Today’s blog is the final in our series on the different kinds of power that are involved in your client relationships. First, power is at the heart of our interactions with others. Second, as a financial advisor with a body of knowledge and experience that a client does not have, you are immediately in a position of power over your client. As a result, it is important to understand the dynamics of power so that you can be more skillful and aware of the dynamics that are at play when interacting with a client or potential client. Understanding power dynamics better can provide a Serious Shift in your ability to ensure that there is always a healthy and respectful balance of power in your relationships with clients and prospects.
It is natural for people to respect and follow those who are experts in a given field or occupation. Expert power results from the expertise a person has gained through the experiences and training that have marked his or her business career. Subordinates (or clients) of a person who has gained expert power believe that their leader will guide them correctly due to his or her vast expertise.
This one really speaks for itself. For starters, just having knowledge and experience with investments over a client implies expert power, much as an accountant or doctor would have. On one hand, having expert power can be very attractive to a client and is a very easy form of power for an advisor to use. On the other hand, the use of expert power can unravel very quickly if the prowess the advisor professed and displayed to exert the power does not come to pass. An easy example is indicating a prowess at picking investments or forecasting markets. Both will end up being wrong and at that very moment, your expert power starts wearing thin.
To mitigate an overreliance on expert power, you need to get your client relationship focused on different points of value that diffuse the expert power and equalize the relationship dynamic. So instead of portraying yourself as an investment expert, try positioning your process of investing as important. Then move quickly to educate your client on the process, not so they can nerd out with you but so that they can understand. As a result, the conveying of your ‘expertise’ to the client transforms them into regaining some power through the knowledge they now have. The resulting success of the investment portfolio is then predicated on a mutual understanding of what is going on versus the advisor retaining all the expert power.
Our client and prospect relationships are all about a respectful balance of power. Expert power can be very powerful in gaining credibility and asserting value. However, it wanes quickly if the ‘expert’ status comes into question from lack of results. Expert power does have a place, but be careful how long you rely on it for in your client relationships. The trusted expert can quickly become the unvalued opinion.