Financial Advisers Discuss Importance of Communication and Trust with Clients

The Importance of Honest Communication in Financial Planning

A recent experience of personal finance coach Kelley Long, CPA/PFS, who successfully developed a plan with a client to clear her credit card debt in three months, underscores the importance of open communication in financial planning. The plan took a new turn when her client revealed plans for a Europe trip funded by a new credit card. Had such vital information not been shared, the plan would have been ineffective. This highlights the importance of ensuring open, honest communication in financial planning.

Psychology and Financial Advice: A Vital Connection

In the AICPA & CIMA ENGAGE 25 session, “What Your Clients Aren’t Telling You Can Hurt You (and Them),” renowned CPAs examined the advisor’s role in prompting effective communication with their clients. Jean-Luc Bourdon, CPA/PFS, emphasized the psychological aspects involved in financial work. He stressed the need for financial advisors to move beyond their technical role and engage with their clients on a more human level.

Concurred by Sridhar Ramamoorti, CPA/CITP/CFF, CGMA, Ph.D., “Clients don’t care how much you know until they know how much you care.” His statement underlines the significance of trust-building and genuine concern for clients’ wellbeing. These elements, intrinsically psychological in nature, are crucial for a successful financial advisor-client relationship.

Building Effective Client Relationships: The Power of Empathy

Panelist Jean-Luc Bourdon stressed the importance of asking the right questions in a comforting and welcoming manner. He shared a case where he gained a client’s trust by probing about her financial security concerns, leading to a comprehensive communication plan to address her worries. Bourdon’s approach shows that it’s not only the question that matters but also how it is asked.

Creating a Shame-Free Space: Shunning Assumptions & Building Trust

Kelley Long also emphasized the importance of creating a judgment-free environment to ensure clients share all pertinent information. Being mindful of clients’ possible discomfort, Long suggested sharing personal experiences of overcoming debt to encourage clients to open up. She concludes, “the client telling me who they are at their core is not wasting my time. It’s helpful.”

Smile: The Universal Icebreaker

Ramamoorti echoed a Chinese proverb, “He who cannot smile must not open a shop.” A simple smile can ease a client’s discomfort and is a major step towards building a trusting advisor-client relationship.

Editor’s Note: To learn more about effective client communication in financial planning, sign up for ENGAGE+ sessions or access archived sessions of ENGAGE 25. Feel free to share your thoughts or suggest topics for future articles by contacting Bryan Strickland at Bryan.Strickland@aicpa-cima.com.