Does educating clients make you money?

By Tracy Piercy | April 9, 2014 | Last updated on April 9, 2014
3 min read

Inherent in every financial transaction is an element of education. But does spending the time and energy to educate clients make you money?

Yes, because it empowers clients with confidence and fosters good communication. But, if the education is too technical, trying to impart that information might have the opposite effect.

Read: 7 ways to help clients save tax

Instead, offer clients concepts like diversification and asset allocation. If you do this, then more in-depth solutions will attract assets and you ensure clients aren’t lured away by another advisor offering a perceived higher return.

Here’s how you can educate clients without sacrificing productivity or overwhelming them.

1. Organize a financial seminar. A successful seminar actually revolves around your follow up materials, not the event itself. Organizing, promoting and developing an event is a business requiring a diverse set of skills in marketing, event planning, content development and public speaking. Explaining tricky concepts in a group setting is also far more complicated than in a face-to-face setting, and can be confusing for clients.

Read: Get to know your next generation of clients

To make the most of your time, co-host and co-promote the event. Ensure you get contact information so you can communicate with interested prospects after the event. This helps to build relationships that are independent of the event. Also provide follow up materials, which you can send to any prospects or clients who aren’t able to attend. This showcases your expertise, builds credibility and strengthens relationships.

2. Send e-newsletters at least once a week. The key is the consistency of your delivery, not the length or how it looks.

Read: A plan for every age

People have short attention spans. So keep information simple and relatable, as opposed to promoting a product or strategy, or detailing economic or market news. Financial institutions, insurance and fund companies, and news agencies already provide most of the technical information. Your goal is to provide information involving life events, such as saving for a kid’s university education, or supporting aging parents.

Clients and prospects won’t read all your information and that’s ok. So include a call to action. This way, they know how they can follow up when it’s appropriate.

Read: 4 ways to maximize income today

3. Include education during every client meeting. For instance, a new client who is risk-averse and has all his liquid assets locked in five-year GIC’s with no rolling maturities is actually exposed to huge interest rate and inflation risk, and hasn’t left room for emergency expenses. You know this, but to balance his portfolio you have to teach him basics, like the different ways he can diversify. This way, he understands the overall net positive impact of diversifying, including reduced exposure to different types of potential losses. Plus, this discussion will likely uncover additional assets and opportunities for consolidating assets with you.

Also, don’t start meetings with charts, graphs and rates of return because you’ll set the tone for a more intimidating interaction. These items are often beyond a client’s comfort level of understanding. This type of discussion also invokes competition because your client can say things like, “I heard another person offering X%.” or “I heard the market did X% last year. How come you got me less that that on my portfolio?”

Read: The ABCs of cash flow planning

Instead, ensure clients understand topics like terminology, economics, markets, and product structures first. Then ask if they’d like to hear more detail. Educated clients make decisions more efficiently, take advantage of more products and strategies, and are less likely to jump around chasing returns.

If you create opportunities to teach financial concepts that are relatable to their lives, clients will feel more connected to you as a person, and more confident coming to you with all their financial matters, including opportunities they might be considering elsewhere.

Tracy Piercy, CFP is the founder of MoneyMinding. She is an author, speaker and financial educator providing books, training, courses and materials for both advisors and clients to help create sustainable income and increase financial capacity.

Tracy Piercy