Identifying Values Effectively

Of the seven categories that make up the Total Client Profile, the most important is the one representing the client’s values. In fact, one of the most important conversations you can ever have with clients or prospective clients is about their values.

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Why are values so powerful? Because they are one of the core motivations for everything we do in our lives. They have a profound impact on every important decision we make, from what we choose to do for a living to whom we marry to how we spend our free time—in short, who we are as people.

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For example, most people who are parents would tell you that they value their children above almost everything else in the world. As a result, they want to protect them, to educate them well and to set them on a smooth path in life. Financially speaking, one of the things many of these parents want to do is build an adequate college fund for their children. This is a common goal known to every financial advisor. But underlying that goal is the fundamental value of loving their children.

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As important as values are, however, most people are not particularly good at articulating them. While they act definitively on their values, most have not necessarily thought deeply about exactly what those values are. So when you ask your clients to identify their core values, you not only uncover exactly where your own focus should be in assisting those clients, you also help them to clarify their direction and what they want to achieve in life.

The Total Client Profile interview guide will help you uncover your clients’ values systematically. It leverages work done by social psychologists and developmental psychologists during the late 1960s and early 1970s. As an industry, we’re indebted to Bill Bachrach and his “values-based selling” approach for making this work on values clarification accessible to financial advisors.

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The values section of the interview begins with the question, “What’s important to you about money?” Assuming, for this example, that the client answers, “Security,” you would then ask, “What is important to you about security?” If the client responds, “Knowing that I can take care of my family,” you would then ask, “What is important to you about taking care of your family?”

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You would continue uncovering the client’s values in this way until you think you have heard his or her final answer. Then you would ask the confirming question: “Is there anything more important to you than (the last value mentioned)?” If the client says “Yes,” then ask, “What is more important?” and continue with the questioning format. Once the client answers “No,” you will have likely uncovered the client’s single most important value.

While this is straightforward on the surface, it’s important to realize that it takes skill to drill down to the client’s most important value. In fact, most advisors tend to do only partial values conversations, ending them before the core values have been identified.

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It’s useful to know that there are generally three levels to every values conversation:

• Level one. This level is about the basic self, including issues such as security, financial freedom and not having to worry about paying the bills.

• Level two. This level is about others, including family, friends and community.

• Level three. This level is about the higher self, including issues of faith, destiny and reasons for being.

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Many financial advisors end the values conversation at level two or even level one. However, you have to persevere through to level three. You can encourage the client to move to the next level by matter-of-factly observing, “We’re not done.” You will usually know that the client has reached level three and that the conversation is nearly over when he or she moves into abstract, or even esoteric, territory. You want to reach a point where you are talking about something that deeply inspires the client.

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Determining High-Net-Worth Personality

As you proceed through the Total Client Profile interview, you have the opportunity not only to gather key information about each client or prospective client, but also to determine his or her high-net-worth personality.

As you will recall from Strategy 2: Implement Wealth Management, affluent clients tend to fall into one of nine different high-net-worth personality types. Each type brings unique needs and perspectives to the table. By understanding which personality each of your affluent clients has, you will be able to communicate and meet their needs much more effectively.

Built into the Total Client Profile are four questions that are designed to reveal the high-net-worth personality. Each question is open-ended, so you may need to ask only one to pinpoint the personality, or you may need to go through all four.

 

1. “What would you like to achieve with your money?”

This question will reveal two different personality types:

• The Family Steward, whose primary motivation is to protect his or her family in every way possible, including financially. Family Stewards will answer this question with full explanations of everything they would like to do for their families, such as funding college for children or estate planning to ensure harmonious division of their assets among family members.

• The Independent, whose primary goal is personal freedom. In response to this question, Independents will tell you about their achieving financial independence in order to pursue their dreams, such as early retirement or a vacation home.

 

2. “When you think about your money, what concerns, needs or feelings come to mind?”

This question will help you identify these three types:

• The Accumulator, who has more financial knowledge than most other types and is focused solely on accumulating additional assets. What Accumulators will do with these assets is secondary; they are just driven to acquire them.

• The Mogul, who values money for the power it gives. Because they like to control people and their surroundings, Moguls’ responses will be all about having more money in order to have more control.

• The VIP, who is status-oriented, desiring to be recognized and acknowledged for his or her possessions and lifestyle. The VIP will answer this question in terms of how money is important for what it can buy and the status it can confer.

 

3. “How involved do you like to be in managing your finances?”

This question will reveal these personalities:

• The Phobic, who dislikes and even fears investing. Because they are intimidated by investing, Phobics’ answers will be all about the worry and burden they feel around it. Many will simply try to change the subject completely.

• The Gambler, who loves investing and is extremely knowledgeable about it. Because it is very often their hobby, Gamblers will answer this question by talking about the excitement of investing and the thrill of market volatility.

• The Innovator, like the Gambler, knows and loves investing. But rather than being attracted to the emotion of investing, the Innovator is drawn to its intellectual challenge. The Innovator’s answer will reveal technical sophistication and a desire to be on the cutting edge of investing trends.

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4. “How important to you is the confidentiality of your financial affairs?”

Your final question will pinpoint just one personality, the Anonymous. While confidentiality is important to all groups, the Anonymous are fanatical about it. They are extremely concerned about personal security and look for constant assurance that their advisors will protect the integrity of their information. Their answers to this question will clearly indicate this intense focus on confidentiality.

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The answers you receive will give you a clear idea of the personality that you are working with, but you should follow up with an additional question or statement to confirm that your first impression is valid. These “trial balloon” questions should reiterate what you understand, albeit with a bit of hesitation so that you are not locked in.

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Here is an example of a trial balloon that you might use with a client you believe is a Family Steward:

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“Let me make sure I’ve got this right. It seems your family’s well-being is your primary concern. We’re going to create a portfolio that’s focused on your family, that’s going to really take care of them long term. Is that your goal?”

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Watch and listen closely to the client’s reaction. The client will either respond positively, confirming that you are correct, or negatively. In the latter case, return to the four questions to get more information.

Here are some other trial-balloon questions to use with prospects who may be one of the remaining high-net-worth personality types:

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Phobics

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“I get the feeling you’re not that comfortable with investing. Is that true? That’s okay, because I am, and I am going to do my best to make sure that your goals are met so that you don’t have to worry.”

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Independents

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“It’s really important to you to have the investment resources in the bank to make sure you can do what you want. From talking to you, I sense that what you want is the freedom to do whatever you want. Maybe retire at 55 and pursue some hobby or interest. Is that right?”

The Anonymous

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“You operate similarly to the way I work with my clients. My key concern is that confidential information stays confidential. When we work together, you can rest assured that confidentiality is one of my highest priorities.”

 

Moguls

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“I feel that you want to be in ultimate control of everything we do together. My job is to make sure that you have the best advice and information in order to make the big decisions. Do I have that right?”

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VIPs

 

“It’s important that you know we work with some of the biggest names in the investment management industry. People who are at the same level as you. People who know and understand the appropriate investments for someone in your position.”

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Accumulators

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“It seems to me that you are very astute about money. You know how to save it and how to make it grow. I enjoy working with clients like you, and I’m going to do my best to make sure we create an investment strategy to make the most money possible. Are we on the right track? Is that what you want from a financial advisor?”

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Gamblers

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“Investing is exciting for you, just like it is for me. I love everything about investing: whether it’s finding a great stock, watching CEOs on CNBC or doing research on financials. Together, we can make sure we keep up with all the events going on. I sense that your ideal advisor is one who is as excited about the process of investing as you are.”

 

Innovators

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“You have a great deal of knowledge about investing, and it’s very important to you to use state-of-the-art investment approaches. That’s precisely what my firm and I, in particular, specialize in.”

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(Source of the high-net-worth personality diagnostic system: Russ Alan Prince and Brett Van Bortel, The Millionaire’s Advisor™, 2003.)

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Handling Difficult Questions

There are two questions in the Total Client Profile interview guide that some financial advisors feel uncomfortable asking. Rather than skipping these questions, we suggest that you understand the reasons for those questions and how asking them can help you to serve your clients better. Here are those questions and the rationale behind them:

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• What is your religious orientation? How devout are you? Many people are passionate about their religion, and it often has a material effect on their finances. Without asking about it, you might never uncover this. For instance, when one financial advisor we work with inquired about a prospective client’s religious orientation, he found out that her biggest goal in life was to start a charitable organization in Israel. A successful businesswoman, she also wanted to hand over her business to her son so that she could head up the charity. These are critical insights, but they did not come out in the discovery interview at all until the financial advisor asked about her religion.

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• Would you describe yourself as an introvert or an extrovert? The answer to this question should give you a better understanding of how you can best support and communicate with the client. For example, a client who is an introvert may not prefer to attend large client events, but may appreciate smaller, more personal gatherings.

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Digging Deeper to Uncover Opportunities

In most cases, you will find that the Total Client Profile interview guide is a starting point only. As each conversation progresses, your questions should build on the information you are gathering, to pinpoint issues of particular importance to the client or prospect. You may find it useful to organize your thinking by breaking out your questions by type:

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• Questions that obtain information. These questions are designed to jog clients’ memories and motivate them to share their information. (Examples: What life insurance do you have? Do you have an accountant? What benefits do you receive from your workplace?)

• Questions that test comprehension. You need to ensure that clients are making informed decisions, based on a clear understanding of their issues. Any question that requires the client to rephrase, interpret, compare or add additional detail will accomplish this objective. (Example: Given the current structure of your family business, how do you think your ESOP is working for you?)

• Questions that require analysis and evaluation. These questions will help you understand the personal, subtle and often sensitive issues clients have around their finances. (Examples: What family relationships are most important to you? Since you’re uncomfortable with your children inheriting your money all at once, how do you want that money administered and over what time frame?)

• Questions that move the process forward. It is more effective to skillfully use questions to move the client or prospect to the next stage of working with you than it is to simply make assertions. (Examples: Whom else do you want involved in your decision making and in managing your finances? When would be a good time for us to review your alternatives?)

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Using the techniques presented here, you will be able to create accurate, detailed pictures of your clients and prospective clients using the Total Client Profile. As you will see throughout this strategy, the Total Client Profile will help support your entire wealth management process.