Do you know how your clients want to work with you, their financial advisor? Knowing this is vital to gaining more wallet share, retaining your clients and possibly gaining new referrals. The key is finding out how they think about and relate to their investments, which you can discover by asking them one simple question:
“When it comes to investing, are you cargo, a passenger or a copilot?”
Let that sink in. I can assure you they will not have an immediate answer. They have never been asked this question and might even be put off by the fact that you have made cargo one of the three choices. That’s good—it will stimulate their thinking and make them sit up and pay attention.
Then explain what you mean: “Imagine an airplane. Cargo, like your suitcase, just needs to ride underneath in the storage area. Passengers, however, want to know where they are going, want to plan the trip, and enjoy looking out the window. Copilots are passengers too, but are also capable of actually flying the plane. However, they all end up in the same place. My question is, how would you prefer to get to your destination?”
I have all three types of clients, and so do you—although you may not know it yet.
Cargo could not tell you the difference between a stock and a bond. But that doesn’t mean they can’t be excellent investors with the help of a patient advisor. Passengers are competent or at least curious investors who want to learn more and follow a plan. Copilots are experienced and able investors equipped to invest themselves, but still need help; they appreciate having another set of hands on the wheel in an emergency. One is not better than the other. Don’t position this as a scale or ranking. For example, copilots are not necessarily better investors than cargo; they simply need to have more control.
Think of this from your client’s perspective. If you treat your client like cargo, but she sees herself as a copilot, you have a problem. The client’s need to direct and course-correct may not be met, and it could even bruise her ego, which will frustrate her and make her seek another advisor.
If you treat your client like a copilot, but he is cargo, he is in for a scary ride. He doesn’t want to hold the wheel for take-off and landing; he simply wants to get there. The more you frighten him by showing him charts and graphs (as in flight plans), or computer analyses of the peaks and troughs of the market (as in panoramic views from the cockpit window), the more uneasy he will become.
Finally, if you treat your clients like cargo, but they prefer to be passengers, they won’t have the positive and fulfilling experience they desire. They may shut down completely, and it could strain your relationship and their financial future.
Here is an actual example.
Important clients fired me because I treated them like passengers. They really wanted to be more in control of their investments than I thought they did. I discovered too late that they were copilots. When they told me they wanted to invest in bank stocks at the bottom of the market in March 2009, I told them they already had enough. When they said they wanted to invest their free cash, I told them that they needed to keep a cushion. This is not how you treat a co-pilot. It was my fault—the clients found an advisor willing to share the cockpit. Lesson learned.
The whole point of this conversation is to understand your clients better.
Using the cargo-passenger-copilot analogy may make the discussion easier and more effective than the more traditional way of getting to know your clients by asking about their tastes in restaurants, movies, religion or politics. Your clients’ likes or dislikes may be important, but they have little direct relationship with how they manage money. Finding out where they belong on your airplane does.
Andy Martin is author of Dollarlogic: A Six-Day Plan to Achieving Higher Returns by Conquering Risk, with foreword by Arthur B Laffer, Ph.D., a registered principal with Girard Securities, and president of 7Twelve Advisors, LLC.
About Girard Securities
Girard Securities, Inc. is a San Diego-based financial services company with Cetera Financial Group®, a leading network of independent retail broker-dealers. The firm offers a broad range of securities brokerage and investment services to individual investors. Founded by independent broker-dealer pioneer Richard Woltman, Girard has a distinct family-oriented culture that embodies key values of trust, stewardship, integrity and loyalty, which manifest through all its business practices. The firm is a top-rated broker-dealer among notable industry publications. Girard, a FINRA member broker-dealer and an SEC registered investment advisory firm, provides insurance products such as fixed and variable annuities and life insurance. To learn more about the firm and its services, please visit joingirard.com.
About Cetera® Advisor Networks
Cetera Advisor Networks LLC is an independent broker-dealer and registered investment adviser firm that utilizes a unique regional director model to support financial advisors through the entire life cycle of their business. As part of Cetera Financial Group®, a leading network of independent retail broker-dealers, Cetera Advisor Networks is able to build and support regional teams through local service, regional offices and a national home office, facilitating the success of financial professionals.
Cetera Advisor Networks is a member of the Securities Investor Protection Corporation (SIPC) and the Financial Industry Regulatory Authority (FINRA). For more information, see ceteraadvisornetworks.com.