You’re not Superman, but you wouldn’t know it from the things your clients demand of you. Some clients expect you to predict their portfolio’s performance with 100% accuracy, be available to them at all hours, and provide your services for free (or well below what you charge).
Of course, your clients aren’t financial experts, and if they are unfamiliar with the industry, their expectations may not match reality. With some strategic communication, you can manage your clients’ expectations so they can understand your client-advisor relationship and its limitations from the beginning. With a clear understanding of what you can and cannot do for them, they are less likely to be disappointed that you can’t perform miracles on their behalf.
Financial Performance and Other Uncertainties
Life is unpredictable, but that doesn’t stop your clients from seeking guarantees, especially when it comes to their money. When the markets are volatile, you may become the scapegoat as clients unleash their frustrations on you. You can’t always avoid your clients’ disappointment; however, educating your clients about the ups and downs of market performance can alleviate their fears if their portfolio isn’t performing as well as they imagined.
Help your clients understand the big picture. A bad day or even a bad year may not indicate long-term results. Downturns are to be expected. If a client’s portfolio loses a large portion of its value, it’s natural for them to worry. It may be helpful to remind them about historical stock market slumps and recoveries. Ask your clients about their goals, make sure you understand their needs clearly and show them the importance of long-term strategies. You can help them track their progress toward their goals rather than day-to-day fluctuations.
Conversely, when a particular sector or single investment is doing well, clients may be disappointed when they compare overall performance to high-flying performers. If you can educate clients about why these types of occurrences are usually rare and short-lived, they’ll be less likely to chase the latest hot commodity.
Forming Boundaries and Being Transparent
To maintain a healthy client relationship, communication should be frequent, clear, and transparent. Start with learning your clients’ expectations for how they would like you to communicate with them. Some clients prefer to meet with you in person, while others prefer email or text. Some may ask for regular updates, while others would rather only be contacted if an issue needs their attention. Although you should set boundaries around client expectations (so they know you won’t answer their late-night texts), you can adjust your communication to meet their needs more effectively.
As you establish communication with your clients, you can build relationships of trust with them. Take advantage of communication channels such as newsletters and emails to help further manage expectations. Your content can inform them of events, industry news, products and services, new regulations, your firm’s practices, and other information that can impact their money and their relationship with you.
Of course, some events are unpredictable, and when these things happen, you can demonstrate your expertise in handling those situations. If a cyberattack, systems or network outage, or other emergency occurs, transparency can reassure your clients of your honesty and competence as well as the safety of their assets.
Education Comes First, Appreciation Second
As an advisor, you offer your clients a unique fiduciary advantage, and it’s important for your clients to understand that. Your legal obligation to uphold fiduciary standards shows your commitment to uphold high ethical standards.
Not only should your clients trust your firm’s commitment, they also need to trust your expertise. Clients may have varying levels of financial knowledge, so it’s important to take whatever time is necessary to help your clients understand their investments at the level and depth most appropriate to their level of understanding and curiosity. The time you spend educating your clients now will help you establish expectations for their investments, such as risk and reward, volatility, fluidity, tax implications, and more.
Expectations can vary widely from one client to another, making it impossible to always please all your clients. However, if you clearly communicate boundaries and limitations for your firm and educate your clients about their investments, you will give them the knowledge they need to make better decisions and clearly understand the benefits and limitations they can expect from you.
The right software can be your ally in managing your clients’ expectations. When your clients can easily access documents, investments, and reports, they trust that you can manage their information and their assets with competence.
