Until now, we have spoken a lot about the questions that your clients may ask you, the bombardment of difficult questions, comprehending the unasked questions, the answers to those questions, and so forth. Today too, the article is about questions, but this time the source is you.
It is extremely important for an advisor to be also prepared with some questions in addition to the conventional answers for a number of reasons:
1. It will improve your quality of advice: The quality of advice you deliver is directly proportional to the quality and quantity of facts you know about the client; his goals, his financial position, his personal information, his attitude in general, etc. And most times you will not be served with all the information on a plate, you will have to toil for the same, excavate the information from the client by asking him questions, identify their financial dreams and goals.
2. You'll seem interested: Moreover, when you ask questions from the client, you give him/her time, listen to their responses patiently; the activity builds their confidence. Your client will feel that you are genuinely interested in his goals and will give him/her the best solution. Your efforts will eventually lead you closer to your clients.
3. Communication: We all know that in any relationship, including the advisor-client relationship, communication is the key. Quite often we meet clients who aren't very conversational, aren't asking you too many questions, A question from your end will be the perfect ice breaker in such a setting, the client will not be left with an option, but to talk.
Now, since each client is different, the conversations will be different, and so will be the questions. We have listed a few general questions that you may add in your list, and can be used in most scenarios.
> Tell Me Something about yourself? This is the first question that a person would prepare for any interview. And this is also the first that you should ask a new client, since it's very important to get to know him/her before proceeding on to business. Ask about his/her family, work, career, education, etc. These random questions will give you links to more general conversations, like your kids may be studying in the same school, or you may have similar hobbies, etc. You may have material to contribute too, your interest and participation will increase your likeability score and will help you lay a cordial foundation of your relationship.
> What are your expectations from me? Some people may be acquainted with the basics, and are looking for a broad direction from you. While others may be looking forward to handholding for every petty financial decision. So, the answer to this question will give you a clear picture and will guide you in your journey with the client. You can ask about his preferable mode of communication here for future interaction. You may ask for any questions or concerns that he may have about your role/services.
> Have you worked with a financial advisor earlier? The response will help you a lot in dealing with the client henceforth, you'll know what exactly will get on his nerve and could be fatal for your relationship. This also gives you a chance to explain how your services are different from the others.
> How do you handle money matters? What is the value of money for the client, whether he keeps emergency funds for near term needs, how important is standard of living for him, whether he will be able to compromise today for his future, what does he think about debt, the answers will tell you a lot about the client's approach towards Saving and Investing.
> What are your Current Investments? Remember to ask this question once you are through with breaking the ice, and have established a connection with the client. His existing investments forms his current Portfolio and hence it is actually the base of your financial planning.
> What's your Risk tolerance? You can discover the client's risk appetite on the basis of his age, income, assets and liabilities, etc., but you need to ask for his Risk Tolerance, his Perception towards risk. You should ask the maximum amount of loss that he is comfortable with. You must explain that how diversification, investment horizon, asset class, will together work to alleviate his risk, but at the end, investing should should be approved both on Risk Appetite and Risk Tolerance parameters.
> What are your Goals? Basically what are they investing for. So, you can align the investments with his goals. Many clients may be random investors, investing for returns, it's not that they don't have any goals or aspirations, but they haven't thought about specifically planning to achieve those goals. Help them outline the goals and structure a plan to achieve them.
> Ask for feedback, Feedback solicitation activity should be a regular ritual. The client will get a chance to express his discontent and you will get a chance to improve.
