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Are You Ready to Answer These 3 Common Questions From Prospects?

Dec 4, 2018 7:00:00 AM


Are You Ready to Answer These 3 Common Questions from Prospects?

Perhaps one of the greatest challenges facing financial advisors as they grow their practice is finding new clients.  Part of that struggle may very well stem from a lack of client trust in the financial services industry and in financial advisors specifically.

In 2016, when polled by the American Association of Individual Investors (AAII), 65% of respondents indicated they “mistrust a lot” or “mistrust a little” that financial advisors will do what is in the best interest of their clients.*

As an advisor, how can you engender trust in a potential client who is wary of hiring you? One potentially helpful strategy is to try to predict what questions might be asked of you during the initial prospect appointment.

Try searching the Internet for a phrase similar to the one a potential client might use such as, “What to Look For in a Financial Advisor” or “What Questions to Ask Before Hiring a Financial Advisor”. This exercise could offer great insight into the specific personal investment publications, blogs, and articles a prospect might have recently read. After comparing a few of these articles, you may notice the same questions being suggested to your potential clients by multiple credible sources.

Let’s look at some of the most common questions a prospect might be encouraged by a financial publication or other trusted resource to ask when interviewing a financial advisor.  

How might you respond to each of these challenging inquiries?

  • Do you serve as a fiduciary?

Ideally, you’re already a Registered Investment Advisor (RIA) and as such, can answer yes to this question. In just a few minutes of online research, a prospect can discover that RIAs are required to provide financial advice to clients based solely on what is in their best interest rather than by another standard such as “suitability” of product or service. If you are not yet a fiduciary, it might take more effort on your part to convince an educated new prospect of your ability to remain unbiased.

  • Do you receive any commissions or incentive and/or what is your fee structure?

A savvy client who has taken the time to research the qualities of a trustworthy financial advisor might’ve been warned to watch out for the slick sales person primarily concerned with his or her own bottom line. If you sell your firm’s proprietary products, or other products for which you receive a kickback, you might find yourself being heavily scrutinized by a skeptical potential client. While these products could very well be quality products in your opinion, you may still find yourself defending the fact that you benefit personally by recommending them.

  • Where will my money be held and can I access my accounts directly?

A prospect who has done their research could very well have been advised to demand a high level of transparency in the relationship with their financial advisor. They may want assurances regarding the reputation and security of the custodian who will secure their assets. They might also wish to have the ability to access their accounts easily to make transfers and conduct other financial transactions independently of their advisor. Ideally your financial management platform will easily accommodate this type of client-driven account activity, which could potentially ease a prospect’s concerns.

 If, however, you find yourself burdened with cumbersome legacy systems which may force you to absorb more risk and invest more of your personal time by handling even the most basic transactions personally, you might turn off a potential client seeking greater control over their investments.

 An increased understanding of your target market’s desires and concerns can go a long way toward helping you make strategic changes in how you promote yourself and your financial advisory practice in 2019. In order to gain more new clients and grow your business, the data might prompt you to explore going independent as an RIA or seek out a custodian with improved technology and a more client-friendly CRM.

Before you have that first important conversation with a prospect in 2019, consider having a conversation with TradePMR about how we can help you be ready for the tough questions.

Begin the conversation today at https://tradepmr.com/contact/



Trade-PMR, Inc., member FINRA/SIPC