Yoko Ono once said: “A dream you dream alone is only a dream. A dream you dream together is reality.”
Clients come to financial planners to make their dreams become reality. They will have long-term goals and a type of lifestyle they’re looking to unlock, and their paths have led them to seek professional advice.
Understanding a client’s life, their experiences, and their goals is so vital to delivering a high-quality financial planning experience. Yet many client files relegate these “soft facts” to a handful of sentences that offer no real insights into the client’s life.
Read on to discover why soft facts are so important to delivering a quality customer experience and five reasons why you must let your client tell their story.
The importance of soft facts is often undervalued by financial planners
Soft facts give you a peek behind the curtain to the core issues that matter to your clients and their current mindset. They can provide a detailed picture of your clients’ attitudes to investing, their tolerance for risk, their past investing behaviours, their previous experiences, and what investing has to do with their goals.
These insights can provide you with a myriad of useful details that can show you all the positives and negatives from your clients’ backgrounds.
For example, your client might have taken a passive approach to investing in the past but wasn’t happy with the growth generated, which explains their openness to taking on higher risk investments in the present.
On the flip side, they might have had a distressing experience in which they suffered a large loss on a previous investment, and that is why they are now overly cautious with their portfolio and are averse to risk.
In doing this due diligence, you can understand your clients’ mindsets and better communicate any recommendations to them with their past experiences in mind. You can also cover any lingering concerns or queries they might have, and leave you better protected in the future, should a complaint arise.
It also provides evidence that you have fulfilled the Financial Conduct Authority (FCA)’s mandate to “know your client well”, a process that can help to avoid what the FCA refer to as “rogue outcomes”.
A detailed client file that demonstrates the steps you’ve taken to understand your clients’ backgrounds and how you arrived at any recommendations, are vital to keeping the FCA happy and passing any future checks.
5 ways that soft facts improve your client experience and your overall business
- They help build trust and a good rapport
Taking an honest interest in a client — and backing it up with thorough note-taking and diligent checks — can help develop a strong bond built on understanding and trust.
The more your client trusts you, the more business they are likely to do with you in the future. Additionally, they are likely to be more open and honest regarding their circumstances and goals.
2. They ensure that key details are recorded and nothing vital is missed
If you set aside the time to properly listen to your clients’ stories and take in everything they have to say, you will benefit from the peace of mind of knowing you’ve covered as much detail as possible and recorded any relevant hard or soft facts in their client files.
You could uncover their reasoning behind their investment preferences, their views on savings, or their past experience with high-risk ventures such as an Enterprise Investment Scheme (EIS) or Venture Capital Trusts (VCTs).
It is all valuable information to possess. It’s also crucial to your paraplanner’s work in preparing a detailed, clear, and accurate suitability letter that will withstand any future scrutiny.
3. They can help increase your firm’s business
Clients’ stories can help provide valuable insights into needs that might not have been obvious on first inspection. This could involve investment decisions for a child or grandchild, or identifying areas of protection that would benefit their long-term wellbeing — something that is sure to appease the FCA in the long run.
Unlocking additional areas in which you can serve your clients’ needs can help increase your revenues and drive more work your firm’s way.
4. They can guide you towards asking the right questions
Don’t rush into asking the wrong questions. You should take the time to consider what you need to ask to get your client to open up and share the key details you’ll need to properly build a thorough profile.
The right question could uncover soft facts that would otherwise have been missed, which could result in the wrong recommendation, a potential complaint, and damage to your firm’s reputation.
Additionally, your detailed suitability report is more likely to be approved by your compliance unit’s checks.
5. They can help protect you in the event of a complaint
A detailed fact-find that covers both the hard and soft facts provides a vital safety net for your business. If your client were to make a complaint in the future, being able to clearly show that you did your due diligence and established a comprehensive client file will help support any decisions you made.
In the event you haven’t covered all your bases, you might find it difficult to defend yourself — so do not underestimate the value of a solid fact-finding mission.
Record everything that is mentioned in meetings, including your clients’ comments, as their own words can provide a solid defence in the event of a complaint. It can also help you during any presentations, as quoting a client back to themselves, can help remind them why you’ve decided to recommend a particular course of action or product.
Get in touch
If you are finding it difficult to allocate the time towards thoroughly hearing clients’ stories and recording all their key hard and soft facts, it might be worth discussing how outsourcing could solve your headache.
Email us at firstname.lastname@example.org or call us on 01733 699071.