Is Your Financial Adviser Listening to You?

Former hostage negotiator Richard Mullender shares how investors and their financial advisers can better communicate

Emma Wall 10 May, 2018 | 9:56AM
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Emma Wall: Hello, and welcome to the Morningstar Investment Conference. I'm Emma Wall and I'm joined today by Richard Mullender to talk about communication.

Hello, Richard.

Richard Mullender: Hello.

Wall: So, you’re a former hostage negotiator. Bit of a leap to come into a financial investment conference. But to talk about communication and the importance of listening, now, for this conversation we are going to apply that to how an individual investor can ensure that an adviser is really hearing them when they describe what they need from their money. Talk about the importance of listening from the adviser's point of view.

Mullender: Well, for me, if I was the investor, I would summarise back them, say, look, this is what I'm looking for. I'll get them to summarise back to me what they think they've heard me say and also, to make sure that they really have listened. I mean, to some extent, it's easy to talk about the adviser.

The adviser should be listening for what I'm like as a person, for what my needs are, for what my values are, for why I'm investing in the first place. That should be the adviser's absolute aim. And as an investor, then I'll make sure that that adviser has got me, because otherwise I think they will just – there will be an impression maybe, it's a perception that they will go off and just do what they feel they should do rather than what I want them to do.

And I think because we come from a position of weakness in a way where we don't know the financial world and we're looking at this adviser who knows the financial world, we want them to be very clear about – I want to understand what they are going to do with my money. I really want to understand that. I want to make sure as what I want my money to do and not just be something that they think is a good idea.

Wall: Because I think financial services, the clue is in the name, it's a service industry. But as you alluded to there, unlike any other service industry, it's not something that the receiver of that service knows much about – if you went to a restaurant, you had a bad meal, you know it's a bad meal. And I think sometimes there is this disconnect where an individual forgets or is too afraid to assert that on the individual providing them with the service.

Mullender: I think it's true in life, in general, is what happens is someone who have greater knowledge enough says something, we don't really understand it. But rather than appear ignorant, we get along with it. And it's that confidence to actually say, I don't understand what you are talking about. Blockchain has just come on the market and I've seen in two or three presentations now on it and I still don't understand what it means. And these presentations are normally to people that understand what it's about. 

But if you come to me, you are going to say, now these securities, these are higher risk, these are lower risk, what does that mean? Tell me in English and tell me so that I can understand it really well. And I think as an investor, again, make sure you really understand what's going to happen, make sure you can – and really push your adviser because they are your adviser. Push them and say, well, okay, what's this mean exactly?

This thing is – CBI or something like that – I'm not sure if it's cheap banking interest rate or something like that, I have no idea what it means. I mean, look at that, CBI plus 1%. Yeah, really? What does that mean? What does it actually mean? Because if there's, tell me, and I think as an investor don't be frightened to say to them, okay, teach me like I'm a six-year-old. Remember Denzel Washington.

Wall: Are there any particular questions that an adviser should be asking their investor, their client in order to make sure that people are on the same page and that as an investor you should be listening for that you know you're being looked after? 

Mullender: I think it depends. There's an easy question, if they've previously had a financial adviser, then the question I would say to them is, who is the best financial adviser you've had in the past and why were they so good. Because I think while asking that one simple question then the investor would actually tell them what they want and what they are looking for.

If I was an investor, I would be very sure – I'd say, okay, so in the past, who have been the best investors and what did you like about them and what was your best investment you've ever made and why did it work so well. So, again, I'd kind of put them on the spot a bit I suppose.

Wall: And you simplified the language to ensure that everyone in the room knows what you're talking about? 

Mullender: Absolutely. Yeah. It's going to be – if you and I would, say, as a couple and there's an adviser in front of us, then we should be able to walk out there and know exactly what we are going to get and it's going to be said in words of very simple – I don't understand finance, right? Teach me but teach me that I can understand it. I don't need to know everything. Simplify it.

I think Einstein said make everything simple but not simplistic. Don't treat me like I'm an idiot. Don't patronise me. But make it simple. The advantage in listening is it's a really quite complicated thing to do, but it's not probably making it complicated for the audience. They are going to understand it very quickly because you haven't got a lot of time. So, get it in simple.

Wall: Richard, thank you very much.

Mullender: Thank you.

Wall: This is Emma Wall for Morningstar. Thank you for watching.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Emma Wall  is former Senior International Editor for Morningstar

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