No two clients are exactly alike. People generally get a financial advisor for a number of reasons. Therefore, you need a flexible process in place when it comes to approaching different prospects in accordance with their reasons for seeking financial advice.
Here are some cases when people get a financial advisor, along with their reasons for doing so and some recommendations on moving things forward.
1. A couple just started a family or has a young child
The average cost of raising a child has soared, with parents spending $233,610 on child costs until a child reaches the age of 17. Mind that this figure doesn’t include college fees. Faced with this monumental burden ahead, a young couple could be motivated into seeing an advisor.
When you sit down with this type of prospect, you need to create urgency by giving them a financial reality check. Point out that just one year at college is equivalent to the cost of a new car. Do they have plans in place to pay this when the time comes? Will they rely on a lump sum or a savings plan, or will they have enough cash to ‘pay as you go’?
While college may seem a long way off, their three-year-old will be starting there in just 180 monthly pay check’s time. That’s a startling thought.
Get them to reflect about what would happen if the money isn’t available. Would they have to rely on family, take out a loan – or forgo further education for their children?
2. A couple is facing retirement
You are probably routinely approached by people in their 40s asking for your advice about how to retire comfortably at age 65.
Firstly, ask them ‘how much money do you want to live on when you retire?’ They will invariably reply that they want to live on the same money they earn now. And with that money they want to travel, buy a condo and experience a life of leisure.
You need to point out that, due to inflation, in 20 or so years’ time they will need far more than their current level of wages to fund their retirement. In fact, they could need double or triple that amount.
And while twenty years seems a long time off, they have just 240 pay checks left in their life to amass this level of funding. If they don’t start saving right away, they will have nowhere near enough money in the bank to fund their retirement.
3. A woman has just lost her husband
Many recently widowed clients seek out a new financial advisor, perhaps feeling their current advisor didn’t address their grief, or concerns. This is where you can step in and become the financial advisor they need.
In the first meeting this type of client may feel intimidated by the investment process. This could be because their partner was most likely the one who took care of their financial affairs.
These clients won’t be focused on money or the markets. They simply want reassurance that you will look after them and their assets, and ensure they are financially secure. So, don’t talk about numbers or products, instead talk about goals. Listen, learn, show compassion and they may well choose to work with you.
4. A client feels he or she is no longer qualified to manage their own money
You may come across a client who has managed their own finances but has decided their situation now warrants outside help. By handing their finances over to you, they are reluctantly handing over the reins.
In this case you need to help this client overcome his or her fear of losing control. Tell them that they are not losing control of their money, it’s simply a case of rearranging the ’furniture’ in their ‘financial living room’. They are not throwing anything away, but simply moving their assets into a preferable arrangement. They will retain control, it’s just their money will be better placed.
You also need to get across that you manage money for a living; it’s what you are good at. By continuing to run their own account, they could be putting their own and their family’s future financial security at risk.
When you meet with prospects, it’s essential to ascertain their reasons for getting a Financial Advisor. Whether they are thinking about saving for college fees or retirement, or their personal circumstances have changed, it’s your job to uncover these reasons and address them.
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