Using Financial Personality to Guide the Advisor-Client Relationship

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All financial advisors are familiar with the phrase: “Know Your Client.” It all boils down to the importance of knowing the priorities of the person you are advising. The guidance you lend to your clients may change what is financially possible for them years down the road — from what house they can afford, to what companies they invest in, to even what they can leave to their children — may change over time, but knowing their underlying motivations is critical to all of it.

Of course, knowing your client is easy to say, but sometimes difficult to do.

In part, it’s because people change, and those changes often happen suddenly and without warning. Sometimes it’s as simple as suddenly learning something about a client’s priorities that you didn’t see coming, or realizing that they had financial values you never knew about. Maybe they’re more risk-averse than you thought, or perhaps they were willing to take risks you didn’t expect.

Tips for better advisor-client financial conversations

Experts agree that communicating with different clients in different ways is advantageous to a healthy advisor-client relationship. For example, there are three commonly accepted types of learners: auditory, kinetic, and visual. Knowing and taking advantage of clients’ learning styles can help when explaining complex concepts or trying to make difficult decisions together. Another strategy to improve your client knowledge is a firm understanding of a client’s risk tolerance, a complicated metric that takes time and solid communication to understand. But what if a single test could determine all of these factors about a client right from the beginning of your relationship?

Financial personality tests take into account all of these factors and give you a better understanding of how to communicate with your client right from the start. Financial personality encompasses learning styles, risk tolerance, and more, to create a profile of the client that gives both of you a baseline for creating a portfolio that won’t hide any unfortunate miscommunications or nasty surprises. All of us have a financial personality type, even though we may be unaware of it. Financial personality tests give you the common vocabulary to talk descriptively and simply about difficult concepts that your clients may not have solid prior knowledge about.

How to Make Financial Prospecting More Personal

Financial personality tests are also a good way to draw in new clients with pre-existing portfolios. A prospective client may take the test before meeting with you and decide that their past investment decisions don’t match up with newly discovered financial values. With an advisor’s help, a client may have their interest sparked by a test and want to talk more about their financial personality with an expert. TIFIN Personality’s test can provide you with the tools to know your clients and give them the personal engagement that they need to achieve their financial goals.

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