The Discovery Process (Seminar 3)

Question 1

’Knowing your client’ is of paramount importance if a financial planner is to be able to satisfy the best interests obligations imposed under the Corporations Act. How might a planner develop a comprehensive insight and level of knowledge about the client in order to be able to provide appropriate advice?

Answer 1

The adviser may employ a range of means to develop a more appropriate level of knowledge about the client. This may include:
• Risk profile and client data questionnaire
• Interviews, which include both quantitative and qualitative forms of enquiry
• Records of all telephone, fax and email communication with the client
• Copies of the client’s financial documents such as tax returns, PAYG certificates, bank
statements, share certificates etc.
• Discussions with other professionals serving the client, such as lawyers and accountants
(providing client’s consent is obtained)

Question 2

Discuss the difference between qualitative and quantitative client interview questions, and provide examples of each. What are the benefits of including qualitative questions in the interview process? What are the potential risks of placing too much emphasis on quantitative lines of enquiry only?

Answer 2

Quantitative questions typically include closed questions which focus on what and how much a client has. Qualitative questions attempt to identify the ideas, values, beliefs and experiences which shape the client’s current financial position, their financial priorities, as well as their ultimate goals and objectives.
Qualitative questions have a number on internal and external benefits (outlined below). An adviser who places too much emphasis on quantitative lines of enquiry may find that clients:
• have difficulty confiding personal information
• feel their best needs and best interests are not being looked after
• fail to understand and engage with the strategies and recommendations made

Question 3

Briefly discuss the Internal and External benefits of effective questioning outlined by West & Anthony (Chapter 6, pp. 26-34), and explain what you think the authors mean by the terms Internal and External in this context?

Answer 3

Internal Benefits
• A good question allows people their space on the stage of life
• Inquiry elevates their intellect and reason
• Intelligent inquiry recognises an individual’s uniqueness
• Questions reveal priorities and issued of importance
• Good questions raise personal awareness and often help save clients from themselves
External Benefits
• Good questions have a disarming effect
• Biographical inquiry reveals possible connection points
• Good questions turn conversations into a fascinating journey instead of a “death
march”
• Questions unlock the memory bank
• Questions allow the client to be the co-pilot instead of the passenger
• You may actually learn something

Internal benefits are those which relate to the financial planning process, and result in improved information discovery which in turn improves the quality of advice. External benefits concern the client-adviser relationship.

Question 4

Briefly discuss the value of a good question, beyond simply eliciting information.

Answer 4

A good question, used correctly, can do much more than simply elicit information
• Questions can also be very useful when you want to get someone to think
• When you want to get someone to recognise the consequences of their actions, asking
can often be a lot more effective than telling
• Questions which encourage individuals to identify solutions themselves will often
result in greater engagement with the solution

Question 5

What is the value of open questions in the client discovery process?

Answer 5

By asking open questions the listener is able to encourage the other person to share his/her more personal knowledge, feelings and opinions about something, and the response is usually more qualitative than quantitative.

Question 6

Describe the ‘Funnelling Approach’ to interviewing?

Answer 6

Funnelling is a 3 stage process:

1. Open
   The Funnelling process generally begins by asking an open question. These generally start with What, Why, When, Who, Where, How, or Tell, Explain, Describe. The Broad questions used to gather as much information as possible, and can be used to set the agenda of the conversation.
2. Probe
   Use probing questions to explore further, by asking follow up questions based on what the speaker has already said to elicit more useful information
   Probe to get the nuggets of detail from the interviewee to funnel the responses into useful information
3. Close
   Use closed questions to qualify, summarise and confirm what the client has said - i.e. summarise back what you understand from the client’s responses and confirm that you have got it right. This often allows the client to add further detail they have missed out and it checks the adviser’s listening skills.

Question 7

Identify three types of ineffective questions and identify the problem(s) caused by each. Discuss strategies to overcome these problems.

Answer 7

• Multiple questions that cover a number of issues
• Ambiguous vague questions that confuse
• Implied questions that reflect your values and opinions
• Aggressive questions that attack or confront the other person
• Leading questions to get the answer that you want
• Aggressive questions that attack or confront the other person
• Leading questions to get the answer that you want
• Rhetorical questions that do not need an answer

Question 8

Explain the cluster of active listening skills

Answer 8

Active listening is empathic listening without two-way emotional involvement to the verbal and nonverbal components of a message.
Active listening comprises a cluster of attending, encouraging and reflecting skills used together in order to pay attention to the content and feelings that comprise the whole message
• Attending skills – to focus on the speaker,
• Encouraging skills – to invite the speaker to continue, and
• Reflecting skills – to mirror the content and feelings in the message

Question 9

2(a) When is active listening most useful?

2(b) List four benefits of using active listening skills.

Answer 9

2(a) Active listening is useful in professional and personal situations to perceive or sense a situation from the point of view of the speaker, giving the listener the ability to see a situation simultaneously from multiple points of view.
For example, a financial adviser actively listening to a client allows the adviser to develop a deeper understanding of the client’s needs and can lead the client to new insights of their own needs and the value of the listener’s advice or service

2(b) The active listening method:
• helps the listener to bypass the personal filters, belief assumptions and judgements that can distort the speaker’s message;
• acknowledges and provides feedback to the speaker, as well as verifying what the listener has heard;
• enables the person to reach his or her own decisions and form his or her own insights; and
• confirms communication and facilities understanding between the speaker and the listener.

Question 10

List four barriers to effective listening caused by the listener.

Answer 10

Barriers to effective listening caused by the listener can include:
• boredom;
• dislike for personality or physical appearance of speaker;
• a desire to change the speaker; prejudging;
• intrusion of own values or attitudes;
• drawing early conclusions;
• selective listening;
• perception by the listener that the speaker lacks credibility; and
• preoccupation with other matters.