Communication is a two-way street. To be an effective communicator, you have to know how to take turns talking AND listening.

It’s easy to assume that being a good articulator is what truly drives client retention. But that’s not entirely true.

Being an active listener has its benefits as well.

Allow us to elaborate further…

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Active listening is the ability to focus on and fully understand a prospect’s or client’s concerns and pain points, and to respond to them appropriately and thoughtfully.

Why is Active Listening Important in A Financial Advisor’s Career?

Whether you’re trying a new client or communicating with an existing one, enhancing your active listening skills will help you succeed in both.

In other words, this soft skill increases your value immensely as a financial advisor.

In fact, excellent communication skills are at the foundation of all good relationships. Listening and understanding what the people around you are saying helps you build rapport with them.

Your clients and prospects benefit when your active listening skills are up to par.

How, you ask?

By paying close attention to them, you understand their financial goals, fears, and priorities, and you use those details to address their concerns, tailor your recommendations, and guide them toward better financial decisions.

So how can you master the art of active listening?

There are various verbal and nonverbal listening exercises you can practice to improve in this area. Verbal exercises include:

• Paraphrasing – Summarizing the main points a client has shared, using your own words, to show you understand what they’ve told you. This also gives the client a chance to clarify anything about a particular topic and elaborate further, whether it’s about market volatility or a goal like retiring early.

• Asking open-ended questions – Asking questions that guide a client into sharing more about a particular concern or pain point, such as what retirement actually looks like to them, or what worries them most about their finances.

• Using short verbal affirmations – Saying short, positive statements that help a client feel more comfortable and show you’re engaged, especially during conversations about finances.

• Recalling previously shared information – Remembering key details a client has shared in past meetings, like a college tuition plan or a desire to sell assets. Bringing up details shared in the past shows you’re not only listening in the moment but also keeping their full financial picture in mind.

Nonverbal exercises include:

• Nodding – A few simple nods show you’re listening to what a prospect or client is saying even before you respond.

• Smiling – A genuine smile encourages a client or prospect to keep sharing and signals that you’re engaged and approachable, particularly important when discussing a topic as personal as money.

• Avoiding distracted movements – Staying still and present communicates focus. This helps clients or prospects feel more at ease, especially during in-depth conversations.

• Maintaining eye contact – Keeping your eyes on clients or prospects while they’re speaking builds a connection between the two of you. Just be sure to keep your gaze natural, or the client may feel uncomfortable.

By applying the verbal and nonverbal techniques above in your discovery calls or client conversations, you’ll work toward building stronger relationships and retaining more of the important details shared during meetings and calls.

Keep in mind that active listening takes practice to improve and maintain. The more you use the techniques listed above, the more natural they’ll feel when talking to clients or prospects.

Take note: Speaking is what gets your message across… but through active listening, you get to build trust and identify and fulfill unmet needs. Advisors who excel at this are better positioned to land and retain clients than those who don’t.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Officer &
Director of Research
at Valens Research