Wealth Management - Ineffective Client Discovery

Wealth Management Go-to-Market Model Issues: Ineffective Client Discovery

In financial services, a firm’s business model is the way the company goes to market. Business model and strategy are not synonymous. The business model is how strategy is operationalized to serve clients.

Some firms operate intentionally designed, consistently executed go-to-market models. Others evolve models in a less structured manner. Regardless of genesis, in the wealth management segment of financial services, there are twelve common go-to-market model issues, one of which is Ineffective Client Discovery.

What is Client Discovery?

Most wealth management service providers have some sort of process for learning about prospects and clients. Commonly referred to as discovery, client listening, or a financial wellbeing evaluation, the purpose of this process is to understand where a client is in their financial life, what success looks like to them, and what matters most today and in their future.

What distinguishes effective Client Discovery?

·        Process vs. Event – Perceiving the learning exercise “one-and-done” limits the opportunity to be of value to a client. Effective discovery is an ongoing process vs. a one-time event. Clients’ lives are dynamic, continually evolving. Life changes prompt financial life changes. Reframing Newton’s 3rd Law – for every action there is an equal, opposite reaction – translated to the wealth management business, we might say for every expected and unexpected event in a clients’ life, there is a reciprocal change in their financial life. Understanding a client’s life changes and accompanying financial life implications informs advisors about the nature and need for relevant financial advice.

·        Inquiry vs. Selling – The art of inquiry as an advisor refers to continuous learning about ideas, interests, and concerns of clients. It is the purposeful act of seeking knowledge through questions. Curiosity stokes inquiry which deepens learning about what matters in a client’s financial life, particularly as life conditions change. Advisors with new business development goals can fall into the trap of thinking inquiry is really a euphemism for selling; it’s not. Inquiry is a powerful practice for professionals to stay attuned to clients, their lives, and their financial lives.

·        Anticipating vs. Inventorying – Artificial Intelligence presents tremendous opportunities for wealth management professionals to better address client needs. Independent of new developments in the use of technology, advisors have another form of AI available to them right now – Actual Intelligence. This form of AI is based on the advisor’s economies of knowledge and experience and guides them in distilling what they learn through the discovery process to anticipate client needs. What is extraordinary in the financial life of a client is likely ordinary for the advisor. For example, consider the sale of a privately held family business. This may be a once-in-a-lifetime experience for the client who built the business. For the advisor, the transaction may be the fourth family-owned business sale they’ve participated in this year. Economies of experience help the advisor anticipate financial services-related interests and concerns a client may have when the business sale is complete. Client learnings are not for the sake of capturing information; they empower advisors to develop and deliver relevant, meaningful, actionable advice.

·        Evolving vs. Assuming – Assuming one knows all they need to know about a client’s financial life is a risky proposition. Given the dynamic reality of client’s lives, we know that views, values, and priorities are all subject to change. A client whose top financial priority was assuring sufficient savings for retirement may re-evaluate when her privately held business goes public and yields her $100MM in publicly traded stock. While retirement still matters, there are likely to be new priorities like diversification of a concentrated position, greater tax efficiency, and the creation of philanthropic vehicles. Recognizing the need to evolve understanding of the client’s views, values and priorities helps assure alignment with the ways in which an advisor will add the greatest value to a relationship.    

·        Advising vs. Promoting – While the urge to promote services and solutions is natural, the discovery process is most effective when it produces actionable advice. The steps of understanding, analyzing information gathered and insights garnered, then using learnings to craft client-specific advice generally creates a demand-pull vs. a product-push condition. Our value as advisors is greatest when we deliver meaningful, relevant, actionable advice.

Mastering the discovery process fuels the opportunity to earn and sustain relevance with wealth management clients.

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