The do’s and don’ts of talking to clients

investmentnews.com:

Getting clients to understand the wealth management industry in simple terms can be daunting and complicated.

While advisors may want to come across as a “know-it-all’ by using industry jargon, this is often a failing factor to keep clients, according to several advisors who spoke to InvestmentNews on the subject. So, how should advisors talk to clients so they fully understand their portfolio or financial plan?

Hank Fox, financial planner at Blue Bell Private Wealth Management believes there is a tendency among advisors to use confusing industry jargon or delve too deeply into specifics.

“I have seen clients become overwhelmed to the point where they stop listening and stop asking questions for fear of appearing uneducated, effectively ending the opportunity to engage in a true dialogue,” he said.

Since financial experience and literacy can vary between people, Fox will start the conversion by keeping the discussion high level and telling clients to ask questions or have him provide more explanation, as needed.

“I also will monitor the client’s attention and periodically ask them if they understood what I have said and if they have any questions. This allows the client to dictate the level of detail they desire or need rather than me making that determination for them.”

Meanwhile, several advisors like to use analogies and stories, breaking down terms and concepts. “[Like] an ETF, exchange traded fund; that doesn’t make any sense to anyone. So I’ll explain, ‘Picture going into Costco with a shopping basket, that’s the ETF wrapper. Then you throw in the meats and the produce, and those are the individual holdings within that,” says Jon Moore, regional director at EP Wealth.

“No two ETFs are gonna look the same, that