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Better than the golden rule

JUN. 18, 2018

Most of us were raised to “Treat others the way we like to be treated”. We refer to this axiom as “The Golden Rule”. And there’s nothing inherently wrong with treating others in this manner. It could be worse, right?

However, in the world of financial services, we take a significant risk in our relationships with our clients, the surviving spouse of our client, and the adult children of our client if we strictly follow the Golden Rule. Consider these facts in the world of financial services.

Facts of a changing generation

The great wealth transfer is happening, and it’s happening right now. Thirty trillion dollars will be transferred from Baby Boomers to their surviving spouse and on to Generation X and Millennial children between now and 2046.1 The money is going to move. But what does that mean for you?

Here are some hard facts:
75% of widows fire their spouse’s advisor.2
66% of adult children fire their parents’ advisor after inheriting their wealth.3

Wealth transfer clients

So what causes this to happen? Why do so many people fire their advisors when wealth transfers? It turns out that seventy-one percent of clients say it’s because the advisor failed to communicate. Another fifty-three percent say it’s because the advisor didn’t listen.4 Not communicating and listening. Notice that these answers have nothing to do with investment returns or fiduciary capability.

When considering the magnitude of this potential loss of clients, it’s quite daunting. The combined effects of those statistics mean that you may stand to lose nearly seventy percent of your book of business as your clients’ wealth transfers to spouses and children.

A changing book of business

Just take a moment and imagine that your book of business was sixty-six percent smaller. Let’s assume you’re effective as a financial advisor, and that only half that statistic affects you. Imagine that your book of business is a mere thirty-three percent smaller because your existing clients’ children fired you.

Advisors lose clients because they are not able to interact effectively with them (read-lack of rapport). The key to any relationship is trust. Trust is built on rapport. Advisors who communicate with the surviving spouse or the adult children in the same way they communicated with their deceased client sets themselves up for client retention challenges. Advisors who want to retain clients must communicate with them in the way the client chooses; in the way the client finds most effective.

Styles of communication

So, what’s different about communicating with the surviving spouse or the adult children of your deceased client? In many cases, a lot! Your former client may have been an extroverted, task focused, bottom line-driven individual. The surviving spouse may be more introverted and focused on building deep relationships. It’s highly unlikely that using the same approach with both will be successful with each person.

Utilizing a tool like the DISC assessment5 might be a solution to consider. DISC helps us understand our own communication style. It also helps us to identify behavioral characteristics of the other person in the conversation so that we can “tweak” the way we communicate with them.

Understanding personalities

DISC classifies human behavior into four types.

  • Dominance (D): People with high Dominance scores are organized, results-oriented, and self -starters. These individuals will make it happen efficiently and quickly. For the high D, obstacles are just challenges for them to overcome.
  • Influencing (I): People with Influencing scores tend to be optimistic, enthusiastic, and creative problem solvers. The high I is an extroverted people person who’s positive, persuasive, and with a capacity to motivate and excite others.
  • Steadiness (S): Those with high Steadiness scores are dependable team workers, excellent team players, great listeners, and team stabilizers. They are quick to assist others if they know the area. They are patient and empathetic, the high S tends to be introverted, though they are a natural at helping people work through problems since they work hard to understand the other person’s position.
  • Conscientious (C): High Conscientious people are objective thinkers who prefer the facts and analysis of the “real world” over flights of imagination. The High C tends to be introverted, task-focused and may prefer to work alone.

The platinum rule

Humans are very complex beings. No one framework can explain everything that’s going on with an individual. This is one piece of a thousand-piece jigsaw puzzle that represents human behavior.

DISC is not the be-all, end-all to understanding other people. But, it is a tool one can employ to enhance communication by “tweaking” the way the message is delivered. So instead of the Golden Rule, we have The Platinum Rule – “Treating others the way THEY like to be treated.”6

More effective communication begets more rapport. More rapport leads to a stronger relationship with your client. And a stronger relationship enhances the trust the client has in you. A potential benefit of this is the surviving spouse or the adult children of your client just might decide to stay with you and your organization because of your communication skills.

Consider taking a DISC assessment to implement the Platinum rule – you can find one of the numerous online assessments available by searching for “DISC” on the internet.