Trust is essential in any relationship, and while it can take years to establish, it can be lost in an instant. For financial advisors, trust is the foundation of their client relationships and the overall success of their firm. That’s why the groundwork for an open and trusting connection must be laid from the moment the client first comes through the door.
When investors seek guidance and advice for investing their money and preparing for their future, they are looking for far more than a financial plan. They want a relationship with an advisor who takes their best interests to heart and understands their unique needs. They want someone they can trust.
For an advisor, building trust can be difficult. Investors are inherently skeptical about handing their money to someone else. However, with the right approach, advisors can start to build confidence from the outset.
Our research tells us that a significant factor in establishing trust early in the relationship is showing you have a proper understanding of a client’s unique situation and preferences. More than 65% of the 1,000+ investors we recently surveyed said this understanding and care are why they choose to work with an advisor. Displaying this level of service is imperative from the outset and one of the easiest ways to demonstrate this is through an advisor’s investment proposal.
First Impressions
Beyond the first meeting, the investment proposal is the advisor’s initial opportunity to make a positive impression. But the proposal itself does not make a difference. Rather, it’s what an advisor puts into the proposal and the context in which it’s delivered to the client. Personalization and education are two essential factors in an effective proposal, each critical to establishing trust in an advisor-client relationship.
A personalized proposal illustrates an advisor’s ability to make financial decisions based on the client’s unique objectives.
Trust breeds confidence, and clients need to be confident that their advisor has their best interests at heart. A personalized proposal demonstrates competence and illustrates an advisor’s ability to make financial recommendations based on the client’s unique objectives. It also conveys an understanding of the client’s financial needs, both near and long-term, against their overall objectives.
Personalization underscores the advisor’s commitment to the client’s best interests. Additionally, by prioritizing the client’s goals and objectives, the proposal reaffirms the advisor’s fiduciary duty – a key component in building lasting trust.
Building Lasting Trust
A proposal informed by personalized investment recommendations is critical. But delivering quantitative data without context may overwhelm or confuse clients. That’s why personalization does not end with the proposal. Rather, it opens the door for education and further communication. We know that when an advisor combines a personalized proposal with a clear explanation, trust is greatly enhanced.
Advisors should always consider the importance of educating their clients. The proposal allows advisors to walk clients through their thinking and explain the context for the strategies they recommend. When clients understand how the proposal aligns with the goals, it becomes far more than a standalone document. A well-executed proposal fosters communication and collaboration between the advisor and the client. It provides a framework for discussion and allows the advisor to demonstrate their expertise and understanding of the client.
Advisors should always consider the importance of educating their clients.
From Proposal To Partnership
The personalized investment proposal serves as a unique roadmap, clarifying the advisor’s plan of action and the rationale behind it. It articulates the proposed investment strategies, risk management approaches and potential outcomes. When coupled with education, it can also provide transparency and instill client confidence. Above all, the proposal can be the cornerstone for trust and a positive ongoing client experience.
As the first opportunity to make a good impression, a well-designed proposal opens the lines of communication and fosters a sense of partnership. But it’s not the only way to earn and keep client trust. Advisors need to continually work to strengthen the bonds of the relationship, by actively listening to their clients’ concerns and goals to providing clear explanations and regular updates on their financial progress. Remember, clients want to understand what the advisor is doing and have a desire to be involved throughout the journey.
Rob Crnkovic is Chief Revenue Officer and Co-Founder at CapIntel, a financial technology company that supports fund analysis, proposal generation and day-to-day workflow efficiency for financial services wholesalers and investment advisors.
