You’re explaining something to a client and his eyes glaze over. He hasn’t a clue what you’re talking about. What now?
Jay Nash, vice president and portfolio manager, Roberts Nash Advisory Group, National Bank Financial, offers solutions for dealing with three types of clients.
Type 1: The hands-off investor
These clients aren’t interested in the markets. But advisors still have to explain what they’re doing, and sometimes get carried away because they’re passionate about their work.
“I tell them, ‘On occasion I get so absorbed I slip into terminology you won’t understand. If this happens, please stop me,’” Nash explains. Say you use the term ‘QE tapering.’ Some might not get it, but “don’t dive into an explanation. Instead, ask if he wants you to explain it because he may not be interested.”
If the client’s game for detail, make it easy to understand without talking down.
Type 2: The “expert”
Some clients think they know everything about investing and will never admit they don’t understand something you’ve said. “Be cautious about the way you speak to them because they’ll take offence if they feel you’re trying to teach them something,” says Nash.
When you suspect the client doesn’t understand (see “Signs of confusion,” right), frame your explanation as though you’re simply reiterating something he already knows. For instance, say, “Of course, when the Fed pulls back on QE…” and then launch into an explanation. This allows you to get the point across without bruising your client’s ego.
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Type 3: The engineer
These are highly educated clients with technical backgrounds.
“They want to learn what they don’t know. If you say something they don’t understand, be prepared to explain it in detail. And you’d better know what you’re talking about because when they get home they’ll do their own research.”
They’re not interested in the watered-down version, either. While their expertise is in other fields, they have the ability to understand complex explanations, says Nash. So speak as if you’re talking to a fellow advisor unless you see signs of confusion.
Dean DiSpalatro is the senior editor of Advisor Group.