My column this month in Investment Executive dealt with a major change in what it takes to communicate effectively with a growing number of existing and prospective clients – and in particular focuses on the growing importance of video based communication.

In understanding the need to change our thinking on communication, it’s important to look at the broader shift in mindset among many clients.

Until recently, most investors would respond to a recommendation with “If that’s what you think, fine.”

  Today, even if the same decision is ultimately reached, conversations are taking longer and investors are asking tougher questions – and often looking for back up via direct access to experts. 

Indeed, many Canadians are looking to collaborate on decision making – that’s especially true of younger clients in their forties and fifties, but in fact can cut across all ages.

This is reflected in a comment from Paul Allan, Senior Vice President with Mackenzie Financial regarding research with high net worth Canadians from Toronto consulting firm Investor Economics:

“High net worth investors are trying to get closer to their money and are listening to multiple sources of information beyond their financial advisor.

As a result, advisors need to spend more time addressing different viewpoints. Three years ago, clients would typically agree with financial advisor recommendations. Today, they want advisors to explain exactly why they are recommending solutions and strategies – and to provide evidence and support.”  

A short attention span world

It’s not just the amount of evidence needed to back up recommendations that’s changed – it’s how Canadians want to receive that evidence.

Historically, financial communication was paper based – articles, newsletters and lengthy reports. Clients have long complained about the avalanche of paper they get – long on disclosure to satisfy legal requirements, short on meaning.

In fact, many financial advisors doubt whether most of what they send gets read.

“Our firm’s economist publishes a monthly report that we’re encouraged to send clients” one advisor told me. “In my view, the chances of most clients looking at that report approach zero. They’d be far better off to send a short video of him being interviewed on BNN.”

The power of video

What makes video so powerful is not just the fact that clients are more likely to watch a video than read an article – it’s also the impact of the sight and sound that video bring.

In early 2009 I conducted a series of morning workshops, outlining strategies to improve communication with clients.

Among the ideas I covered was supplementing face to face and telephone conversations with regular emails of articles from credible sources such as the Wall Street Journal, the Economist or Fortune.

A few weeks later, I got a call from an advisor who had attended the workshop.

He had started emailing clients articles and had received a generally positive response. Then one day he decided to try emailing a video of a CNBC interview with Warren Buffett instead – and was blown away by the feedback.

As he put it: “The response to the articles was good but the feedback to the video was great. Partly because it was Warren Buffett, but a big component was that clients could actually see and listen to him for the first time. Even if I’d sent an article by Buffett, it wouldn’t have had anywhere near the same impact.”

David Foot in action

In the interest of full disclosure, I should mention that in the fall of 2009 my company launched an initiative to allow financial advisors to send clients videos of interviews with portfolio manager and financial experts.

Among these interviews were several with David Foot of the University of Toronto, considered Canada’s leading authority on demographics and co author of the best seller “Boom, Bust and Echo.”

One interview related to the thesis in Harry Dent’s book “The Great Crash Ahead” that demographics will cause a market collapse, which Foot dismisses.

Last fall, an advisor called to tell me about an experience he’d just had.

A million dollar client had called him, said he’d just finished Harry Dent’s book and had decided to go to cash as a result. Despite all the advisor’s best efforts, nothing could change this client’s mind.

At lunch, a colleague told him about the Foot video. The advisor arranged for a short meeting at the client’s office that afternoon - and played Foot’s interview on the client’s computer.

Afterwards, the client first thanked him, then said that now he understood the advisor’s perspective apologized for wasting his time – and asked if they could just pretend that morning’s conversation had never taken place.

“What made this work” the advisor said “was that my client could see and hear David Foot in real time. Even if I’d sent an article by David Foot making the identical points, it wouldn’t have had the same impact.”

Let’s be clear, the written word will always be with us. In a time pressed world, reading is still the most efficient way to assimilate information. And with the launch of digital devices such as Amazon’s Kindle, Sony’s E-Reader and Apple’s rumoured new competitor, reading in real time will become easier.

Further, there are some complex topics that just don’t lend themselves to video. And of course there are some clients who will always prefer to receive information in writing.

For good or for ill, however, those clients are shrinking in number. We live in a world that’s moving to shorter and shorter attention spans, with greater emphasis on immediacy and on the visual medium.

Today, advisors need to take a hard look at every aspect of their business.

As part of that, it’s essential that advisors closely examine not just WHAT information they send to clients – and also HOW they communicate that information.