Written by Kronos Technologies on March 11, 2019
In many regions the law requires that advisors complete a financial needs analysis (FNA) before making a sale to a client. And, in most other cases, the completion of an FNA is a matter of policy for the insurance and wealth companies that advisors work with. But even when there is no hard requirement for an advisor to conduct an FNA—it’s still the best thing to do, both for them and their clients.
Read on to learn four reasons why you should conduct an FNA with each of your clients, even if it’s not required by law or company policy.
Reason #1: FNAs are the best way to understand your client’s needs
Making a sale is a one-time, advisor-centred event—it’s a transaction, rather than the beginning of a relationship, and is not likely to help you make repeat sales and build sustainable long-term revenue in your practice. On the other hand, uncovering and meeting an array of needs is an on-going, client-centric journey. Clarifying where your client wants that journey to take them means conducting an effective FNA.
In the old advisor world, FNAs were usually unstructured, ad hoc conversations with clients. Advisors relied heavily on their “people skills” to draw out the client and gain an understanding of their needs. The results were predictably hit and miss.
Today, advisor attitudes about the best way to conduct FNAs have evolved, and many great tools are available to ensure the FNA process is consistent, efficient and effective. Using an advisor-specific FNA software solution enables advisors to always get all the information they need to best help the client. And, because the client can review and revise their own information as part of the process, they become much more engaged at an earlier stage—making them more thoughtful about their goals and dreams, and more receptive to good advice.
Reason #2: FNAs build trust and client confidence
Your client’s confidence in you may be the most powerful motivator in their decision to work with you. Advisors who rely on the logic of their solution and explanations of the features of their great products, are ignoring the truth that there is not as much difference between products as there is between advisors. The client’s decision to buy from you rests in large part on your ability, experience and ability to feel empathy for them.
Building trust—the currency of all great client relationships—starts with your very first interaction with a client and is something great advisors continually work to build. Conducting thorough FNAs is a great way to inspire that trust because it shows the client that you are motivated by their agenda rather than your own. A good FNA process includes a review of their journey to date—highlighting for them how far they have come towards meeting their stated targets and goals. It reinforces what you have done for them already—and it illustrates what more you will be able to achieve for them in the future.
Reason #3: FNAs uncover opportunities for cross-sell and up-sell
Studies show that, on average, clients have only purchased one, or perhaps two, products or services from their advisor. Given the variety of insurance and wealth needs that most clients have, there is a significant opportunity for most advisors to cross-sell more products and services that address outstanding client needs.
Clients benefit because they achieve more of their financial and life goals. At the same time, cross-selling helps the advisor because, the more products your clients buy from you, the more the depth and breadth of your relationship is increased—putting up a barrier against your competition. It also increases the profitability of each client relationship and increases the life-time value of the client. And, because of all of the work you have done to build trust and a solid relationship, making sales to existing clients is more than three-times easier and six-times cheaper than trying to land a new client.
Good FNA software supports advisor’s cross-selling efforts. It includes tools for analyzing a client’s life, disability, and critical illness insurance needs—and, it also contains great calculators for determining retirement savings and income needs, education savings needs, and investment goals. The FNA software will use that data to recommend which other products best meet your client’s future needs.
Whatever your client’s initial motivation for working with you, once you work through an FNA with them, you’ll uncover a variety of other opportunities for you to meet more needs and make more sales down the road.
Reason #4: FNAs help advisors demonstrate their expertise
FNA software not only ensures that you build trust and uncover all your client’s financial needs—it’s a great way to demonstrate your expertise. The right software will use your exploration of your client’s needs to create potential solutions—and then generate a professional-looking presentation for you to deliver to your client. These presentations can be customized to provide whatever level of detail your client wants—some are happy with just the bottom-line, others need to examine all of the detail. And, the presentation can be branded with your practice’s colors and logo.
A great presentation will demonstrate your ability to create effective solutions that meet your client’s needs and enable them to reach their goals—but it will also show them you are a professional, with the right experience, skills and tools to meet all their future needs.
Conducting a comprehensive FNA for each of your clients—whether it is required by law or not— is a great way to create awesome client experiences. Focusing on your client’s needs shows them that you are motivated by their desires rather than your own. The process builds trust and the confidence clients need to feel comfortable buying from you. And, FNAs allow you to uncover future cross-sell and up-sell opportunities. Doing a thorough FNA is not just about maintaining compliance—it’s an important method of building deeper and broader relationships that will stand the test of time.
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