The Customer Experience:

Client Types
Financial Planning Practice Management
FIP 510
 Todays discussion topics
01 Why do some Advisors thrive while others struggle?
02 How does Behavioral Finance relate to Interpersonal
Communications?
03 Client traits: Examples you will see as a FP

04 How to identify and effectively communicate with various

clients
Why do some Financial Planners
thrive while others struggle?
Sells in an Can
Simple Excels in
illustrative relate to
manner explanations communications
people
y
Man nt
re
diffe nt
clie s Don’t
ty p e comp add
lexity
There are numerous client
dispositions or investing tendencies
Lets do a deep dive on some key traits
Media Sensitive Anchoring Analysis Paralysis

Afraid of a loss Familiarity bias Framing effect

Overconfidence bias Recency effect Loss Aversion

Winning Streak paradox Failing to plan

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Client disposition: Media
Sensitive This is sample
It is important to acknowledge
the concerns
that the client has.
text FP: "I am hearing that you
have concerns about making
Client reacts to ‘noise’ media changes now?"
Media and the urgency of things. "If we were able to alleviate
Sensitive Can be via internet
News articles
those concerns can we talk
about how we will move
Friends or family input forward with your
investments?”
Listen to the client concerns
and reconfirm the strategy and
importance of implementation
Client disposition: Anchoring
This is sample
“The price of this XX is only
text $20. Last month it was at $30
Anchoring occurs when so I want to wait till it comes
a client talks about a back to $30”
prior price as a Acknowledge the concern.
Anchoring reference point. As a Provide information as to why
the decision to redeem is in
result, their future
line with their plan.
expectations are
influenced by that Reconnect the strategy to the
goals and the decision to
number. redeem helps achieve that
strategy.
Client disposition: Analysis
Paralysis This is sample Help client identify their
text investment priorities.
Too much choice Acknowledge the
concern and reframe
Analysis The paradox of choice
from a winner/loser
Paralysis While choice can help
better results, it can
view to a more ‘big
picture’ view
lead to greater anxiety
and indecision Don’t inherit someone's
bad choice
Prune the tree.
Client disposition: Afraid of Taking
a Loss
This is sample
text
Client is resistant to sell
Afraid of and lock in a loss on an
investment
taking a More willing to hold on
loss to a losing investment
May also want to sell
winning investments
Help clients to identify
the goals.
Remind them of the
Plan.
Provide your
recommendation and
reconnect your client to
their strategy and their
Plan.
Your conviction and
recommendation will
help them move
forward.
Client disposition: Familiarity Bias
This is sample
text hesitation
Client expresses
about a strategy or Acknowledge the concern and
recommendation such as educate the client.
investing in the US or Taking advantage of global
Familiarity Emerging Markets. They feel expertise is a prudent strategy.
it is too complicated or a bit
bias of a mystery.
Canada makes up a small % of
the world market.
Their preference is to buy Working with a FP may help
things from ‘home country’. open their eyes to other
They may invest to heavily in opportunities
familiar assets
Client disposition: Framing Effect
This is sample
text to different
People respond
situations based on the Emotional responses are
context of it. misjudgments that people
Framing How data is presented
How news is described
make
Occur when fear is a factor
effect How one interprets charts Educate clients
Reframe the issue
10% loss on $1MM
Use metaphors or examples
Vs.
$100,000 loss
Client disposition: Overconfidence
Bias This is sample
People rate themselves
Ensure the client is
text properly diversified.
‘above average’
compared to everyone “Don’t put all your eggs
else in one basket”
Overconfidence Belief that their Asset Allocation
choices will win ( they
bias are usually not correct)
“Just in case”
It is NOT different this
Think that things will time
stay as is
Use history as an
“I'm great at this!” example
Client disposition: The Recency Effect
This is sample
text

Short term focus

Recall more recent Connect clients to their
The Recency long-term goals
events more
effect prominently Emphasize the quality of
Short memory when it their investments
comes to investing
Client disposition: Loss Aversion
This is sample
text
Acknowledge clients
concern
Loss Clients feel the pain of Provide them other
Aversion a loss more than the
pleasure of a gain
options
Talk about the risk of
NOT taking action
Client disposition: The Winning
Streak Paradox
This is sample
text

The Acknowledge the

Winning Misjudging events that position that the client it
Streak are random or poorly
understood
taking and revisit their
Financial Plan.
Paradox Trying to find a pattern Revisit their goals
where there is none Is the risk necessary?
Client disposition: Failing to Plan
This is sample
text Focus on your value
To underestimate how proposition
much time and
Focus on the Plan
Failing to resources are required
for a task Clients may value a
Plan Thinking that “I can do formal plan
investing on my own” Constant
without the help of an communication
advisor Education
Lets put this information into
practice PROVIDE 2-3 POINTS
TO SUPPORT YOUR ANSWER

STATE WHAT CLIENT TYPE OR DISPOSITION IT IS

SUMMARIZE THE SCENARIO

DISCUSS IN SMALL GROUPS

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 Client type Scenario 1 : What channel are
you watching?
Your client Rami Green has been with you for 2 years. His
account has grown over 12% in that time and he is very
happy with your service.

As part of your service model, you send all of your clients

market updates and new items to keep people informed. • State what client / disposition it is
The news hasn’t been good as of late, with headlines about • Provide 2-3 points to support
Trade Wars, Border walls, and market uncertainty. In the your answer
last week, the S&P TSX has dropped 2%, and the volatility is • How would you handle it?
forecast to continue.

On Monday, Rami calls you… ” I’ve been watching XYZ news

and reading all this stuff on the internet how the market is
going to crash. I hear that there is going to be a recession
this year as well! I want to sell everything now and just
buy a GIC.”
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 Client type Scenario 2: "Lets just wait"
You have just signed up a new client to your Financial
Planning Practice. After 4 meetings and a lot of work,
Diana Grey has decided to leave her other Advisor at
Orange Bank and sign on with you.
Diana is very impressed with your investment
recommendations and is in agreement with the plan. • State what client / disposition it is
She is willing to cash out of 2 of the funds her previous • Provide 2-3 points to support
advisor recommended, after all they are worth more than your answer
they were 5 years ago. • How would you handle it?
There is one challenge; Diana does not want to cash out
her Third fund. The “Pot of Gold” mutual fund that has
gone down 50% in the last 5 years and represents the
majority of her portfolio.
In the meeting Diana tells you “ I don’t want to sell this till
it comes back. There's no way I want to take a loss now so
lets just leave it.”
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Q&A
Interpersonal Communication Skills for Financial Planners
FSP202