The first law of financial advice is that clients don’t make financial decisions based on the financial advisor’s reasons; they make them based on their reasons, which are almost invariably based on the client’s core values. While expertise and financial acumen are essential for dispensing advice, advisors must understand that it is their clients’ core values that truly matter to them and are the primary drivers of their decision-making.
Advisors who understand and embrace the importance of aligning their advice with their client’s values can better differentiate themselves and build stronger, more meaningful relationships. This blog post will explore why client values matter, how to identify them, and how integrating them into your practice can foster unshakeable trust, cultivate unwavering loyalty, and ultimately create a more fulfilling and successful advisory experience.
Why understanding client values matters
Clients aren’t simply spreadsheets and portfolios; they are individuals with unique aspirations, fears, and beliefs. While logic plays a role in financial decision-making, emotions, and deeply held values often steer the course. A client might intellectually understand the need for a diversified portfolio, but if their core value is security, they’ll need reassurance that their principal is protected.
Aligning financial plans with these core values creates a sense of purpose and connection beyond mere financial returns. This connection transforms the advisor-client relationship from a transactional one to a partnership built on mutual understanding and respect. In a market saturated with advisors, this values-based approach sets you apart.
How to discover a client’s core values
Uncovering a client’s values requires more than just reviewing their financial statements. It demands active listening, thoughtful questioning, and keen observation. Here are some effective strategies:
#1. Active listening & asking the right questions
Move beyond surface-level inquiries and delve into the “why” behind their financial goals. Instead of simply asking about retirement plans, explore how they envision their retirement. Ask open-ended questions like: “What does wealth mean to you?” “What are your biggest financial fears and dreams?” “What legacy do you want to leave?” Listen attentively to their responses, paying attention to their words, tone, and body language.
#2. Observing behaviors & priorities
A client’s actions often speak louder than words. Pay attention to their spending habits. Do they prioritize experiences over material possessions? Are they actively involved in charitable giving? How do they spend their free time? These observations can provide valuable clues about their underlying values.
#3. Storytelling & personal experiences
Encourage clients to share their life experiences, both positive and challenging. Ask them about pivotal moments that shaped their financial perspectives. Understanding their past can illuminate their present values and future aspirations. For example, a client who experienced financial hardship in their youth might prioritize financial security above all else.
Using client values to strengthen trust & loyalty
Once you’ve identified a client’s core values, the real work begins: integrating those values into your advice and communication.
#1. Aligning financial strategies with their values
The key is demonstrating that you understand and respect their values by tailoring your recommendations accordingly. If a client values security, your focus should be risk management and capital preservation. If family is paramount, highlight estate planning, legacy building, and education funding strategies. Connect the dots between their values and your recommendations, showing them how your advice directly supports what matters most to them.
#2. Communicating in a values-based manner
Weave their values into your conversations and explanations. Instead of using generic financial jargon, frame your recommendations in the context of their values. For instance, instead of saying, “This investment has a high growth potential,” you could say, “This investment strategy aligns with your goal of providing a comfortable retirement for your family.”
#3. Demonstrating authenticity & commitment
Clients can spot insincerity a mile away. To build genuine trust, you must demonstrate a genuine interest in their well-being beyond portfolio performance. Follow up on personal matters they’ve shared, remember important dates, and show that you genuinely care about them as individuals.
The business benefits of values-based advising
While values-based advising primarily focuses on building stronger client relationships, there are also significant business benefits.
#1. Increased client retention and loyalty
When clients feel understood and valued, they are far more likely to remain loyal to their advisor, even during market fluctuations.
#2. Encourages referrals from like-minded clients
Clients who resonate with your values-based approach are more likely to refer you to their friends and family who share similar values. This creates a natural pipeline of ideal clients.
#3. Makes the Advisor’s work more meaningful and fulfilling
Connecting with clients on a deeper level and helping them achieve their life goals can make your work as an advisor more meaningful and personally rewarding.
Bottom Line
Values-based advising is not just a trend; it’s the future of financial advice. In a world of increasing complexity and impersonal interactions, clients crave connection and understanding. By prioritizing client values, you can build stronger trust, foster deeper loyalty, and create a more fulfilling and successful practice.
Related: Long-Term Care Planning: The Crucial Conversation Your Clients Can't Afford to Delay