Understand Client Psychology aka What Makes Them Tick

Most of the most successful advisors I’ve met over the past 25 years make it a point to understand the mindset of their clients and prospects before they ever talk about investments. They know it’s important to understand what experiences they have had in the past, any fears they have about investing and what their future looks like in their mind. The best way to learn more about them is to ask specific questions and then pay attention to the details. Here are seven questions recommended by the best financial advisors I know.

  1. How was money handled by your parents when you were growing up?    This is a big question because you’ll quickly get a glimpse of the lessons they learned and what their attitude is about investing today. My financial advisor asked me this question in 1995 and learned plenty about me when I answered. I grew up very poor, learned the value of food stamps and food donated to our family by the local church and as a result, it taught me many valuable life lessons. Lesson number 1: I NEVER want to be poor again. But it also scarred me as an investor because I never wanted to be broke again as an adult. So my advisor learned that I wanted to increase the size of my portfolio but didn’t want to take on too much risk because I feared losing all my money. When you ask a prospect or client that question, be ready to take plenty of notes. Fears run deep and this question will bring back many memories.
  2. If we were to meet three years from now and look back to today, what would have to happen in your portfolio and in our relationship for you to feel like this was a successful relationship ?     This will help you manage expectations and learn exactly what they are expecting from you. Again, listen and take notes. IF your client told you they are conservative but expect their portfolio to double in three years, that’s a red flag. That performance happened in 1999 but it’s unlikely to happen again. Their reply will tell you what to expect and what you need to do to make this relationship a successful one for both of you.
  3. What do you visualize your retirement to look like? What will you be doing? Where will you be living and what does a typical day look like?  Visualization is a good exercise for both of you. It paints a vivid picture in the mind’s eye and gives you something to look forward to. As an advisor, you’ll have a clear picture of your responsibility but you’ll also have a better understanding of your client’s attitude, dreams, hopes and expectations.
  4. What lessons have you taught your children and/or grandchildren about money?     Many of us learn lessons over the years. Sometimes we learn the hard way and others we learn from observing others. My three children know how poor I was and they’ve seen my tiny childhood home. It inspired them to work hard and save some of their money. I will admit that I spoiled them because I wanted to give them all the things I didn’t have when I was a kid. It was a mistake but I had the best of intentions. Fortunately, they still worked and saved and learned from my lessons. One of the best lessons I learned from my father is one I adhere to today. If you can’t afford it, then don’t buy it until you can afford it. I also learned how valuable it is to “help” cover a portion of the cost for something your kids want. Offer to pay for half if they are willing to pay for half. This strategy works much better than paying for the entire purchase because now they have some skin in the game and the purchase is meaningful to them. That works well for cars, golf clubs, big ticket items and even college.
  5. What concerns or thoughts keep you awake at night?  If you want to understand your clients life on  a daily basis, this question will tell you plenty about them. One of the most common complaints about advisors is that they don’t understand the most serious concerns and don’t really know the client. Once you know this, it’s up to you to address the concerns and find a solution to put them at ease if possible.
  6. What was the best investment you ever made?   This answer will give you more insight into their investing psychology but will also put a great big smile on their face. They love talking about the Home Run investment they made and how they celebrated. They will possibly talk about the nightmare investment also, and that helps you understand their mindset also.
  7. What else I should know about your past experiences or future goals that I may have missed?  This question will give them the opportunity to share anything else on their mind and something you may have missed during your talk.

Asking questions and then listening (that’s the important part of this exercise) creates trust. A main reason prospects decide NOT to invest with a certain person is because they just don’t trust them. No trust = no relationship ~ period!   This exercise ties into one of my more popular presentations on consultative selling. It leads to a higher level of trust very quickly. Be sure you ask these questions in a friendly tone that says, “let’s get to know each other”. This is NOT an interrogation with 50 questions. When you meet someone at a party, you both ask questions to get to know each other, see what you have in common and sometimes it develops into a new friendship. This works the same way with clients and prospects. Enjoy and share this blog with anyone who will appreciate it.

All the Best ~


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