Socrates would have made a great financial advisor

Getting the discovery process right can make a significant difference in our ability to serve a client well. Understanding their goals, concerns, family and the legacy they want to leave helps us identify their most fundamental motivations.

Like a lot of financial advisors, I was taught to use a goals-and-concerns form. It worked well, for the most part. But too few of the questions prompted much more than superficial conversation. Too many of the discussions sounded alike.

There’s a better way, with a history that dates back more than 2,000 years.

The Greek philosopher Socrates developed a style of question-and-answer dialogue that is as relevant today as it was in 399 B.C. The method uses open-ended questions to stimulate critical thinking and help individuals explore their beliefs and assumptions.

Incorporating this Socratic method can enhance your understanding of the client’s priorities. It can do the same for them too, leading to more favourable outcomes.

It’s up to you to lead the way though. Unless they see a psychologist or spend time around philosophy students, your client probably hasn’t experienced this style of questioning or conversation.

There is no clear goal or structured agenda. These conversations utilize open-ended questions to uncover and reveal the most authentic version of people’s thoughts, goals, concerns, family values and legacy wishes.

Five Socratic steps

Wealth managers can apply the Socratic method with ease:

1. Understand the client’s goals, concerns and investment holdings. To get a clearer understanding of each goal or concern, ask clarification questions such as: What do you mean by that? Could you help me understand that better? Can you explain further?

2. Sum up the person’s goals and concerns. Play back what they said to clarify your understanding. OK, I heard you say that x, y and z are very important. I just want to make sure I really understand what you’re saying. I think you are saying …

3. Ask for evidence. Ask open-ended questions to elicit additional information and uncover assumptions, misconceptions, inconsistencies and contradictions. How do you know that to be a fact? What is your evidence to support that? What are some examples of …?

4. Challenge their assumptions. If contradictions, inconsistencies, exceptions or counterexamples arise, ask the person to disregard or restate their belief more precisely. What assumption is this belief based on? What evidence is there to support this? Why do you think that is true? When might this goal or concern not be either? What are the implications of that on the balance of your life? What could happen if …? What do you think the consequences of your past plan are? What would you not want to change?

5. Repeat the process with another vital goal, concern or previous investment method.
Do this until you have completed the list of goals, concerns and investment questions.

The order of these questions may not always proceed as listed here. Let the conversation flow naturally.

More productive conversations

Now, imagine a time when you were in a discovery meeting, and you asked a question like: Which goal would you prioritize? You got the answer and moved on to the next question.

But did you get the real answer? Will the answer impact your plan for the client? Did the answer move you closer to an improved relationship with the client? Did you show curiosity, or were you ticking a box? How did the client feel about the exchange?

If you asked the client why they prioritized x or y after that initial response, they might give you another answer. Again, ask: Could you explain further? Would this clearer answer give you more confidence in the clients’ feelings about where x and y rank?

This form of questioning resonates with clients because it empowers them to truly participate in the conversation. The process pushes the conversation forward and allows either party to take it in different directions.

It leads to more meaningful and productive client interactions, and instills confidence in the advisor who comes away from the meeting with a deeper understanding of their clients’ needs and preferences.

It can take longer than a traditional discovery conversation, so limit the deeper dives to the most important or largest goals and concerns. And not all clients will be comfortable with this level of introspection. It’s important to respect their boundaries and adjust your approach accordingly.

There’s no need to convert your discovery process along these lines entirely. In fact, you shouldn’t. Strike a balance inspired by the Socratic method. There will be moments when you’ll know it’s time to dig deeper — and now you have the tools to do that.