For many advisors, particularly those catering to the affluent, winning the business of a prospective client requires more than a demonstration of one's own abilities. They often also have to plant doubts about an invisible third party–the client's current advisor.
That job is made easier, say sources interviewed by National Underwriter, when the current advisor fails on two counts: the quality of the expertise delivered; and, more importantly, the quality of the relationship.
"When an advisor communicates ineffectively and delivers a substandard outcome, that's when [a client's] blood really begins to boil," says Phil Buchanan, a senior instructor and consultant at Cannon Financial Institute, Athens, Ga. "They're ripe for the picking by advisors who are committed to delivering a superior experience."
Indeed, say experts, that ability to deliver a superior experience–to 'wow' the client, in the words of one–is key to establishing a durable relationship. The advisor who has earned the client's trust but blunders by suggesting an inappropriate product or tactic may be afforded an opportunity to right the error. Clients are less forgiving when they have received the reverse: competent advice, but a poor relationship.
That's not to say expertise, or lack thereof, should be discounted. Observers note examples where advisors made recommendations–some bordering on malpractice–that led to an irreparable rupture with the client. Simon Singer, a financial planner with the Advisor Consulting Group, Encino, Calif., cites a case of an 85-year-old woman who was sold a deferred annuity that entailed a 25-year surrender charge and a 20% commission.
Randy Scritchfield, president of Montgomery Financial Group, Damascus, Md., says that one of his clients, having been rated a substandard risk for health reasons, was lured into buying a life insurance policy for which the premium payments–$1,200–totaled more than one-quarter of his monthly income and secured a death benefit of only $25,000.
Other examples, though less egregious, might also send up red flags. Brian Walsh, a partner at Walsh and Nicholson, says he frequently speaks with prospects who named the wrong beneficiary (or no beneficiary) on a life insurance contract; were inappropriately sold class 'B' share investments instead of 'A' shares; or were never asked basic discovery questions about wills, plans for kids and long-term objectives.
How should advisors treat such failures? One thing they ought not to do, sources stress, is to badmouth the existing advisor.
Says Scritchfield: "One has to tread carefully when criticizing [an advisor] with whom the client has been working because this may be viewed as questioning the client's judgment."
Micheline Varas, an advisor with Vancouver, B.C.-based Equinox Financial Group Customplan, agrees, adding: "I don't think anyone earns credibility by cutting someone else down. That makes the client second-guess the advisor who's doing the criticizing."
Producers also agree that, except in cases where clients were woefully ill-served, advisors should endeavor to preserve existing products and plans, tweaking them as necessary to better conform to the client's objectives.
