Clients want personal conversations – but are advisors up to it?

eMoney executives warn that avoiding touchy subjects could jeopardize the relationship

Clients want personal conversations – but are advisors up to it?

A new research from eMoney suggests that while most advisors are reluctant to discuss their clients' private lives, those who don't learn how to do so run the risk of losing their clients to rivals.

Only 23% of advisers felt "extremely comfortable" discussing subjects like serious sickness with customers, according to data gathered by the advice-technology company through a series of surveys.  Likewise, only 18% are "extremely comfortable" discussing topics like divorce planning or premarital planning.

There were 660 advisors that contributed overall.

Head of financial planning at eMoney, Matthew Schulte, said, failing to do so puts advisors’ businesses at risk.

“If advisors are unwilling to go beyond their traditional relationship with a client, they risk clients getting their answers from another advisor who can also provide the same service,” he said in an email to Financial Advisor IQ.

Read more: Seven effective strategies to deepen your client communication

In fact, 41% of investors polled by eMoney highlighted "willingness to discuss difficult topics or life events with me and work through them" as crucial to them in terms of financial planning.

The company gathered information from about 2,800 consumers, and presented survey statistics at the 2022 eMoney Summit.

At this point, when market changes and inflation worries are affecting customers' wallets and hearts, it is more important than ever to establish a human connection with consumers and present a plan that addresses those concerns.

Read more: Financial planning: What is it and why is it important?

According to Schulte, whose company employs 100,000 consultants to serve 5 million families, “Having difficult conversations with clients creates trust and builds a relationship.”

Creating a strategy with the needs of the client in mind prevents clients from being transactional. The emotional toll that money takes on clients cannot be understated by advisors.

According to Emily Koochel, a financial planning education consultant for eMoney with a degree in applied family science, advisers need to remember that it's physiologically challenging for clients to make financial decisions during stressful situations because the brain is in a distressed condition.

“Seeking to understand before we seek to fix is going to be really important,” Koochel said.

Read more: Three ways to keep clients calm and thinking long term

This could entail checking in at key points in a plan or, in a longer-term engagement, annually or semi-annually, while keeping in mind that things can change. According to Koochel, each client will always choose their level of success.

Financial advisors must also be aware of their limitations when dealing with sensitive subjects, according to Koochel. Advisors should look for assistance rather than avoid delicate conversations.

“We are telling financial planners that they have to recognize their own influence and their relationship. As much as the clients have an influence, you have an influence and understanding you as a person, as a planner, your own biases and your own values can also influence that relationship that you have with your clients,” Koochel said.