Editor’s note: Bryce Sanders is a longtime columnist for Rethinking65. Read more of his columns here.
Bryce Sanders
Most advisors seek long-term relationships with their clients. This usually involves getting to know them as individuals. To make this happen, you need to know more than just the basics about them. It may be enough for prisoners of war to provide only their name, rank and serial number to their captors, but neither party there seeks to build an in-depth relationship.
So, how can you learn more about your clients without seeming intrusive? And why else is this so important?
Rules and Relationships
The “Know Your Customer” rule is a good place to start. It’s a legal requirement. You don’t want to get into serious trouble in areas like money laundering.
On a positive note, many advisors are outgoing, gregarious people. They make friends easily. Friendships strengthen relationships. There is an old expression, “You can’t fire friends.” Many advisors will admit it is a lot harder to transform a friend into a client compared to transitioning a client relationship into a friendship.
These relationships can be enduring. When I transitioned from production into management at my previous firm, a client said: “If you ever go back into production, let me know and I will come back to you.” (The firm did not like this idea one little bit!) It was one of several motivations for me to stay in touch with former clients who became friends. Some friendships lasted decades.
Getting Started
How can you learn about clients without seeming nosy? Let us start by considering the volume of information you can learn about someone through the Internet and their social media presence. Fans of the TV series “Person of Interest” will recall the great quote from Harold Finch: “The machine needed more information. People’s social graph, their associations. The government has been trying to figure it out for years. Turns out most people were happy to volunteer it.” He’s referring to social media.
You know a certain amount already about your clients. From your new account form, you know where they live, where they work, what they do and their age. You know similar basic information about their spouse.
Can you connect with your client on LinkedIn? Once you become 1st level connections you can see how many mutual connections you share. You will see where they went to college. You know their work experience and perhaps their hobbies.
Be Observant
If your client has an investment account with cash management features like check writing, you will have a window into their personal life that might best be left closed. You will know how they spend their money in terms of checks written. A local financial advisor explained if she had two month’s worth of the her clients’ checking account statements, she could learn an extraordinary amount about their lifestyle.
What you know from research and what you can talk about are two separate categories. Let us focus on information you can learn by chatting with your client in social situations — or even by just observing them in your office. For example:
Jewelry. Do they wear a watch? Do they wear rings or bracelets? Are they wearing a college ring? If a woman is wearing a wedding band, is it an Eternity ring signifying a major anniversary? Wedding rings are traditionally worn on the left hand. Certain countries have a tradition (some same sex couples too) of wearing a wedding ring on their right hand. It is easy to compliment a person on their jewelry. It often gets them into storytelling mode.
Emblems. People wear rings, lapel pins, ties and possibly scarves to signify membership in an organization or to support a cause. People often wear lapel pins as a sign of patriotism. Ties often signify membership in a club or graduation from a specific university. Taken to an extreme, the pinstripe suit originated in the London banking community of the 1800s. Different banks had different variations on the pinstripe design. You could tell the bank someone worked at by the style of their pinstripe suit.
Fashion accessories. If you visit an upscale shopping mall you will likely see Gucci, Hermes and Louis Vuitton stores. These are some of the premier world fashion brands. People who carry their bags or wear their belts are making a statement, often about their financial and social position. That is important to them.
The car they drive. You may have heard the expression, “You are what you drive.” In 2008, author Jay Lamm wrote the book, “You are What You Drive: What Your Car Says About You.” That was probably the moment the expression became immortalized.
‘Give to Get’
The next group of questions fits into the “Give to Get” category of information gathering. When you volunteer information, it is easier to draw someone out compared to asking a direct question. Consider two ways of asking the same question:
How long have you been married?
We have been married 42 years. How long have you been together?
The second statement prompts the person to give a more conversational reply. Here are some other topics to discuss that can help you understand how they spend money and what they like:
Where do they travel? It is easy to bring vacations into the conversation. You will be able to tell if they are passionate travelers, if they go where their spouse tells them to go, or they avoid travel, never leaving home.
How do they feel about food? Some people are really into fine dining. Others eat because they are hungry. Some eat out all the time because they cannot cook. Others eat out rarely because they are comfortable cooking at home.
Are they sports fans? Some people are passionate. They follow favorite teams. Others (like me) have no interest. Merely bringing up the subject will get you the answer.
What music to they like? The easiest way to learn this is to ride in their car or visit their home. You should hear the music they enjoy. But if you don’t have those opportunities, you can simply ask them. Like sports, some people are passionate about music. Others could not care less and a surprising number of people live in the past — specifically the 1970s or 1980s.
Topics to Avoid
You want to stay away from divisive topics. The three traditional ones are:
Politics. Today, this can actually be a unifying topic. If you support the same party, you might have an instant bond. If you suspect you don’t, avoid the subject.
Sex. You might have drawn conclusions, but don’t mention them until they tell you first. Years ago, we were at a great sale featuring fine china and crystal. They had pairs of champagne flutes, each engraved “His” and “His.” I could think of many people we knew where this would be an ideal gift. My wife shot down the idea. She explained, “We might think they are a same sex couple, but you cannot acknowledge it until they announce it personally.”
Religion. People can be tolerant, but they can also be surprisingly intolerant. You do not want to get into a situation where the unspoken message is “I am right and you are wrong.” Knowing their religion doesn’t really get you anywhere. Remember, asking an applicant’s religion is forbidden under U.S. labor laws.
The fourth “off limits” category traditionally is money. As your clients’ financial advisor, this obviously does not apply in this situation. You talk about it all the time, but you do it privately. However, never do or say anything that implies you are wealthier than your client. If you do, they often assume that they are paying too much in fees and start pushing back.
You can learn quite a bit about clients without crossing the line.
Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book, “Captivating the Wealthy Investor” is available on Amazon.
