As any financial advisor should know, the advisor-client relationship isn’t just about numbers. You have to know your clients so well that you can visualize their future — and plan for it.
But you may be having a hard time connecting with clients from a different background — and you might not even know it.
An article published by the CFA institute discusses a speech by Adrienne Penta at the 2017 CFA Institute Wealth Management Conference held in Nashville, Tennessee. According to Penta, the finance sector, particularly in the US, is mainly focusing on older white male clients, even though wealth is being created across the demographic spectrum.
“We’re really limiting ourselves in growing our businesses and thinking about how we serve clients if we only create a rapport with people who look like us,” said Penta, founder and head of the Centre for Women and Wealth at Brown Brothers Harriman. “[W]e have to create rapport in the absence of commonality.”
Normally, unconscious bias is a useful tool: it provides a framework for you to get through your day without agonizing over every bit of information. But problems arise when that bias leads you to make false assumptions about people, or makes you treat them differently for no good reason.
Penta focused on gender-related bias. According to her, finance has historically developed as a male enterprise, with women entering the picture only in the last few generations as professionals, property owners, and financial decision-makers. This contributes to financial advisors’ tendency to not engage very well with female clients.
“For high-net-worth women, women who have a million (US) dollars or more, 30% of them don’t have an advisor,” she said. She also cited a tendency among advisors to ask men about business and women about their families, and for them to not even look at their female clients. “We don’t go into a meeting thinking, ‘I’m only going to look at one person in this meeting. I’m not going to look at the other person.’ But sometimes those things are happening.”
To overcome those tendencies, Penta recommended a three-step process:
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- First, the finance sector should collect data to define the scope and nature of the problem. Do a survey of your client base: ask them what they want to know about, what form of communication they prefer, and other questions to get to know them. Separating the data by gender, ethnic background, age, and membership in the LGBTQ community could prove fruitful.
- The next step is to train people on how to deal with clients. “We have to be intentional about best practices in terms of communication,” she said. The information from your client survey should be helpful in formulating best practices.
- Finally, have a process that filters out unconscious bias. Penta prescribed the use of checklists and fine-tuned onboarding protocols: “The first 90 to 120 days of client experience is an indicator of future success for wealth management clients. They have to have a really good, really smooth, really well-served onboarding experience.”
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