Why one “nice” financial advisor lost two clients!

Recently I had an interesting conversation with a young woman. We were talking about financial advisors when I mentioned that advisors will have to justify their fees by actually delivering service once new fee transparency rules come into play. I was not prepared when she said, “what does ‘providing service’ mean?”

I had to think for a while before I started listing the usual: listen, be respectful, meet on a regular basis, complete a financial plan, etc. But even as I was saying it, I realized how meaningless this was to her. What I was listing was the minimum level of service that any financial advisor should provide, certainly not enough in many clients’ eyes to justify, in some cases, high fees.

So instead I told her about an old friend who engaged a “young” financial advisor after her husband passed. When I asked her how it was going, she told me she loved him. She said, “he treats me like his mom. He knows I need an income from my investments but he also knows I am alone without family near by so he calls me regularly. He set me up with an accountant and a lawyer”, she continued, “and he asks about my health. He even told me I had enough money to hire someone to shovel my walk in winter – that I should save my back.” Now that’s service, I thought!

In contrast, I told her about an advisor who thought he was providing service. He was polite and attentive but sometimes didn’t listen enough, especially when he was rushed. Not long ago, he gave the exact same plan to two women, who happened to be close friends – a fact he had forgotten. While their ages and net worth were similar, their life circumstances couldn’t have been more different. One had an ailing husband and children who would probably need financial help. The other only had one child who was doing extremely well and her husband was younger than her. Needless to say when they compared their plans they weren’t happy. They both fired him. Providing a cookie cutter plan is not service, no matter how nice you are.

“You know, when you put it that way, I get it,” said my young friend. “Personally, I would love to find a financial advisor who knows my family well enough to remember our eldest is off to high school or one who can tell me whether it makes financial sense for me to take a part time job and work until I’m 65, instead of 60.”Take away

When it comes to providing service, it is about far more than being polite and delivering a template as a plan. You have to take the time to really get to know your clients and engage with them on a very personal level.

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