5 steps to become a trusted advisor

By: Kyle Enger, Executive Vice President of Finagraph

With the surge of alternative lenders, competition among banks is stronger than ever. But what exactly does that mean for the everyday banker?

It means business owners want more. If you’re only meeting your clients once a year on a renewal, it’s not good enough. In order to take your customer service to the next level, you need to become a trusted advisor. Someone who understands where your clients are going and how to help them get there. If you’re not investing in your clients’ business by taking the following actions, they may have one foot out the door.

1.       Understand your clients’ business

One of the biggest complaints from business owners is that bankers simply don’t understand their business. A good commercial banker should be well-versed in their borrower’s company, competitors and the industry. They should be willing to get to know their business, commit to them, stop by to check-in and provide a proactive plan to avoid future risks. Here are some of the actions a great banker should and shouldn’t be taking with their clients:


 2.       Utilize technology for your benefit

The majority of recent bank innovations have been used to make the customer experience more convenient, but not necessarily the more helpful. We’ve seen everything from mobile remote deposit capture to online banking to mobile payments – all of which are keeping customers from interacting with the bank.

Contrary to what many think, technology can be used to create strong relationships by giving bankers information about their customers to help serve them better. Using new software programs, bankers can see information like the current ratio, quick ratio, debt-to-equity, gross margin, net margin and ROI within seconds. With this insight, a good business banker should be able to:

  • Compare industry averages and ensure clients are up to par
  • Review key business ratios and explain them in a way that makes sense
  • Become a trusted advisor for specific businesses
  • Provide financial advice on all areas of a business
  • Monitor the financial health of borrowers 24/7
  • Immediately flag problem areas to mitigate risks

3.       Heighten financial acumen

Banks have access to a vast amount of customer financial data, but sometimes fail to use this information to its full potential. With insight into consumer purchasing behavior and business’ financial history, banks should be able to cater products and services to clients in a personalized manner. However, many lenders walk into prospect meetings without knowing much about the business. Their mode of operation is solely focused on trying to secure new clients by building rapport – they are what we call surface bankers.

In the old days, bankers used to be able to get by schmoozing at rotary clubs, but today’s business owners needs more. The new generation of business owners are more sophisticated, aware of new technologies and have a wide variety of lending options. They require specific financial advice according to their industry niche, and a one-size-fits-all approach to finance won’t cut it anymore. It’s time to raise the bar and start giving more to business owners.

A good banker will educate clients on what they need to know such as equity, inventory, cash flow, retirement planning and sweep accounting. They should also know about new technology and consult borrowers on intermediate financing, terming out loans that are not revolving, or locking in with low interest rates. Following, they will bring in the right specialist to match the product according to their clients’ needs. Lastly, they should present all of these options based on the business’ particular location, industry and vocation.

 4.       Go beyond the price

Many business owners make the mistake of comparing banks based on cost, but the value of a healthy banking relationship and a financial guide is priceless. So many bankers these days are application gatherers working on a transactional basis, but that’s not what business owners need. They need to stop looking at the short-term convenience of brands, price and location, and start considering the long-term effects a trust financial advisor can make on their business. Business owners are going to ask the following questions about their banker, before deciding on which bank to choose:

  • Is the banker familiar with my industry?
  • Does the bank offer the services and products I want?
  • Are they willing to meet in-person?
  • What is the lending process?
  • How fast can they close a transaction?
  • How long have they been with the bank?
  • What’s the turnover rate?
  • Do they have a business division?

In the final analysis, the most important aspect of dealing with borrowers is establishing a relationship of trust and confidence. If you are well prepared and indicate that you really understand the financial aspect of your clients’ business, you should enjoy generation-long relationships with your clients. Financial planning for a closely held business is not complete until the owner has established a plan for the orderly succession of the business.

5.       A partner in your business, not a banker

“Sixty percent of businesses are misfinanced using short-term money for long-term use,” according to The U.S. Business Banking Board. In other words, there are many qualified candidates in need of a trusting banker to help them succeed. Unbeknownst to many business owners, bankers actually want to make loans and help their clients’ business grow. Making this known is the baseline in building a strong foundation for the future of your career. Just remember to ask yourself – am I being business-centric or bank-centric?

Read the published article on the Experian blog here: http://www.decisionanalyticsblog.experian.com/blog/experian-information-systems/five-steps-to-become-a-trusted-advisor.