
- They are able to think clearly.
Easy if you are at Baskin Robbins, harder buying a vehicle, and nearly impossible when deciding on a treatment plan for cancer or planning for retirement!
In truth, neither is what people want. We want information AND control, along with guidance, which is the 3rd role:
3) Interpretive – The professional’s role is to HELP people determine what they want, what experts call shared decision making.
- What is most important to you?
- What are you worried about?
- What are your experiences, biases, and risk attitudes?
- What are acceptable trade offs?
I believe that Interpretive delivery is the single most important skill that most advisors, medical or financial, need to develop. It is the essence of Goals-Based Wealth Management—helping clients find their own best answer.
Stay tuned to the next blog about one of my favorite topics—radical honesty!
1Samantha Boardman, “Why We Love Talking About Ourselves,” Psychology Today, March 17, 2017, http://www.psychologytoday.com/us/blog/positive-prescription/201703/why-we-love-talking-about-ourselves.