Australia’s sovereign wealth fund’s prediction of a tough year for investors didn’t come to pass, but they’re not the only well-resourced manager that missed the mark. For investors, this period is a reminder that investment patterns may exist, but markets certainly aren’t beholden to them.
It’s essential that we learn from the Dixons Advisory scandal, the FAAA chief said, so we can avoid future harm. The association has asked the government to consider a full inquiry into the case, while advisers contemplate the financial toll ahead of them.
‘I’ve been busy’ and other things advisers should stop saying to clients
It’s an offhand, genuine response that’s often perceived to be an expression of virtue, but telling financial advice clients that you’ve “been busy” is anything but positive.
Not only can it be construed as elitist and insulting (busy, compared to who?), but it can be taken to mean that you’re too overworked to take on new referrals, or worse, don’t have enough time to spend with existing clients. That may not be the intention, but as Invesco Consulting’s Jacquelyn Mann points out, the intention isn’t as important as the perception.
“Words do matter,” Jacqueline told a room full of advisers at The Inside Network’s Practice and Investment Efficiency Masterclass in Sydney recently. “It’s not so much what we’re saying that matters, it’s what the other person is hearing.”
‘I’ve been busy’ can also come across as vague or disingenuous, Mann said, even if it’s a truism for most financial advisers. “It’s almost like muscle memory to throw out the word ‘busy’… but even a simple term like that means different things to different people, and it can certainly close doors if we’re not careful.”
The four Ps
The observation comes from a study Invesco Consulting conducted into the language that financial services professionals use, which has been ongoing since 2007. The study encompasses the common terms and phrases used in the industry, and focused on how clients emotionally respond to those terms.
Mann explained how the focus spread to four key communication themes that financial services professionals need to keep in mind; positive, plausible, plain-spoken and personal.
Being positive, she explained, is about making it easy for a client to align with the message that’s being conveyed. The same thing can be said in multiple different ways, but the one that is easier to align with will generally have a better chance at eliciting a more positive emotional response.
For example, the Invesco study showed that while 81 per cent of people were interested in ‘making sure you can afford to maintain your lifestyle’, only 19 per cent of people were interested in the term ‘managing inflation risk’. And when two phrases were put in front of people, ‘It’s more stable than equities’ and ‘It’s less volatile than equities’, 61 per cent of people said the former felt like a bigger advantage than the latter.
Interestingly for advisers, clients find the term ‘fees’ to be highly negative, with 53 per cent saying they liked it the least compared to commissions (26 per cent) and charges (15 per cent). The most positive relative term was ‘costs’, which only 6 per cent found to be the most negative.
The second theme the team identified centres on the notion of the idea of plausibility, or saying things that make sense and are easy to believe. For example, instead a client that their problem is unique and you can fix it, let them know that it’s a problem you’ve seen before and know how to help with.
“If you’ve not even dealt with this before, when you say you’ll help resolve it immediately, the client starts to think, ‘Oh, can I trust them?’ Can they actually do it immediately if it’s so unique to them? But if it’s a common problem, it means that you’ve got experience in it, and you’re not over-promising or under-delivering.”
The third thematic Invesco identified was being plain-spoken and avoiding jargon, which can alienate and confuse clients. “The number on thing about being plain spoken is to strip out all the jargon in our conversations with clients,” she said, adding that acronyms and initialisms are especially unhelpful.
“We use a lot of acronyms, right? We’ve got ESG, SMAs, MDAs, ETFs, which leaves people thinking WTF. So strip out the jargon. It is efficient to use jargon or acronyms, [but] always ensure that we’re actually giving a full definition of what that is. Then you can go on to using your acronym, but don’t assume that a client understands.”
The final piece of the puzzle, Mann explained, was for advisers to personalise their communication and to shape it into something the client can relate to.
“Sometimes we have to explain very complex strategies or ideas to clients, and so we go in with all the facts to show them, and we forget that we’ve not actually mentioned anything about the client and how this impacts them,” Mann explained.
“This whole idea of being personal is, of course, personalising the communications, but when we think of it as a foundation principle, we need to ensure that we are addressing the potential benefits to a client before we start talking about the features and the facts and the numbers?”
