Bank Advisor Blunders And How To Avoid Them

By Brian Bloch AAA

Although customer-oriented advice is the undisputed objective, two-thirds of bank customers complain that they still do not get offered the kind of products or services that are really appropriate for them. Even when advisors have their hearts in the right place, concepts fail to be well implemented and goals are not achieved.
What Advisors Typically Do Wrong
The underlying rationale for certain concepts is often not even properly understood by the advisors/sellers themselves. The level of education and skill of advisors is highly variable, and some are simply unable to get a grip on what they sell.

Another problem is that only those clients who visit the bank, and are clearly willing to invest a bit of time as well as money, get a relatively good explanation of what they have right now or could have from the bank. Yet many clients who lack the time or motivation to bother with their investments, and particularly to see the advisor personally, are not looked after well. (Learn tips to find a good advisor for your needs in Advice For Finding The Best Advisor.)

Advisors are nervous to call people up, and indeed, some do not welcome the input. All this means that a large group of clients is under-served and undersold, constituting a considerable loss of business and revenue for the bank. In other words, the familiar customers are those who make their presence felt physically, by being particularly big investors or unpleasant customers.

While Know Your Client (KYC) is at the heart and soul of the investment business, the reality is that many customers are not known and even if they are, this knowledge is not always converted into the right portfolios.

Then there is the really tough paradox that, despite the rhetoric on client-oriented advice, the reality is that the pressure is still there to achieve sales goals for certain specific products. Investment banking is a lost cause if sellers are frantically trying to push what brings in the most money, regardless of its suitability or the real chances of it yielding an acceptable rate of return over the given time horizon.

These problems have their roots in an overriding and sole objective of making money in the short run. Such objectives convert inevitably into a self-seeking investment process, revolving around the firm rather than the customer. The process needs to be mutually beneficial in a kind of sensible compromise. (If it isn't working out, here are some tips on how to say goodbye in How To Break Up With Your Bank.)

How Do We Get this Right?

The objective of the seller cannot be the ruthless profit maximization that jeopardizes the interests of clients. Such an approach may bring in money in the short term, but over time, can only result in dissatisfaction, and angry and disloyal customers who will vote with their feet. Accordingly, goal-setting processes must seriously and sincerely be based on the notion of a profitable long-term partnership between buyer and seller.

Advisors will then be relieved of pressure to sell what brings in the most in the short run. Over time, satisfied customers will stay with the bank and this will pay off in both loyalty and revenue. The right philosophy must come from the top, from the start. Fear of control and of not achieving ambitious and ruthless sales targets has to be eradicated.

Once this fundamentally correct orientation is in place, advisors need to invest time in their clients, so that they will invest their money with the bank, and be satisfied both with the process and the results, now and in the future,right into retirement. (Get what you need out of your bank. Read Bag The Best Bank Account.)

Emails and phone calls need to be used efficiently and productively to establish ongoing communication. The classic fear of phoning must be overcome, and can be, once clients realize that this is about truly helping them, and not about pushing money-spinners down their throats. Training is needed on how to write such emails and how to start, develop and conclude the phone calls.

Personal visits are also essential, depending on the clients, their portfolios and personal preferences for such meetings. There is simply no substitute for a personal meeting. In no other format do people really give matters their full attention, and the face-to-face approach allows a three-dimensional relationship to develop. Additionally, the ability to assess the other party meaningfully, including his or her emotions, fears and hopes, and level of knowledge and understanding, is optimal in a real meeting.

Only in person is the body language of the other party evident. People's facial expressions, they way they sit, stand, talk, use silence and so on, all play a role in effective and honest communication. Even people who are unfamiliar with the world of body language do pick up vital clues and cues from personal interaction. Useful as emails and phone calls are, they are no substitute for personal meetings and never will be. (For more, check out Keeping Clients Through Good And Bad.)

The Bottom Line
The advisory process between bankers or brokers and their clients remains a source of mutual dissatisfaction and lost opportunities, not to mention lost money. Far too many customers are neither properly known nor well served and this has to change.

The essence of resolving the problem is to get rid of the notorious sell-at-all-cost mentality from the top right now, and to ensure that advisors develop productive and viable processes and relationships with their clients. Naturally, the selling still has to occur, but this needs to be within a symbiotic, mutually beneficial process entailing open and honest communication. If the attitude is to get the money now and worry about the consequences later, the investment industry will go from one crisis to another with an ever-deteriorating reputation.

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