How well do you know your clients and what they want? That is the most important question for your practice.

Morningstar’s August 2024 report, “Understanding What Investors Value in a Financial Advisor,” showed that investors value help reaching their financial goals more than they value anything else, including help with investments and making their portfolios tax-efficient. Of all the things they’re willing to pay advisors for, they’re willing to pay the most for help brainstorming and articulating their goals. And 22% of investors retain their advisors because of the quality of the advice they receive, while only 12% do because of the returns they get.

The only way to know your clients and what they want? Just ask. But you need to know what kinds of questions to ask. “Think of every client conversation as an iceberg. The stuff that matters most is beneath the surface,” says Wassan Kasey, advisor practice management consultant with Capital Group. “Asking deeper questions is key to providing better financial advice.” 

How can a deeper question lead to better advice?

To illustrate the power of the “iceberg method,” consider an example of a Dallas couple in their early 60s engaging an advisor to help with their retirement. As an advisor, you might start with a typical playbook: When do you want to stop working? What are your income expectations? How can you optimize Social Security? And so on.

But with this couple, you could ask an additional question: “Where do you want to live?” From this, you learn that they plan to sell their home in Dallas and buy a small place and retire in New Rochelle, New York. Given this information, you could offer more guidance about real estate assets, cost of living adjustments and income needs.

What if you went even deeper to ask, “Where will everyone else in your family be living?” You might learn that one of their children lives in New York City and the other lives in Texas with their two grandchildren. You might then ask, “Do you plan to visit them, or will they come to you? If they come to you, do you want a home with more room?” Or you might ask, “As you get older, do you expect to get care from your child who lives in New York? Will this change impact your estate plan?”

Whatever the direction of the questions, the idea is to go beyond what’s known — playbooks and principles that have worked for many other clients — to get to the unknown. The more you can uncover the particulars of a client’s life, wants and motivations, the better you are able to provide advice that meets those specific needs. 

When do you ask deeper questions?

It’s not only what you ask but when that matters, says Leslie Geller, wealth strategist at Capital Group. “Most advisors do the bulk of their information-gathering at the start of a client relationship, during the onboarding process. They ask about hopes and fears, things clients desire and things they dread. But for many advisors and many clients, that’s the last time they ever have a conversation that deep.”

With time, clients change. So do their underlying needs. Asking deeper questions can help you stay current with those needs. Geller suggests using annual reviews to thoroughly examine how goals have changed, not just to report progress against the goals that were outlined at the beginning of the engagement.

But advisors should always be prepared to ask deeper questions, Geller says. The iceberg method is critical in conversations about life events such as a divorce, sale of a business, birth of a child or career change. But life events don’t always happen linearly. They can take place unexpectedly and in different orders for different people. “A client could call you at any time asking for help dealing with a life event,” Geller notes. “Are you ready to ask the right questions?”

How does asking deeper questions help your business?

How and when you ask questions helps set you apart from the competition. “What do you have with a client that no other advisor in the world could replicate today?” asks Kasey. Another advisor could create a financial plan, construct a portfolio, offer educational materials and provide access to other professionals. “Deeper questions and better conversations — that’s how you box out the competition.”

“The best advisors are differentiated by their ability to connect with and understand their clients at the deepest level,” adds Geller. “This is especially true for advisors working with high-net-worth clients, whose needs and motivations can be especially complicated.”

Excellent client service tends to lead to referrals. Kasey recalls an example of three business partners who sold their company for a tidy profit. One of them had an advisor who, after an extended conversation, realized that the client was philanthropically inclined. That advisor suggested creating a donor-advised fund, an idea the client loved.¹ Eventually, that client convinced the other two partners to work with the advisor.

As the donor-advised fund example shows, asking deeper questions can sometimes help you identify investment opportunities and grow your managed assets. But it doesn’t always. You should still strive to have better conversations with your clients, Geller says. “Some conversations might not lead to more AUM, no matter how deep they are. But they do lead to more trust and a stronger relationship. Ask deeper questions, not just those that lead directly to investments.”

If you feel like you’re not naturally good at this, Geller says not to worry. “A lot of people have the wrong idea about the ability to ask better questions. They think you either have it or don’t. But this is something you can learn.” That has been the conclusion of multiple studies, including a test of 54 corporate managers, a paper from Colorado State University researchers and a literature review published in Harvard Business Review.

The skill is separate from financial planning, investment management and other skills advisors typically focus on developing. That’s a good thing for newer advisors, Geller points out. “Even if inexperienced in every other way, you can bring something to your clients that few others do.” On the other hand, she observes that veteran advisors can fall into the trap of not asking deeper questions because they rely on their prior experience. “If the trick is to focus on what’s unknown, not what’s known,” she says, “the fact that you know a lot can actually be a liability.”

How do you find the questions to ask?

For advisors who want to develop this skill, one resource Geller recommends is Warren Berger’s A More Beautiful Question. But the key thing is to enter the conversation with a curiosity about the unknown. She finds that, when advisors understand the importance of knowing their clients more intimately, they naturally probe to learn more.

Some advisors can ask “Why?” and let their instincts carry them the rest of the way. Others need to be more systematic. Kasey offers five levels of questions to explore whenever a client expresses a desire:

1. History: What experiences has the client had in the past that are related to this desire?
2. Bias: What perceptions does the client have that are leading to this desire?
3. Outcome: What is the client hoping results from the decision?
4. Blind spots: What is the client not thinking about?
5. Portfolio: What does this all mean for the client’s portfolio?

In the New Rochelle retirees scenario, the second advisor’s questions are related to blind spots. The advisor could also ask history-focused questions like, “Have you been to New Rochelle?” or “Have you lived in New York before?” Outcomes-focused questions might include, “What do you envision retired life looking like? What will you do with your time?” and “How much time in a year do you want to spend in New Rochelle? How much will you be traveling or living elsewhere?”

Another strategy Geller suggests is using “proxy questions” to explore hard-to-reach areas. These are areas where straightforward questions aren’t available. Risk tolerance is one of these areas. “What’s your risk tolerance?” isn’t easy to answer. Proxy questions could include, “How often do you check your portfolio? When did you start saving for retirement? Have you ever invested in crypto?”

The iceberg method can transform your relationships with clients. You might learn things you never knew about them, see around corners for them and spot opportunities that you weren’t able to see before. Ultimately, asking deeper questions can yield better results — for both your clients and your practice.