Preface

For financial planners . . . communication . . . is the single most powerful antecedent to trust and commitment . . .

-Dr. Dave Yeske1

The purpose of this book is to provide financial planners with insights on how they can improve their communication and counseling skills. The approach presented in this book is based on helping financial planners develop, practice, and use skills associated with the formal and informal sharing of information between a client and the financial planning professional in an empathic manner that enhances the client-financial planner relationship.2

This book serves as a valuable resource for students and professionals alike. The ineffable importance of consistent and effective communication with clients is widely acknowledged by experienced financial planners. At the same time, few planners have implemented systems within their firms (or personal professional development plans) to increase knowledge and hone skills associated with client communication! This book provides professional financial planners, as well as the leadership within financial planning firms, with a blueprint for taking their client communication to the next level. Inarguably, increased sophistication in client communication translates to higher client retention and a more effective financial planning process. Thus, the ROI on time allocated to toward communication skill development is quite high.

Those who conduct research on financial counseling and planning also know that communication skills are the foundation to building a successful financial planning practice. Some researchers have even contended that, "effective communication is vital to successful financial planning."3 Certified Financial Planner Board of Standards Inc. (CFP Board)-the primary academic standards setting and enforcement board for college and university programs4-supports this notion, as it has identified communication and counseling skills as an essential element of financial planning competency.

WHY THIS BOOK

Over the past two decades, myriad financial planning practitioners have emphasized the importance of client communication to business success and client satisfaction.5 In fact, the authors, who regularly hear practitioners speak about their professional roles when invited by their university's student financial planning organization, have noticed a consistent emphasis on client communication and relationship building as the foundation of each presenter's success. Many of these practitioners believe strongly that their method of client communication is effective, and undoubtedly it is at some level, but what they may fail to consider is whether another communication strategy or skillset could work even better. As will be highlighted throughout this book, the study of communication and counseling skills can assist even those financial planners who are already quite proficient communicators to become even more effective in their work with clients.

Current financial planning practice standards mandate that anyone hoping to become a Certified Financial Planner (CFP®) professional must obtain proficiency in the following interpersonal communication domains:

• Evaluating client and planner attitudes, values, biases, and behavioral characteristics and the impact these have on financial planning
• Principles of communication and counseling

The CFP Board's requirement goes beyond a theoretical understanding to requiring proficiency. The role of communicating effectively with prospective and current clients permeates the financial planning process. Consider the CFP Board's standards related to professional conduct and fiduciary responsibility, disciplinary rules and procedures, and practice standards. According to the CFP Board, practice standards are intended to:

1. Assure that the practice of financial planning by CFP® professionals is based on established norms of practice
2. Advance professionalism in financial planning
3. Enhance the value of the financial planning process

Practice standards apply to all CFP® professionals and those studying financial planning in a CFP Board Registered Program. The standards, however, also serve as a foundation for professionalism within the broader financial services profession. Practice standards were first developed in 1987, updated in 1994 by CTB/McGraw-Hill, an independent consulting firm, and again in 1999 by the Chauncey Group. These standards, tied directly to steps in the financial planning process, are shown in Table P.1.

TABLE P.1 The Financial Planning Process and Related Practice Standards

Source: CFP Board, 2016: www.cfp.net/for-cfp-professionals/professional-standards-enforcement/standards-of-professional-conduct.

What is important to remember, from the perspective of this book, is the role communication and counseling skills play at each step in the financial planning process. Imagine how challenging it might be for some financial planners if they needed to meet a prospective client who is unsure of his or her need for financial planning because of cultural or ethnic barriers. Without a systematic approach that can be used to build rapport through questions, feedback, and encouragement, this meeting could end up being a lost opportunity for both the client and the financial planner. Not only could the financial planner lose a potential client, the prospective client may shy away from needed behavioral change. The importance of applying appropriate communication and counseling techniques at each step of the financial planning process is just as important. As it turns out, not only are communication and counseling skills important attributes of professionalism, these skills often determine who has the greatest likelihood of becoming a client's most trusted adviser.

Five communication tasks-or functions every financial planner needs to perform-have been linked in the academic literature directly with the CFP Board's practice standards6:

1. Mutually defining the scope of an engagement before providing financial planning advice
2. Helping clients identify meaningful personal and financial goals
3. Applying a systematic communication and counseling process that helps clients clarify their financial and life goals
4. Taking time to explore and learn about each client's cultural background, personality, attitudes, beliefs, and family history and values
5. Explaining how financial advice aligns with each client's unique values, goals, and needs

Financial planners who embrace these five communication tasks with each client report greater client retention, higher client satisfaction, greater client cooperation, more openness in discussions, greater client disclosure, and more referrals.

While it is true that the CFP board requires all financial planning professionals who hold the CFP® marks, as well as those studying for CFP® certification, to exhibit communication and counseling proficiency, the purpose of studying communication and counseling is much more profound. Essentially, the manner in which a financial planner reaches out to others determines, to a large extent, that professional's effectiveness in helping clients make life-changing decisions. We are not talking about helping salespeople sell one additional product or service as the end result, but rather, facilitating the growing professionalism of financial planning in the marketplace. Just as attorneys, accountants, and physicians must employ communication and counseling skills on a daily basis, the same is true for professional financial planners. An important outcome associated with reading this book, watching the accompanying videos, and practicing each chapter's techniques should be a greater appreciation on the fundamental skill sets needed to be a competent financial planner in the...