Several decades ago, a good friend of ours came down with a mysterious illness. It began as the flu, with brain-splitting headaches, dagger-like low-back pain, and scorchingly high fevers. Within several weeks, those symptoms got better, but chronic ailments persisted: lack of appetite, unusual bruising, no energy, nausea.
After being out of work for weeks, our friend decided to see an infectious-disease specialist. After an initial visit, the doctor said he had a hunch, but needed to do a full physical and lab workup before confirming a diagnosis. While our friend was at the front desk, the doctor sternly warned him not to miss the appointment. Reason? It was a big block of time he couldn’t fill at the last moment.
In that instant, he realized the doctor wasn’t in medicine to serve others; he was in it to serve himself financially.
As it happens, the doctor made the right diagnosis and with the right medications, our friend eventually recovered. But he never went back to that office or referred others to the doctor. He didn’t like his attitude . . . or his heart.
This is a common scenario in financial services. Advisors bring ulterior agendas to their initial prospect meetings. They push to close sales without really understanding a prospect’s needs. They allow their conflicts of interest to color their recommendations, giving rise to fiduciary and suitability concerns. In short, they’re self-centered rather than client-centered, a difference people are quick to notice.
Like our friend’s doctor, self-driven advisors may see a lot of prospects, convert a reasonable number into clients, and generate substantial first-year commissions. But scratch below the seemingly successful surface and you may find a practice with poor persistency (and weak trailing commissions), limited cross sales, and a lousy reputation in the community. They’re walking placards for the proposition that if you’re in this business for yourself, you may not be in it for long.
So what does a no-worry advisory style look like? It involves putting clients at the heart of your practice in every way. It involves a robust commitment to comprehensive fact-finding, a full embrace of the new Department of Labor fiduciary standard (when it goes live next year), and a by-the-books approach to product suitability.
The payoff for being client-centered: more income, more referrals, fewer E&O insurance problems, and a stronger professional reputation. A slam dunk in every respect!
As with prior articles in this series, getting to a no-worries position demands both ethical values and compliance rigor. Here are some ethical pointers that will move you in the right direction:
- Sell clients only what they need, not what you need to sell financially.
- Commit to multi-meeting fact-finding that probes the full complexity of prospects’ financial and personal lives.
- Use skilled open/closed and direct/indirect questioning techniques that uncover core needs and risk tolerances.
- Rely on empathy and attentive listening to hear the problems and concerns beneath a client’s words.
From a compliance perspective, these pointers should be equally helpful:
- Commit yourself to a 100 percent fact-based selling style; never misrepresent what a product does or what it costs.
- Use a printed or electronic fact-finding form to guide your interview and record prospect answers in order to minimize future E&O insurance problems.
- Only use approved sales aids to illustrate key product concepts.
Because when all is said and done, putting your clients at the heart of your business may well be the most powerful way to accelerate its growth and assure its future, while minimizing its E&O insurance risks. To serve yourself best, you should always serve others first!
For information on affordable E&O insurance for low-risk insurance agents, investment advisors, and real estate broker/owners, please visit EOforLess.com. For information on ethical sales practices, please visit the National Ethics Association’s Ethics Center.