Episode 6: Communicate better with clients

Episode 6

This episode, on Prosper:

Body language expert Mark Bowden provides tips on projecting a trustworthy posture through gesture and stance. Then, litigation lawyer Ellen Bessner talks about how to reduce the risk of being misunderstood. Transcript below.

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Hosted and produced by Bruce Sellery

Mixed and edited by Jason Perrier of Phizzy Studios

Editorial direction and visuals by the Advisor’s Edge team

© 2019 Newcom Media Inc.

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Bruce Sellery: Hello, I’m Bruce Sellery. This is Prosper, the financial advisors podcast from Adviser’s Edge. Our focus this episode, communication, so important and so hard. First, we’ll talk about body language. Mark Bowden: We can really influence and persuade people by the body language that we send out. Also, noticing the body language they produce, we can get a better read on how they’re thinking and feeling. Bruce Sellery: Communications expert Mark Bowden will be here with tips on how to send the right message to your clients and how to interpret the language you receive. Second, managing communication risk. Investment industry lawyer, Ellen Bessner on how to improve communications between the advisor and the client. Ellen Bessner: If an advisor wants to have a really successful relationship with their clients, the clients need to meet them… I say halfway, but they have to meet them entirely the whole way. To your point also made at the beginning, any relationship is like that. If each person puts in 50/50, all you’re going to get is 100%. what you really want is you want 200%. Bruce Sellery: Yeah. Plus a tip from the field on how to build a prosperous practice. Nick Bakish: Hi, this is Nick Bakish, I’m a portfolio manager with Richardson GMP. I think the most important thing when it comes to growing your practice through word of mouth is to really be authentic. Bruce Sellery: That’s coming up on Prosper. Greg Dalgetty: For over 20 years, Advisor’s Edge Magazine has been bringing you tools, ideas, and strategies to serve your clients and grow your business. We also deliver relevant stories daily on all our platforms, our website, advisor.ca, our daily AM and PM e-newsletters, and the podcast you are listening to right now. We’ll soon be launching The Weekly Indicator, a fresh new take on our weekly e-newsletter. Same great stories, but with more context and ideas. If you haven’t already, make sure you’re subscribed by heading to advisor.ca. Bruce Sellery: The nuance of body language is lost on most of us, but it can play a powerful role in the relationships financial advisors are trying to develop with their clients, both in terms of what their body language is saying and what they are interpreting about their clients on the other side of the desk. Mark Bowden has been studying these subtle cues for years. He is the co-founder of the communications training company TRUTHPLANE, and the coauthor of Truth and Lies: What People are Really Thinking. Hello, there. Mark Bowden: Hey, there. Bruce Sellery: I am deeply ambivalent about this topic because of course I want to put my best hand gesture forward. You get what I did there? But I also don’t want people like you telling me I’m crossing my arms wrong. Tell me why there is more to be gained than lost by focusing on body language. Mark Bowden: Well, because actually we can really influence and persuade people by the body language that we send out. Also, noticing the body language they produce, we can get a better read on how they’re thinking and feeling. We can better understand people and better be understood with body language. Bruce Sellery: Our listeners are appropriately skeptical because unprofessional practitioners in this area are full of smoke and mirrors and voodoo. You have been working in this credibly for a long time. How do you learn this? What, do you go do a PhD in body language? How do you learn it? Mark Bowden: Well, look, most of the people in my area, and there aren’t many of us, most of them actually come from a law enforcement or CIA or FBI background. I don’t, though I work for some of those people. Bruce Sellery: It’d make it much more interesting if you did. Mark Bowden: Absolutely. Yeah. No, I’m going to make it less interesting. Maybe more interesting. I actually come from a performing arts background, really, I would say specifically a visual arts background. I really looked at how the body tells stories with pictures and the way it influences and persuades our mind. I worked in areas like advertising and animation and theater and film and some really big films that you’d probably recognize on how to create movement that affects people. Bruce Sellery: This is a show that focuses on financial advisors, which you know. There is a certain element of performance that promotes affluence and trust, right? Like the stereotype of the financial advisors with the great suit and the great cars and the office and all that stuff, the way of speaking. Where does body language fit in, in terms of laying that foundation of trust? Mark Bowden: We decide quite instantly whether we trust somebody and we think they’re credible. We actually decide that based on their behavior, their movement, and the tonality of their voice before they’ve even opened their mouth. Then they open their mouth, and then we make what they said fit our assumptions about them. If you can win trust and credibility before you’ve even opened your mouth, you’re off to an incredibly good start with a client. Bruce Sellery: What are some very obvious cues that would either support or denigrate our ability to build trust? I’m watching my body [inaudible 00:05:05]. Listeners, I’m sitting here in my chair, I’ve got my arms half-crossed, my glasses are at the end of my nose, and I thinking, “Mark’s going to tell me I’m not trustworthy.” Mark Bowden: Well, look, I know you a little bit better. Bruce Sellery: Yes. Mark Bowden: Let’s just say we’ve been- Bruce Sellery: Our friendship has established the trust. Mark Bowden: Yeah. We’re friends. That’s okay. This is not about clients that you already have. It’s maybe more about clients that you want to have. I would be saying to you, “Hey, do you think you could be a little bit more open with your body language?” Bruce Sellery: Yes. Mark Bowden: Yeah. Bruce Sellery: I just did that. Mark Bowden: Yeah. Bruce Sellery: I just did that. Mark Bowden: Actually, yes. Now you’ve kind of opened your arms out, and you’re doing what we might call more maximizations, or imagine this. Imagine you’re in front of a fire, and it’s a cold day, and you want to warm up. Notice how your body would move out more and want to absorb more of the heat. That’s what we’d call warm body language. If you’re warm with your body language, people will like you a lot better. Bruce Sellery: What would you say about the notion of power? Because power is a big part of… [inaudible 00:06:04] read the book. There’s a big theme there on power, and yet in the world of financial advice, it seems to me to be tricky, because on the one hand power means, “I’m so confident in my financial advisor because they’re so powerful,” but on the other hand, “I don’t want to be dominated by this person.” What’s the spectrum? Mark Bowden: Yeah. When you have a relationship like that of client and advisor, there’s an exchange of power. You gain the power of me giving you my money to look after, and I guess you take a portion of that. Bruce Sellery: That’s how it works. Mark Bowden: That’s how it works. Bruce Sellery: Yes. Mark Bowden: But also I gain the power of your insight and the power of you being able to transact for me. We’ve got to do an exchange of power here. It’s no good you being, say, super arrogant-looking, which would be the over-display of kill points on the body in close proximity. Bruce Sellery: The over display of kill points? Mark Bowden: Yes. Bruce Sellery: Like I could knife you. Mark Bowden: I’m rocking back on my [crosstalk 00:06:52] here. Bruce Sellery: I could stab you. Mark Bowden: Yeah. I’ve displayed my carotid artery and windpipe to you. Bruce Sellery: Right. Right. And your nose is tickling the ceiling tile. Mark Bowden: Yeah. in striking distance, going, “I don’t think you’re powerful enough to actually strike me right now.” Bruce Sellery: Right, so don’t that to- Mark Bowden: Don’t do it. I’ve taken too much power there by taking your power down. Body language, I would say, is a display of power or response to a display of power. You can display power. The room can display power. At the moment, for example, this microphone that I’m in front of has a lot of power because I can’t move away from it… Bruce Sellery: You cannot. Mark Bowden: … or I’m not heard. It’s very powerful right now, and it’s deciding a lot of my movement right now. Bruce Sellery: What would you say about the ticks that many of us have in our body language like flipping a pan or fiddling with our rings or our nails? What are things like that, that we should keep in mind that may be taking away from our ability to have established trust? Mark Bowden: Look, there’s no bad body language. There’s just results that you wanted or didn’t want. If you’re flicking your pen around or kind of digging at your nails or whatever it might be- Bruce Sellery: Yes. Yes. I’m sure you’ve seen some crazy habits. Mark Bowden: Yeah. We don’t necessarily know why you’re doing that. When insufficient data, when we don’t know why, we default to negative. If you’re flipping your pen around, my instinct is not, “Okay. You’re really excited because you’ve got a great idea.” My instinct is, “You’re bored with me, and I’m not interesting for you.” We default to negatives when we don’t know why. Unless you flick your pen around and go, “Hey, I’m really excited by this product at the moment. I want to tell you about it,” then I’ll know, “Okay, the flicking of the pen, the spinning of the pen, that’s excitement.” If I don’t know, I go, “He’s bored. I’m useless. I don’t have enough money for this guy.” Bruce Sellery: Advisors engage with clients in lots of different environments, not just in an office. What is one thing you would have an advisor keep in mind at a networking event or at a party that just happens to be a place in which clients could approach them? Mark Bowden: Yeah. Look, one of the things you could do to really attract trust and credibility with clients is go and find the ones that are hanging out at the peripheries of the networking, because they are a little less keen to get in. They’re a little more cautious, socially cautious. If you could be the person that goes over to them, makes them really comfortable, brings them into the bulk of the room, starts introducing them to others, now you’re a social asset, and now you’re somebody who makes them feel good. I guarantee they’re going to say, “What do you do? Who are you?” Bruce Sellery: Right. Does that bridging begin with a handshake? Is it a smile? What is it? Mark Bowden: Absolutely best way to do it is that handshake, and here’s my tip for you, is give that person the upper hand, which means you’re going to offer out your hand with the palm up. Bruce Sellery: The palm up? Mark Bowden: Yes. There’s goes on top of yours, and that gives them more power. You’re giving them power. Now, they’re hanging out at the periphery of the room, so they don’t feel much power right now, so you’re going to give them power. I guarantee, when you give them the upper hand, you’ll see them smile. They’ll look at you, and they’ll smile. They’ll see you as a benefit, not a risk. Bruce Sellery: Okay. Another environment is presentation. People do seminars or they’re presenting in front of a client, a little group thing. What is one thing to keep in mind in that context? Mark Bowden: The biggest thing you can do is open-palm gestures at exactly navel height. It’s as simple as that. Bruce Sellery: Why at exactly navel height? Mark Bowden: Because your navel, your stomach area, that’s where your center of gravity is, and if somebody gets control of that, you’re in trouble. Bruce Sellery: Right. My center of gravity is so tiny. Tiny little center of gravity. Mark Bowden: You’re a wonderfully slim chap. Bruce Sellery: Thank you. Thank you. Mark Bowden: Yeah. I’m in awe of you. Bruce Sellery: Yeah. Thank you. It’s the Spanx is what it is. Mark Bowden: Yeah. You’ve also got a lot of delicate organs there that are exposed. You don’t have ribs all the way down, so it’s vulnerable. If you do open-palm gestures, which is a signal of no tools, no weapons, nothing in my hands, and you’re exposing that belly area, that means there’s no predators in the room. You’re not a predator. You don’t see predators in the room, which means it’s a low-risk environment. You’re low-risk. Therefore, all your products, all your services are low-risk. Bruce Sellery: Are low-risk. Mark Bowden: Yeah. Bruce Sellery: I love it. How do people practice? They hear you on a show like this. They read your book, whatever. They’ve got these ideas. How do they make sure that they put it into their day to practice? Do they have someone videotape them while they’re having a session? Do they write a Post-it note on their computer? Mark Bowden: None of those. You practice like a doctor practices, on real people. Bruce Sellery: Doctors practice on real people? Mark Bowden: Yeah. Bruce Sellery: I thought they did it on cadavers. Mark Bowden: No. That’s why they call it a practice. You get into a practice. Bruce Sellery: Geez. Mark Bowden: Look, you make mistakes as a doctor, and you go, “oh, that was the wrong diagnosis,” yeah, sometimes it’s a bit fatal. Bruce Sellery: “Oops. I cut off the wrong arm. Sorry.” Mark Bowden: Okay. Okay. Okay. But you’ve got to practice on real people so that you get that feedback of going, “Okay. I’m purposely doing open-palm gestures at navel height, and I can see their eyes going wide. They’re excited to be around me, and they’re pleased to be around me. I did that upper handshake, and I saw them smile.” Bruce Sellery: I’m basically sitting here with my palms facing the ceiling. It’s like I feel like I should hold two plates in my hand, and that would- Mark Bowden: Sometimes I practice with people and I put two melons there. Bruce Sellery: Really? Mark Bowden: I’m not kidding. When I’m working with world leaders, I use two to melons, because they’re having to carry a big weight for the audience. Bruce Sellery: Right. Okay. A little bit of knowledge is a dangerous thing, as the cliché goes. What are the pitfalls of working on body language? Mark Bowden: The pitfalls are that you start reading other people’s body language too much instead of suspending your judgment about it. Bruce Sellery: Okay. Okay. That’s a great segue because we’re talking about what you send and what you receive. You have the SNAP model. Mark Bowden: Yeah. Bruce Sellery: Tell us about the model. Mark Bowden: Yeah. Yeah. Yeah. First of all, you’ve got suspend- Bruce Sellery: Not SNAP. SCAN. Mark Bowden: SCAN. Bruce Sellery: You’re looking at me like, “I don’t know. Am I supposed to snap my fingers?” SCAN. I apologize. Mark Bowden: SCAN. Yeah, yeah, yeah. Bruce Sellery: SCAN. Mark Bowden: Suspend judgment, that’s the first step, is, “Look, I’m seeing your body language right now,” and you were doing what we might call a self-soothing gesture actually, which is your fingers on your lips and you’re rubbing your lips. My instinct is instantly, “Okay, Bruce is concerned about something, but I’m going to suspend my judgment about that, and I’m going say maybe, maybe he is.” Now I do context. Okay? “What’s the context here? Well, I’m telling him something about… But hang on, he’s already read about this. Maybe he’s thinking about what question he should do next. Maybe he’s listening to me and thinking about the question next.” Mark Bowden: A is ask, “What else?” I’m going to go, “What else could be going on? Well, maybe he’s thinking, ‘Hang on, how are we doing for time right now? Are we running out of time?’ Maybe he’s doing to self-soothing about this.” Bruce Sellery: Did I shave completely? Are there wild hairs on my face? Mark Bowden: Yeah. Yeah. It could be so many things. I could also ask you, I could ask for your input on this and go, “So Bruce, so I saw you doing what we call a self-soothing gesture, and I’m…” Bruce Sellery: Right. What’s with that? Mark Bowden: “… wondering whether you’re concerned about the time right now or you’re confused about what I’m saying or something else? I give you three options. Okay? Bruce Sellery: Yeah. Mark Bowden: I’m not going to go wait for your answer right now. Bruce Sellery: [crosstalk 00:13:58]. Mark Bowden: Okay? Then we make a new judgment out of all of that, and we put our new judgment with our old judgment. Now, our new judgment may be inaccurate, our old judgment may have been accurate or inaccurate, but we’ve just gathered more data, and more data makes us more intelligent. Bruce Sellery: As you look for a new judgment, is a part of the objective finding a judgment that is empowering to you? Do you endeavor to find one that you’re like, “Okay. I’m going to say he’s more engaged versus less engaged”? Mark Bowden: Right. I do want to stop that default to a negative, because look what I did first of all. I went, “Bruce is self-soothing. Okay, he’s worried. I’m not making sense.” Okay? I instantly defaulted to a negative, but now I’ve got, “Okay. Bruce is just trying to keep things on time. Okay. Good. What a good guy.” Bruce Sellery: Yeah. He’s in control. Mark Bowden: Yeah, he is in control. It helps me understand you better. That’s the key. That’s the key to reading body language, understanding people better. Bruce Sellery: One of the things I hear from clients all the time, clients of financial advisors, is, “I feel embarrassed to ask my advisor questions.” It is almost universal. What are the signs that a financial advisor could look for that might indicate that that is the feeling of the advisor? Or sorry, of the client? That that is the feeling of the client? Mark Bowden: Okay. What I mainly want people to look out for is changes, when things change radically. In a session with a client, when you think, “Hang on, something’s changed about this. Why are they looking like that now?” Bruce Sellery: “We were having a lovely time. We were talking about all the shows we love on Netflix. It was great. Then all of a sudden I moved to the portfolio and-” Mark Bowden: Right. “Uh-oh, this is real change.” Or, “We were talking about the portfolio, and then we talked about that product. Then they did that. Interesting.” Well now you go, “So that’s interesting.” Now what we start is the interrogation process. You go, “You know what? I’m interested. When I mentioned product X, I kind of felt there might be something up about that or you were interested in that or something else. What’s going on with that for you right now?” Bruce Sellery: How often do you have to provide people with the language to talk about body language in a colloquial way? Because it would be super weird if the financial advisor pulled out a copy of your book and were like, “On page 17, it says I’m scanning, S-C-A-N.” What’s the way to make it natural? Mark Bowden: Yeah. I think about it as surfing the web. Okay? You know when you see something on the web, and you go, “That’s kind of interesting,” and you double click on it, or you single click now, I guess, and you go deeper? That’s how you do SCAN. You go, “That’s interesting,” but you don’t go, “I know about that. I know about…” No, you go that’s- Bruce Sellery: “I heard this interview with Mark Bowden, and he said-” Mark Bowden: Yeah. You go, “Okay. That’s really interesting. I want to inquire more about this.” Yeah? You inquire more about what was being talked about at the time when you saw a change in somebody, a difference in them. Bruce Sellery: What is the number one pitfall people fall into when trying to read the body language of another? Mark Bowden: They think they know other people. Bruce Sellery: They think they know… Mark Bowden: They think. Bruce Sellery: … and they have no idea. Mark Bowden: They have absolutely no idea. Here’s what we think as human beings. I just think you’re me. I just think you’re me. Bruce Sellery: Wouldn’t the world be a better place if we all were just you? Mark Bowden: It would be. Well, because then you’d do as you were told. Bruce Sellery: Yes. That’s my worldview. Mark Bowden: Yeah. We’ve got to know that you have some likeness to me, but just because I’m feeling a certain way doesn’t mean you’re feeling a certain way. Just because when I’m feeling or what certain way I do a certain thing doesn’t mean when you do that thing, you’re feeling a certain way. I’m not you. You’re not me, though we have similarities. I’ve got a suspend my judgment about what happens with you and inquire more about it. Get to know you more. Bruce Sellery: Yeah. I think that’s a great tip. Everybody should try and get to know me more, you too. Mark, thank you so much. Mark Bowden: My pleasure. Bruce Sellery: Mark Bowden, he is co-founder of the communications training company TRUTHPLANE, co-author of Truth and Lies: What People are Really Thinking. Coming up on Prosper, know your client forms are just the starting point in building your relationship with your client. Ellen Bessner: The form is not enough. The regulators have said it. I’ve said it. The book says it. The form is only a synopsis of all the stuff you learn about a client. It’s just really for compliance to be able to follow whether or not the risk and the suitability of the investments is consistent with the overall plan of the client. All those details are really, really important. Particularly, and you’ll know I talk about the personal story of the client, to understand how that client ticks. Bruce Sellery: Investment industry lawyer Ellen Bessner on how to mitigate communications risk and Prosperous Practice, a quick tip on building your business. Nick Bakish: The impact on my business is that I’ve been able to appeal to a much higher net worth type of clientele. Bruce Sellery: Hey, there’s a ton of really great information and insight on our website. The URL is adviser.ca. There’s articles on investments and insurance and practice management and industry news, tax stuff. You can also sign up for our daily e-newsletter and subscribe to the print magazine. How’s that for kicking it old school? Stay with us. We’ll be right back. Greg Dalgetty: It’s almost that time of year, when people start looking forward to relaxing with family and friends, taking a trip, or doing absolutely nothing. But with continuing education deadlines quickly approaching for CFPs and IIROC cycle seven, it’s also time to make sure you’ve got your CE credits in order. CEcorner.ca is Canada’s fastest growing online source for financial CE lessons. Available nationally and for all designations, it’s the easiest way to earn and manage your CE credits. Visit CEcorner.ca today and join thousands of financial professionals on Canada’s fastest growing source for accredited CE. Bruce Sellery: Yeah, yeah, yeah. We all need to communicate better. Sure. But when it comes to financial advisors and their clients, it is really, really important to communicate better for relationship reasons and for financial reasons. That’s the view of litigation lawyer Ellen Bessner of Babin Bessner Spry. She saw too many examples of communication gaps over the years and decided to write a book about how to overcome them. Bessemer is the author of Communication Risks: How to Bridge the Client Advisor Gap to Protect and Grow Your Business. She joins us now. Hello, there. Ellen Bessner: Hello. That was such exciting introduction. Bruce Sellery: I’m so excited. Well, I love the topic of communication in any regard, but I love it in the context of financial advisors and their clients because it’s so important and a lot of people aren’t that good at it. There can be communication gaps in any relationship, personal or professional. You highlight three reasons why that gap could exist between financial advisors and their clients. First, unrealistic expectations. What do you mean by that? Ellen Bessner: The problem is that clients create a situation in their mind that they’re going to be giving a check over, they’re going to be giving their money over to the advisors, they’re going to make them piles of money, and then they’re going to go home with their piles of money and be happily ever after. Because what do they need their advisor for? They need them to make them this pile of money. Perhaps they haven’t saved enough. Perhaps they haven’t thought about the future early enough. They have these immense expectations from their advisors. Bruce Sellery: Which an advisor in theory could address in their prospecting conversations or in their first meetings, but I can see why they wouldn’t necessarily want to put too hard a point on it because a part of what they’re selling is the dream. Ellen Bessner: Exactly. Well, the dream is overstated. I would like to say to meet their expectations or their planned goals. Dream is a bit scary. Right? But I think you’re right. I think it’s the difference between selling the dream and selling, “Let’s be realistic about what your goals are, how we can meet them,” and just, “Where’s the roadmap to getting there-” Bruce Sellery: Yeah. Except for the financial advisory who I interviewed yesterday was selling me the dream. I want to go with her. She’s selling me the dream. Ellen Bessner: Well, you can go with her, but are you going to actually meet those expectations that you have? Bruce Sellery: Right then I’m going to be disappointed. Ellen Bessner: Then are you going to be coming to me in six months from now saying, “Wah, wah, I’m not happy.” Bruce Sellery: Right. Second reason you flag is what you say isn’t what you mean. Tell me more about that. Ellen Bessner: It’s part of that they don’t really know what the questions are going to be asked. The clients don’t know what questions are going to be asked by the advisor. They get into this room with the advisor, and the advisor asks them all kinds of questions like, “How much money do you need to live on after you retire? Or how much money do you spend now? Or what are your personal goals?” These are big, tough questions. Those change frequently. As you grow and age and as your circumstances change, you may be married, you may be divorced, you may be in a relationship, you may not be, you may be in a job, a secure one or not a secure one, as all of that changes, you change. Ellen Bessner: When the advisor asks you that, really, it isn’t a question that necessarily applied… The answer didn’t necessarily come to you today that would be the same as it was two years ago, so you need to rethink the whole thing. You may not know the answer. You might kind of make it up. You might kind of fudge it. You might tell them something that just comes to your mind. You’re embarrassed to say, “You know what? We need to talk about that, and I need to kind of rethink that. Can you help me? Bruce Sellery: Right. Then there could be some embarrassment about telling the full truth. The third reason that you highlight is that clients may be secretive. How frequent is that? I’m such an open book. I can’t even imagine that, but it happens. Ellen Bessner: Bruce, I am also a complete open book. I’m like you, right? I’m here to see my advisor, and, “What do you need to know? What do you need to know to help me?” But so many people are very, very private. When I speak, as you know, to conferences with hundreds… and sometimes over 1,000 people, advisors, right? When I say to them, “Clients are secretive,” they’re all nodding their heads, “They are secretive. They don’t want to tell me where their other money is. They don’t want to tell me what their personal financial situation is. Ellen Bessner: Either they’re trying to hide their assets because they don’t want the advisor to be bothering them to get more assets, they’re diversifying among advisors, they’re trying this new one, they don’t want them necessarily to know who the old one is, they might be private because they’re worried that the CRA may not know their whole story, and they’re private about that, they may have real estate and investments, and they may be worth more than what they’re disclosing, or they may be much, much less than what they want to admit, like, “I’m on the cusp of retirement, and I’m not going to really tell you what my net worth is.” Bruce Sellery: How did these communication gaps become apparent to the advisor? What the signals? Should advisors be really poking at these things to see if the facts are accurate? I can imagine that’s a subtle art. Ellen Bessner: Number one, they need to be asking the questions and not just taking a slough off. To your point before, if they’re selling the dream, then part of the dream is, “You don’t have to do too much work. Leave it to me.” But the reality is that clients need to also do the work. It’s hard, as you say, when you’re prospecting to try and sell, “Well, you’re going to be doing some work here too.” That is the reality. If an advisor wants to have a really successful relationship with their clients, the clients need to meet them… I say halfway, but they have to meet them entirely the whole way. It’s like to your point also made at the beginning, it’s any relationship is like that. If each person puts in 50/50, all you’re going to get is 100%. What you really want is you want 200%. Bruce Sellery: Is there a part of our psychological makeup that would really prefer not to know some things? I know that just in the world I have my spidey senses say that I’m getting not the whole truth, but it’s not in my vested interest to know the whole truth. Ellen Bessner: I think for advisors it’s in their client’s vested interest. It’s in their clients’ interest to get the whole truth, because how can you build a path, a roadmap to meeting their planned requirements, to meeting their personal expectations if you don’t know everything? Bruce Sellery: Now, there is a very, very basic process, the know your client forms, the know your client process. It is basic, basic, basic. What more should advisors be asking? In the book, I wouldn’t say you’re cynical about KYC, but maybe skeptical about it. Is that fair? Ellen Bessner: Skeptical about whether they do the entire- Bruce Sellery: Of that process. Of whether it’s enough. Ellen Bessner: The form is not enough. The regulators have said it. I’ve said it. The book says it. The form is only a synopsis of all the stuff you learn about a client. It’s just really for compliance to be able to follow whether or not the risk and the suitability of the investments is consistent with the overall plan of the client. It’s not the details, and all those details are really, really important, particularly, and you’ll know I talk about the personal story of the client, to understand how that client ticks. Everybody in this whole world has a personal story. You’ve got to find that story. Bruce Sellery: You were a big advocate of the paper trail, a fairly extensive paper trail. I was surprised at some of the examples. How do advisors track a change in circumstances? For example, you’ve got an example of a client who lost his job, didn’t tell his advisor that, and if the advisor had asked if anything had changed and documented it, they would have been in better shape from a legal perspective in that particular example. Ellen Bessner: And in every example. First of all, there needs to be a lot more communication with the client. They need to have more touch points, and I don’t mean birthday cards and one-way communication, “Here’s what I think about the market.” I mean meaningful dialogue. To the point that you just made, advisors are not the first people clients call when they lose their job, right? They sulk. They’re sad. They’re trying to figure out how to get a new job. They have to communicate with their family. They’re embarrassed. It’s all bad, right? It’s just a horrible situation to lose your job. But it’s so important for the advisor to know that. Bruce Sellery: How does an advisor create a context or an environment in which the client is willing to disclose not only a job loss, but marital difficulty? That’s very, very sensitive, especially in the early days when they haven’t made a choice of how that’s going to go, but material to their financial future. Ellen Bessner: It’s material to their financial future, and it’s also important so that the advisor understands what might be down the road. They don’t need to make any financial changes that moment, but they need to know what’s down the road. Advisors need to have, number one, more touch points, but, number two, more meaningful dialogue, where they really know that person. Bruce Sellery: What’s the line between knowing the person, doing the due diligence, and acting like a CIA agent and bugging their phone? Ellen Bessner: You don’t want to bug their phone. Bruce Sellery: Like, “I went through your garbage yesterday, and I saw that you have another account somewhere.” Ellen Bessner: Yeah, that would be really not a good idea. Bruce Sellery: Don’t do that. Against the law. Ellen Bessner: Yeah. Don’t do that. Bruce Sellery: Against the law. Ellen Bessner: It’s not in my book. Don’t do that. Bruce Sellery: Okay. Ellen Bessner: But ask them lots of questions and be sensitive. Here’s the big mystery in this business, listening. Bruce Sellery: Did you just invent something? Ellen Bessner: Listening. Bruce Sellery: I don’t even know what that is. Ellen Bessner: Listening. Bruce Sellery: Listening. Ellen Bessner: Then when somebody says a few times, even during this dialogue, I’m really trying to listen to what you say, and I’m kind of circling back, “Yeah, you said this thing, and I’m tying it in.” Right? Listening really, really well and then probing, asking more open-ended questions, listening, listening. Don’t try and think about, “What am I next going to say?” That’s our natural tendency. Bruce Sellery: “What am I having for lunch?” is what I usually [crosstalk 00:30:44]. Ellen Bessner: Well, maybe, and lunch is kind of soon, so I kind of get that. But if you’re distracted by something as an advisor, get it out of your head because clients will know if you’re connecting or not. Bruce Sellery: Yeah. You had this great example of a patient in a health context not disclosing information to a doctor and the observation that the doctor’s probably not going to work with a patient who doesn’t disclose. If the advisor can’t get the client to open up, what should they do? Do they fire the client? Ellen Bessner: Yes. Well, firing the client is harder than just not taking them on in the first place. You should be able to assess that out really early on, because although it’s not comfortable in the first meeting for a client to really share everything, you should really assess whether this is a client who’s going to be able to open up to you in the future. Life is too short. If you can’t do your job, send them away in the prospecting time. Bruce Sellery: Ugh. Ellen Bessner: I know. Bruce Sellery: God. Ellen Bessner: I know. Bruce Sellery: [crosstalk 00:31:40]. Ellen Bessner: I know it’s hard. It’s like taking money off the table. Bruce Sellery: $2 million in AUM. No. Ellen Bessner: I know. It’s huge. Bruce Sellery: You had this great exercise for advisors to look at their strengths and weaknesses on client service. What do you want people to do with that self-knowledge? They do that work. What do you want them to do with it? Ellen Bessner: What a great question. What I want them to do, even the exercise itself is going to really open their mind to, “Who should I be servicing?” I want them to really think about, “What kind of people do they connect with? Young, old, of their backgrounds, not of their backgrounds, of different backgrounds? Who do they connect best with?” Focus on them because those people are going to know you connect well with them, and it’s going to be natural. It’s going to be beautiful, and your AUM is going to grow. Bruce Sellery: Yes. What role does fear have to play in all of this? Because on the client’s side, you’ve got a fear of looking stupid. On the advisor side, they’ve got a fear of not bringing in assets. This is not a hobby for most people. This is how they pay their mortgage. Their identity is tied in their ability to build a solid practice. How do you navigate that? Ellen Bessner: Fear is a terrible thing, and it really makes people stop in their tracks and not be able to kind of move forward. I think that you have to identify what the fear is, and then you got to unwrap it and figure it out, whether it be on the client side or the advisor side. The stress on advisors these days to increase their AUM is just not good. But if you have a connection with clients, guess what those clients are going to do? Bruce Sellery: Refer you. Ellen Bessner: They’re going to refer you to everybody they know, and there’s some great, great opportunities there. But if clients don’t have confidence in you and they don’t connect with you, they’re not going to be referring you. They’re going to be looking for their next advisor. Bruce Sellery: For the most part, advisors are not paid by the hour. Some are, but for the most part they aren’t like lawyers who will sit there and talk to you all day because their clock is on. Ellen Bessner: No, I say, “Stop, stop, stop talking. My clock is on.” Bruce Sellery: Right. The steps you’re talking about can take a lot of time. How do you deal with that? How does an adviser make that call of what’s worth it? Ellen Bessner: Well, they have to figure out, for example, who is the most efficient type of target market for them to deal with. If they’re driving halfway across the country or flying halfway across the country to meet with clients, that’s not a good use of their time. That’s why that exercise is important to identify your target market. Also, in terms of efficiency, if you’re trying to climb up a mountain and it’s like two steps back for every one forward, that’s not good. Bruce Sellery: I have one last question. I know this is going to open up a whole can of worms, but I want to ask it. For advisors who’ve been lucky enough not to be caught up in a communications gap that involved lawyers and regulators, what should they know? What is the cautionary tale of when advisers are showing up at your office and being like, “Ellen, I need your help.” If they are in this situation, it’s, I presume, money, it’s time, it’s stress. Ellen Bessner: And reputational damage. Bruce Sellery: Reputational damage. Ellen Bessner: That’s the key. When they’re prospecting, if there’s something on the internet, people will find it now. The reputational damage is the worst, and literally, I have seen so many grown men in my office falling apart and crying because it is so tough to deal with these things. Bruce Sellery: It could have been different. It could have been different if they had communicated. Ellen Bessner: It could have been different, and it’s tough. The expectations by the regulators are very, very high, so read the books and apply these very basic things that will protect you. I want to close the file before it goes anywhere. Bruce Sellery: Yes. Ellen, thank you so much. Ellen Bessner: My pleasure. Bruce Sellery: Ellen Bessner, Babin Bessner Spry. She is the author of Communication Risk: How to Bridge the Client Advisor Gap to Protect and Grow Your Business. There’s what you learn in school, and then there’s what you can only learn from experience. Prosperous Practice is our effort to bring some of that hard-earned experience directly to you. Nick Bakish: Hi, this is Nick Bakish. I’m a portfolio manager with Richardson GMP. I just wanted to talk today about referrals and maybe what I do and what I don’t do. I think the most important thing when it comes to growing your practice through word of mouth is to really be authentic and focus on your core values and your beliefs and realize that every client is different in their own unique situations. But I think providing independent objective advice is the most important aspect of the relationship, and that can often be centered around unique alternatives, investments, or private placements, or if there’s more traditional stocks and bonds, but I think at the core of it all, it comes down to a good planning process and good relationships with a client. The key to avoid any type of a negative situation is to not promise things that you can’t deliver, so always keeping the expectations realistic in what the clients could and could not be realistically expecting to gain from the relationship. I think that all comes down to authenticity, and that builds over time with the relationship between the advisor and client. Nick Bakish: The impact on my business is that I’ve been able to appeal to a much higher net worth type of clientele that has very unique needs, and this could revolve around many different areas and not just investments. It could be around taxes, philanthropy, estate, overall planning, and I really believe that in order to be able to properly service this higher net worth clientele, you really have to be able to customize the level of service for what makes sense for them. A cookie cutter approach would not be the ideal situation, but obviously being able to do deeper dives and provide unique solutions to people’s unique opportunities and unique situations. Nick Bakish: It creates a set of virtuous cycles where you know you get clients that value, that type of relationship. There’s a self-selection type of process, and it allows you to build the existing relationships to a much deeper level. It is beneficial on multiple fronts. Bruce Sellery: This is Prosper, the financial advisors podcast from Advisor’s Edge. We would love to hear your comments, your questions, your topic ideas. You can connect with us in a whole bunch of ways. Social media, Twitter is @advisorca, Facebook, Advisor’s Edge Magazine, LinkedIn is adviser.ca, and then there’s email. Remember email? News.Adviser@TC.TC. Now, here’s one quick request. Take a second right now, literally right now, unless you’re driving, then you can park. Take a second and rate the podcast. I’d love five stars, but I’ll take four, whatever. Click on that little subscribe episode too so you’ll receive the next episode of the Prosper podcast automatically, and maybe give us a review. Okay. That would take more than a second, but we appreciate it anyway. Thanks for listening. Now go out and prosper.