Customer Versus Client – It’s More Than Just Semantics

If you are looking for an easy way to test how a financial advisor, financial planner, insurance agent or investment advisor views your relationship, I suggest you try the following. Ask them a question designed to get them to talk about another individual to whom they provide services. The question could be anything relevant to your discussion that elicits a response about another individual. The goal is to get them to discuss someone else.  As an example you could ask the following: ”Tell me about a time when you helped someone your work with about how to emotionally deal with market volatility.” You will want to listen carefully to how this professional characterizes the other individual to whom they provide services. Do they refer to these people as customers or clients?

While on the surface there may seem not much difference between customer or client, I believe that there is a significant amount of value and weight conveyed by which word is used. The word selected can help you understand how a financial professional views you. From Mirriam-Webster’s online dictionary a customer is defined as “one that purchases a commodity or service” whereas a client is defined as “a person who engages the professional advice or services of another.” This small difference in definition can mean a great deal to what type of financial advice you receive. While the difference does not necessarily speak to whether you can expect a financial professional to work in your best interest or not (although I believe it often does), it certainly can help you understand the type of service you will receive.

My contention is that someone who refers to the people they provide service to as “customers” views their service and relationship as a one-time transaction with no long-term relationship implied. They may provide the advice delivered in your best interest, but do not view their role as extending beyond the time that advice is delivered unless a new transaction is involved. Once you have purchased the product or service they are offering you, their obligation to you has formally ended. This type of short-term, transactional focus can be an indication that the person you are working with is a product focused salesperson. This is not always the case, as there are financial professionals who deliver advice services on a one-time basis to lower net worth individuals as a way to make their services more affordable, but these people are likely to refer to you as a client. It is the use of the word customer that carries weight and creates a value statement.

Someone who refers to the people they work with as “clients” likely views their services as a long-term relationship where the delivery of advice is the main “product.” While there may be product recommendations and even selling involved, the transaction is not the focus with a client. The focus is on fostering a mutually trusting relationship through delivery of a valued service, open communication and working in your best interest. A client is a person whom a financial professional hopes to work with for many years to come.

The difference in definitions of customer and client are small. The implications of these differences in what you can expect from a financial profession are real and meaningful. As always, there are exceptions to this, but in deciding who to work with the customer versus client test provides you one more tool to know what type of professional you are speaking with.


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