Advisers often ask me how to improve their communications with clients and prospects. Would you believe my first recommendation is always to start by using actual words?
As professions become more specialised – and financial advice is becoming as specialised as any other area – there’s a tendency by practitioners to adopt industry acronyms and assume everybody outside knows what they’re talking about.
While exaggerated for effect, the following scenario is not too far from the experienced reality of many clients and prospects when consulting an adviser:
John, a soon-to-be-retired doctor, was needing financial advice and approached the offices of H.A.N.D (‘Have a Nice Day’) Financial Planning.
Harry Hand, the principal, greeted John with the following exchange: “John, thank you for coming. Now, being an RIA, I can advise on your ETP, but ASIC says I must give you an FSG that explains my AFSL and AR status, therefore limitations on my APL”.
John wondered whether he had walked into the Albanian embassy by mistake, so interjected: “I just need some help with my retirement plan, you see.”
Harry: “I see, I see. But it’s important first that you read the FSG, which includes information on the CSLR, BID and my ASP. You will see my typical clients are HNWI. Here are numbers on our FUM, DUM, & AUM. I also have to point out any conflict with B2B referring COIs due to JVs. The guide also covers off my CPD requirements.”
This, of course, was no clearer to John, who started to look worried.
Harry: “I can see you have reservations. If it helps, I am a CA and CFA. I have passed the FASEA and am a professional member of the CPA and ITAA, as well as the AFA and the FPA. I am in fact a CFP, as well as being a FAICD under the AICD.”
Being a medical man, John was privately diagnosing Harry as a potential stroke victim by this stage. But, before he could intervene, Harry went on:
“Ultimately, John, we will need to give you an SoA, but before doing that we need to go through a KYC and AML. We will then capture all this on our CRM”.
“Definitely a type of Apraxia,” thought John, studying the staccato and consonant-dominated soundings coming from Harry’s mouth. “The symptoms are all there – difficulty coordinating the muscles for speech. A growing resort to meaningless babble.”
“We have multiple structures to employ,” Harry went on regardless. “We could create an SMSF that invests in IPOs but only after a detailed SWOT of the P&Ls. We have an ESG overlay that will knock out the FAANGs. For your FI allocation, we can put you in TIPs that offer a margin over LIBOR.”
By this stage, John was thinking about a treatment plan for Harry: “Perhaps, a referral to Tony, the cardiologist, and a few sessions with Sarah, the speech pathologist and almost certainly an MRI and an ECG. My God! It’s catching!,” he thought in horror.
Harry by now was talking at the wall behind John’s head: “We are thinking beyond the CAPM to factor models using BtM and SML. Then of course there are considerations around EBIT, EBITDA, and PBT. Everything is measured on a DCF model back to NPV after SWOT. Being tax aware, we have to consider FIFO and LIFO methods.”
“Thank you so much,” said John, quickly picking up his satchel and slowly walking backwards to the door he came in through. ‘You have been very helpful, but time marches on…”
“But wait!” said Harry. “If time is short, we can switch the SoA for an RoA and consider your IP and TPD!”
“Harry, let me be plain,” said John. “I strongly suspect you have had a CVA. That’s what we in my trade call a cerebrovascular accident, or ‘stroke’ in your language. My recommendation is you just STFU for now. Goodbye!”
The lesson from this scenario is that acronyms, while often valuable and time-saving tools for insiders, are the death of communication with anyone else.
Do yourself and your business a favour. Carry out an audit of your communication materials. If you have to use an acronym, spell it out and tell the client what it means in everyday language. Don’t presume anything.
TTYL. (Talk to You Later).
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