It’s communication, not performance, that is the key to success in advice

One of the more interesting learnings from the pandemic so far has been the varying methods of communication used by political, media and industry leaders alike.

What becomes even clearer, listening to far too many press conferences, is how important it is to use words that resonate with your audience. Nowhere is this fact more relevant than in the financial advice sector.

As financial advisers, we tend to like talking more than most, covering everything from complex investment matters to more personal issues with our clients, but do so with very little if any training on communication.

According to research by Invesco Consulting, communication is one of the biggest risks facing advisory businesses around the world. In a recent study of over 1,000 global investors, the firm found that around two-thirds of clients would lose more trust in their adviser due to ‘unexplained’ or poorly explained fees, than the one-third who were concerned about performance.  

Put simply, communication can easily kill your business.

As part of its industry-leading training programs, the group sought the assistance of a political advisory and legal firm to help it understand what advisers have been doing wrong, and how small changes to communication with clients could have a significant positive impact on their business.

Its research found that all investors are looking for three simple things when seeking advice: for advisers to be ‘smart with my money’; ‘help me with more than my money’; and ‘show me my progress, make me feel I’m on track’.

This likely doesn’t come as a surprise, but we all tend to revert to spending far too much time on the more interesting investment topics during our regular review meetings, which can ultimately lead to delivering little value in eyes of clients who crave personalised discussion with actionable outcomes.

In its extensive program ‘Priceless’, the group advocates for a number of small changes to the way review meetings are framed, both prior, during and after, that ultimately deliver better cut-through and leave investors felling like they have been heard, but also that they have received value for money.

Some of the more powerful insights, however, come from simple changes in the vocabulary we use on a day-to-day basis with clients. Whether we like it or not, financial advisers are prone to over-complicating matters or alternatively over-simplifying matters to the point that everything we say has an acronym.

While by no means exhaustive, several simple changes relate to going back to basics with our language. For instance, describing passive funds as what they actually are, index-following strategies, seemingly because the word ‘passive’ suggests the adviser is doing nothing.

Preparing a financial ‘plan’ could be replaced with preparing a financial ‘planning document’ to highlight the ongoing and not one-off nature of advice. Similarly, in this era of low-cost options, referring to an approach or strategy as being ‘cost efficient’ can reduce clients’ general and often unfair association between cost and risk, while also providing the comfort that it has been personalised and it is specifically matched to their needs.

In advice and with all clients, words clearly matter.

Drew Meredith

Drew is publisher of the Inside Network's mastheads and a principal adviser at Wattle Partners.