By Louis Williams, Dynamic Planner Head of Psychology and Behavioural Insights

This year’s coronavirus crisis has impacted the adviser-client relationship in such a way that online communication is now essential.

Advice firms face the question of whether this mushrooming trend will impact the levels of trust their clients have in the advice they receive long-term – and ultimately their decision to work with a professional financial adviser.

For many firms, the sharp transition from March 2020 to online communication platforms has not been a huge challenge due to technology and solutions being widely available and easily accessed. However, if not handled carefully and appropriately, the subsequent separation experienced, between firms and their clients, has the potential to negatively impact relationships and their value on a personal and on a business level – for example, client referrals for new business.

That said, some online communication platforms may not be so accessible for some older clients. Furthermore, such communication, in comparison to face-to-face contact, disrupts the way advisers have classically and skilfully engaged with clients in the past.

Clients’ learning styles can differ. For example, many may prefer visual aids, which can lose their impact virtually or simply be difficult to navigate and share using video chat, for instance and even more so without the use of video.

Clients’ preferences are, of course, important to consider as they naturally look to their adviser for guidance on matters they themselves do not fully understand. After all, they are of course paying advice firms for their expertise and experience in these areas.

Existing data and research here suggests that the majority of people – 64% or nearly two-thirds – have multiple preferences for the way they best learn, i.e. visually and verbally, while inclinations for a single preference increase with age. This, of course, is relevant here as clients of firms tend to be older, underlining the importance of employing online communication effectively.

Video chat – Pros and cons

Many advice firms today have naturally turned to video chat to communicate with their clients. However, building rapport using it can be more challenging due to difficulties interpreting non-verbal communication and making and maintaining eye contact is not as simple as when face-to-face.

Such factors can together erode levels of trust in the adviser-client relationship. Advisers may, of course, then feel less confident that they fully understand a client, who in turn is less confident of the information and advice they are receiving.

To develop trust, regular communication and also maintaining communication over a sustained period is required – but, as we have seen, building rapport is not as simple remotely. Research has shown that remote forms of communication can lead to the development of similar levels of trust as face-to-face. However, evidence must also be considered that it takes longer for trust to grow and in this sense is more fragile and less robust than trust built through face-to-face contact.

Furthermore, research demonstrates that while face-to-face communication is more important with a new client initially – further engagement, using, for example, video chat, can prove as effective once a relationship has been established.

In any relationship, an ability to effectively empathise with someone and be able to provide and display compassionate support is essential.

Those who do so are perceived to be more trustworthy – and clients of firms are naturally more likely to heed advice from people they like and who are empathetic to their situation and circumstances, rather than mere experts in the field. Trust based on emotion, in this context, is arguably most significant.

What is the answer?

How then can advisers maintain or build relationships and trust with clients if there are either no opportunities to meet or only limited ways to meet, as has been the case in 2020? In answer, there happily are approaches firms can adopt, particularly with older clients.

Arranging regular calls to enquire about a client’s health, physically and mentally, is an important step a firm can take. Discussing both financial and non-financial matters is essential during times like we have experienced this year and can prove beneficial to the client’s overall wellbeing, emotionally and financially.

Trust issues were leading factors behind decisions, either positively or negatively, to seek professional financial advice before Covid-19.

Naturally, it is now more vital than ever that advisers maintain an active and authentic presence online and be just as accessible as they were before lockdown began in March.

Following conversations anecdotally this year with advisers, it is clear that they are aiming to get to know their clients personally to understand their financial needs, desires and overall wellbeing today. It is important that those clients are still able to experience and access real care and attention from firms in this new era we have all entered, whether we have liked it or not, in 2020.

“Older clients might prefer face-to-face and to look into the whites of your eyes” – How one adviser has managed their relationships with clients this year