There are few conversations more irritating than when you are speaking with someone who claims to be an expert in the field you definitely are an expert in.
Those conversations never work out well. Invariably, one of the two of you end up being wrong. Sometimes, both of you end up being wrong. It’s awkward and painful and requires some deft conversational wizardry to move away from the interaction.
This sort of conversation is probably experienced by people in dozens of occupations. Doctors, lawyers, restauranteurs, sports writers and broadcasters - just about anybody can run into a person who wants to express an opinion about the field you are in, and are fairly certain they know what they are talking about. Even when they don’t.
The problem hits home when those know-it-alls end up in your office. Clients come in all shapes and sizes, and they come in with varying degrees of knowledge regarding finance, investment products and the American economy in general.
According to Spectrem’s study Asset Allocation, Portfolios and Perceptions of Providers, 89 percent of Ultra High Net Worth investors with a net worth between $5 million and $25 million consider themselves either knowledgeable (51 percent) or very knowledgeable (38 percent) about investment products and services. That should be good news for advisors; it cuts out the educational part of the conversation so that talks can be directed at the actual decisions which need to be made.
But those percentages are self-perception. How many people do you know you think they know a great deal about a subject but are actually a bit misguided in their self-evaluation? Such can be the case among investors, who hear something on a financial investment program on TV and consider it gospel, or worse, read an article on a speculative website and believe all the information to be true and valuable.
There is only one way to approach knowledgeable investors, and that is to be more knowledgeable than they are. Advisors need to make certain they are the most knowledgeable person in the room, so they can confirm the true facts investors bring up and dispute those beliefs investors gathered from uncertain sources.
The same is true regarding trends in investor habits and attitudes. A client may have heard from a co-worker that “everybody’’ is jumping onto a certain financial bandwagon, but advisors need to be able to bring reality into the conversation with the knowledge that “everybody’’ is actually a small number of speculators.
Spectrem’s research provides such knowledge. Our surveys of affluent investors are timely and informative. We have a precise handle on just what “everybody’’ is doing in regards to investment trends.
As wealth increases, so does the perception of investment knowledge. Advisors are aware when an investor is just starting out and their investable assets fund is not large, a certain amount of educational conversation is going to be required. When a client is wealthy and his account requires a great deal of attention, that client is likely to have a level of certainty about what he knows, and can have preset notions of what is the correct way to proceed.
Advisors need to be prepared to argue against any misperceptions clients come into the room with. The best weapon to have in your arsenal is knowledge.
So advisors must be prepared to have conversations with investors who think they know what they are talking about. The struggle for advisors is two-fold; dealing with those investors who really do know the details of a particular investment strategy, and dealing with those who think they know, but their information is skewed.
© 2018 Spectrem Group