My next series of 5 blogs will examine 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 important to understand the dynamics of power so that one 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.
Coercive power is the most primitive type of power and is demonstrated by the ability of the power holder to remove something from a person or to punish them for not conforming with a request. Coercive power relies on fear for its effectiveness. In the classic sales process, the objective of the seller (advisor) is to find out the ‘hot buttons’ of the prospect/client and then create a story or solution of how their services/products can solve for that problem. The implication here is that if the prospect or client does not comply (agree to the sale), then they will be punished by not having the solution. The more vividly that the seller can make their case by painting ‘word pictures’ and leveraging the prospect’s/client’s fear of loss, the more profound and effective their coercion is. Some would call this manipulation, but what is really going on is the client reacting to a very powerful emotional fear of loss.
The classic description of coercive power is ‘handling objections’ or turning a ‘No’ into a ‘Yes’. Be careful because the following statement is also true: “If you turn a no into a yes, it is only a matter of time before the first point of adversity (trouble in the markets) will turn that yes right back into a no.” The issue here is that if you take a client’s power away through the use of coercive power, they will eventually want their power back if the product or service does not deliver the implied promise of a result. As noted, this form of power is very primitive and the effects are short-lived.
Our client and prospect relationships are all about a respectful balance of power. Coercive power does have a place, but be very careful where and how you use it.