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What Clients Need Isn’t What They Want | Wired Advisor with Brendan Frazier

By Brendan Frazier, Chief Behavioral Officer at RFG Advisory

The increased awareness and interest in behavioral finance has started to shine a light on the fact that behavioral coaching is valuable when working with clients.

In fact, there have been numerous studies conducted with the goal of quantifying the value of an advisor. We’ve had Vanguard’s Advisor Alpha, and Russel Investments’ “Value Of An Advisor” study.

And in each of these studies, the top “value-add” derived from working with an advisor boils down to the behavioral coaching element. It’s worded differently in each study, but basically, the most valuable thing an advisor does is help clients behave the way they are supposed to.

Naturally, in a profession where value is in the eye of the beholder by means of offering an intangible product, we all want to be able to quantify our value (both for our own validation and the client’s.)

Yet, the numbers show that most advisors don’t actively promote this value:

  • 83% of advisors don’t include information about personal coaching or life planning in promotional or marketing materials
  • 72% of advisors don’t discuss the role of coach or counselor during an initial contact

But if it’s’ the most valuable component of our work, shouldn’t we be actively communicating this value to our prospective clients?

“Hey Mr. Client, if you want to retire in 5 years, you’ve come to the right place. We’ll build a plan to get you there and show you how to invest. More importantly, though, I’ll help you do the things you need to do and avoid the things you shouldn’t!”

Think about these dynamics from the vantage point of another industry: personal training.

Ask someone why they want a personal trainer and the first thing they will say is: “I want to lose 20 pounds. And I need someone to show me the workout and nutrition plan to get me there.”

Here is what they won’t say: “I want to go to a personal trainer so that I can actually get out of bed in the morning when my alarm goes off and to make sure I do a few extra reps when I’m tired.”

But ask any personal trainer the value they provide their clients, and they’ll tell you it’s accountability and getting people to do the things they don’t want to do on their own.

What We Want Versus What We Need

There’s a difference between what people want and what they need.

The personal training client wants someone to help them lose 20 pounds, so they have the energy to play with their kids and not feel exhausted.

What they need is someone to help change their behavior and stick to the plan that will get them there.

As an advisor, you know exactly what clients need. But what do clients actually want?

If they want someone to act as a behavioral coach, then you should undoubtedly broadcast to clients that you’re a behavioral coach.

Fortunately, Morningstar and the Financial Planning Association conducted a research study seeking to identify the attributes that clients value most when working with an advisor.

Unfortunately, it clearly revealed that financial advice clients see the behavioral elements in the same light as personal training clients.

Give Them What They Want and Slip In What They Need

So how do we reconcile this situation where clients don’t want what they need the most?

We take a page out of the parenting playbook in the chapter titled “How to Get Kids To Eat Their Vegetables.”

Put broccoli on a child’s plate and they won’t touch it. So, you have to find ways to slip broccoli in without them noticing. You put spinach in the smoothie.

If you’ve never had a smoothie and added spinach, it’s truly a fascinating experiment. No matter how much spinach you pile into the blender, you simply can’t taste it. But it’s still packed with all of the health benefits and nutrients.

Give them what they want and slip in what they need.

Here are a few as examples (And I’m not even going to mention keeping someone from selling when the markets are down because it’s the most obvious):

  • Form a vivid and crystallized vision of their goals and values. Help bridge the gap between their current and future selves.
  • Spend 5 minutes at the end of each meeting asking Moira Somers’s 3 questions to improve follow-through
  • Write out and agree to plans that will govern your future actions when you’re in an emotional state
  • Ask: “What’s the next smallest step you can take to get ____ done?”

The Value of An Advisor Continues To Shift Towards Behavioral Coaching

As the industry continues to evolve and the value of an advisor shifts more towards the ability to guide clients through the process, unearth their values and emotions, and change their behavior for the better, the focus on behavioral coaching will only intensify.

More research studies will be commissioned verifying that behavioral coaching and management is the most valuable service we provide.

But, until clients start asking for someone to change their behavior, it’s best to stay focused on what they want and slip in what you know they need.

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