From Transactional To Transformational: The Art Of Asking Great Questions

As a financial advisor, it’s important to understand that you are not in a logical business. This is an emotional business.

The key to becoming a masterful, high-producing advisor is being able to connect with clients logically AND emotionally. You need to bring both aspects together.

This is evidenced by a common industry ratio: 10, 3, 1.

You’re probably familiar with this ratio. On average, you’re going to get ten referrals, you’ll meet with three of them and you’ll end up with one new client.

Have you ever thought about why this is the case? When you think about all the financial issues of most Americans, between the dismal savings rate, how few people have a plan, and high percentage of people who are under insured, almost every needs help.

When I was a rep, I took 3,512 fact finder meetings. I could count on one hand the number of people who had a complete, well-developed financial plan that they had fully executed. No one had all their i’s dotted and t’s crossed.

With this in mind, these ratios make no sense. Why is it that out of ten referrals you only end up with one new client? Clients should be beating down your door to work with you! However, the reason these ratios do make sense is because so many advisors only operate in the logical space.

If you only work in the logical space, it’s all about timing. It’s about getting in front of the right person, at the right place, and the right time. That’s if you work logically, or what I like to call transactionally.

What I like to teach is to become transformational. If you work in a transformational mindset, you can blow those ratios away. The key is to connect with clients emotionally, and there’s no better way to do that than by asking great questions.

The Purpose Of Asking Questions

What is the point of asking your clients questions?

When you work in a transactional mode, the questions are very basic, superficial and lead to token answers.

The purpose of advisors who ask these kinds of question are to gather data, fill out a form, and put a check in the box. Or, even if it’s with good intentions, it’s just to lead the client down a path to make a sale.

In order to become a masterful advisor, your purpose must be more profound. A master’s purpose is to create a path to truly understand their client, not just by what the client says but by tapping into past behavior and observations.

In addition, it’s to help the client acquire a deeper understanding of themself. When you ask great questions, you help the client better understand their own financial behavior and mindset through self-reflection. This allows them to buy into and make the necessary changes for them to be more successful in the future.
It can lead to eye-opening, profound moments for your clients, and that’s how you bridge the gap from transactional to transformational.

Putting Questions In To Action

Let’s take a look at how these concepts are put into action with an example of an advisor conducting a fact finder meeting and talking to their client about their income and saving money.
A transactional advisor will ask the basic questions like:

- What is your annual income?
- After taxes, insurance, and deductions, what is the net amount you take home every month?
- How much on average do you save?

For simplicity, let’s say the client’s monthly income is $10,000 per month and he or she says they typically save 25% of that amount. At that point, many advisors would be satisfied and simply move on to the next section. They feel that they’ve gathered the data. Mission accomplished.
A transformational advisor will still gather that essential data, but also go deeper.

The truth is that the majority of clients have very little to no true savings. The majority of their wealth is in their house or in their qualified plan. So, when they don’t have a significant amount saved up, yet they tell you that they typically save 25% of their income every month (or conversely that they only spend 75% of their monthly income), you know there is a disconnect.

A transformational advisor will get to the root of this by asking questions like:

- You mentioned that on average you spend about 75% of your monthly take home income every month on expenses. This means that you save about 25% of your income every month, is that fair to say? If that’s the case, where is that money?

Most clients will answer along the lines of, “Well, if we had a met a few months ago, you would have seen a bunch of money, but just recently we had to do some renovations on the house and I had to help out a family member financially.”

It’s at this point you can have a conversation about the difference between deferred savings and true savings. Deferred savings is money we save for a period of time to be used, for things like renovations, a new car, or helping a family member. Some of these expenses are expected, others are not. True savings is money we put away for a time period when we will no longer be working.

This is when most clients realize that the monthly amount they put towards true savings is often zero. This is when a transformational advisor can follow up with questions like:

- Looking at the past few months, do you think you could find discretionary spending that you could avoid?
- When you think about doing that, describe to me the pain that comes along with it?
- What would be your greatest challenge to give up that spending and to save?
- How can I help?

Do you see how different this conversation can be by digging deeper and asking great questions? This is transformational, not just transactional! And it leads to action based on the client owning their own situation.
This is the key to developing deeper relationships with your prospects and clients and dramatically improving your ratio so that you can convert a much high ratio or referrals into clients.

Think through other great questions you can use throughout the other stages of your fact finder and planning meetings. Or better yet, watch the latest episode of JIM’s TAKE on P2P Academy to see some more examples. Most importantly, make sure you are going deep with your clients not just asking superficial questions to fill out your forms.


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