Speaking to Clients in a Way They Understand

Published by Judson M. Stone, Director - Senior Account Executive, Business Development
August 4th, 2017

The financial industry is known for its complex lexicon. Advisors and other insiders often converse exclusively using terminology most personal investors do not understand. Much of their jargon pertains to topics like interest rates, assets, and risk. Words like attribution, beta, alpha, and standard deviation routinely surface in reporting applications and presentations, and they are often lost on clients.

By shifting vocabulary from financial jargon to common language, advisors have an opportunity to transform the dynamics of their relationships with clients. Focusing on goals-based storytelling sans the highly technical language can be a game-changer for both sales and retention.

The Buzz on Buzzwords

For financial advisors, jargon is part of the gig. Wealth management is a highly technical field, so financial professionals are schooled and tested using specialized terminology that describes and supports their discipline. Statistical measures are used to implement and prove financial theory, so advisors become well versed in the technical vocabulary they need to excel while achieving their credentials.

Advisors carry this lexis with them into their work, not only because it is functional, but also because it is comfortable. Technical terminology becomes second nature to advisors as they use it to track statistics and analytics and to define the best methodology for implementing an investment strategy. When they are immersed in their business, advisors rely on a specialized lexicon to be effective at their jobs.

Advisors are also hyper aware that they are measured and evaluated on their understanding of the industry. Choosing to speak with a degree of complexity is an advisor’s way of proving expertise to investors. When it comes to client relations, it is easy for advisors to lose sight of the ways communicating in common terms the client understands can deliver much greater value.

The Problem with Jargon

Financial jargon is a useful tool for advisors serving clientele in institutional businesses with complex investible assets. It also helps personal wealth stewards showcase their expertise to win investors’ confidence and earn their business. Using jargon also can help advisors differentiate themselves from competition.

But beyond the early stages of the advisor-investor relationship, insider lingo can do more harm than good. It can be extremely confusing to clients, preventing them from being able to make informed choices with their investments. Without a firm grasp of how their assets are being managed, clients struggle to set appropriate expectations and comprehend their results. When investors are left in the dark, misunderstandings can snowball and clients may lose faith in advisors.

When relationships with investors falter, advisors have to spend significant time and energy just retaining their business rather than growing their accounts. Without investors’ trust and confidence, it becomes extremely challenging for advisors to present clients with new products and better tools that could help them grow their wealth.

Simplifying the Story

By minimizing jargon in client communications and focusing financial discussions on investors’ goals, advisors can nurture trust and foundational understanding that helps them grow their clients’ wealth. While investors may not know alpha from beta or understand the technical terms associated with risks and returns, they have in-depth understanding of their own financial goals. Goals-based storytelling strikes common ground and emphasizes investors’ most important priorities.

When advisors focus reporting and communications on investors’ goals, the conversation is personalized to the investor. Attention shifts from how well the advisor is performing against the market and competition to how aligned he or she is with client goals. Goals-based reporting shows exactly how advisors’ decisions are helping to advance investors’ objectives. It enables clients to pinpoint where they are on the path to meeting their financial goals.

The heightened understanding cultivated through goals-based storytelling strengthens advisor-investor relationships and continually builds trust. When investors have a high level of trust in their advisors, their relationships endure through periods of both growth and challenge.

Tools for Goals-Based Reporting

In today’s marketplace, few technology solutions do a thorough job of supporting goals-based reporting. Within legacy platforms, it is difficult to track progress towards financial plan objectives because most tools only emphasize performance reporting.

First Rate’s CORE solution offers a flexible alternative. It enables the advisor to input a set of metrics, determined by an investor’s financial plan, from which monthly, quarterly, or annual reports can be created and presented to the client. This goals-based reporting capability lets advisors track clients’ progress toward their objectives, and it works alongside a performance reporting feature that shows clients how advisors are performing against their peers and market benchmarks.

The dual reporting capabilities featured in First Rate’s CORE solution empower advisors to provide clients with relevant reports that both support their relationships and capture the performance data that underscores their aptitude.

About the Author: Judson M. Stone, Director in Business Development, has been with First Rate since 1995. Jud works as an Account Manager developing new and current opportunities with prospects, clients and strategic partners. Stone has served in multiple groups at First Rate, working as a Performance Analyst, Product Developer, Business Analyst and most recently as Development Manager in Professional Services. Connect with Jud on Twitter @judson_stone and on LinkedIn.

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