Preparing for New Client Meetings as a Financial Advisor

When looking for a new provider for any type of service, consumers don't typically end their search with the first supplier they find. Think about it; when you chose your cable and internet provider, did you make your decision based on which provider you saw first, or did you take things like plan fees, connection speed, channel options, and customer service into account? We're willing to bet you did some research and comparisons before moving forward with a selected provider.

It’s no different when someone begins their search for a financial advisor. Although this may seem a little daunting, it’s actually a positive thing. Prospective clients and plan sponsors actively researching and comparing various financial advisors are trying to find the best fit for their individual needs, which means you'll want to be prepared to answer any questions they may have. Being prepared with thoughtful answers to their questions is the first step in building a long-lasting relationship with the client.

Five questions advisors should be prepared to answer when meeting new clients

1. Are you a fiduciary?

Knowing if you're a fiduciary is extremely important for financial advisors, and whether or not you’re considered a fiduciary will depend more on what you do than what your title is. A fiduciary is someone who has accepted legal responsibility to act on another person’s behalf and is required to act in the client’s best interest at all times—but as is the case with most things, it’s not quite that simple.

There are multiple types of fiduciaries, including a 3(21) investment advisor and 3(38) investment manager, and many broker dealers have rules in place stating which type of fiduciary responsibility its financial advisors can accept. A 3(21) is someone who gives advice or suggestions about investments but doesn’t have discretionary authority to make changes to the plan. In simpler terms, if you advise a plan sponsor or employer on which investments to include in its lineup but leave the ultimate decision up to the client, you are acting as a 3(21) fiduciary. On the flip side, a 3(38) investment manager assumes responsibility for the investment lineup, which means the stakes are a lot higher. Before meeting with any prospective client, you’ll want to make sure you know which level of responsibility your home office allows you to accept.

If you want to elaborate further when prospective clients ask this question, you can include a few short sentences about your background in the industry, what licenses and credentials you hold, and any other information you deem relevant.  

2. What services are included in your offering?

When plan sponsors or clients ask what services are included in their plan, they’re really trying to determine how much you’re willing to help them. In your answer, it would be beneficial to elaborate on what your process is when you sign on as the advisor of the plan, whether you plan on holding any one-on-one meetings or educational seminars with plan participants, or if you offer any integrated services. For example, offering a retirement plan that’s integrated with payroll would save the plan sponsor time, thus increasing the client’s perceived value of the plan. And remember, the more benefits and services you can offer the prospective client, the more valuable you become to them.

Related: How to Build Relationships with Clients as an Advisor

3. What are your fees, and what’s the all-in cost for my plan?

Although this may seem like a loaded question, it's important for the plan sponsor to know how you’re paid and what the all-in cost of the plan is. Transparency is key, so tell the client whether you work fee-based or commission-based, and make sure to include any investment costs or fees they will be charged for recordkeeping and third-party administration. This transparency greatly assists with building trust in the relationship right away.

4. How are you monitoring fund performance?

Are you going to review the funds’ performance monthly? Quarterly? And what benchmarks will you use when evaluating the investments? It’s vitally important to have a plan in place for how you’re going to manage the plan’s fund performance.

When answering this question, include information about the entire process you’ll use for benchmarking and evaluating investment performance, as well as what your process will be if a fund needs to be replaced in the plan. Your answer should be as informational as possible to help ease any anxiety the client has about losing money with the plan’s selected investments.

You might also be interested in: How to Talk to Clients About Their Risk Tolerance

5. What does your ideal client look like as an advisor?

Many prospective clients ask this question to determine if you will be a good fit for their individual situation and needs, so think critically about your answer well before meeting with the client. Are you focused on large plans with big assets? If so, a small startup company looking for a low-asset 401(k) plan may not be a good fit for you.

In your answer, you’ll want to include what types of plans you focus on and if there are any specific industries you specialize in. Although your answer to this question may make or break a sale, it’s okay to be as open and honest as possible to help both you and the prospective client determine if you would make a good team going forward.

Read more: Five Ways for Financial Advisors to Prospect 401(k) Clients

Prospective clients and plan sponsors can arrive at their final decision for any number of reasons, but preparing thoughtful answers to the questions you know they’ll ask will give you a leg up on the competition. And at the end of the day, you'll know if you’re a good fit for the client's needs, so let the confidence of knowing you can help them shine throughout your entire conversation.

If you need a retirement services provider you can rely on, we’re here to help. At Ascensus, we’ve partnered with financial advisors for more than 40 years to offer retirement plans to millions of people—and our wide range of retirement solutions provide you with the freedom to build a plan you can offer to clients with confidence. For more information, contact us today at 800-345-6363.