Issue 2 ::
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Who's Advising Who?
By: Anthony Nettuno,
Nettworth Financial Group
As financial advisors, most of us recognize that no single aspect of our business is more important than the customer service we deliver. However, during periods of considerable market volatility like we are currently experiencing, one key element of serving our clients can easily be overlooked. Now is a time for us to remember that, even while our clients may be anxious or even fearful about their assets, we are the financial professionals. And we need to avoid the pitfall of allowing our clients to assume the role of the advisor.
Your Clients’ Best Interest
We have all likely felt the pressure at one time or another of making rash decisions in response to restless clients. This situation often results in making a move that is clearly not in the client’s best interest. Advisors themselves sometimes panic or succumb to their clients’ panic. And others, in times like these, will unilaterally decide to pull client assets out of the market. Why? We as advisors must always ask ourselves, “Am I doing this because my clients are stressed, or because it is in their best interest?” Unfortunately, even experienced advisors are vulnerable to this reaction. We must continually remind ourselves why clients engage us in the first place. They do so because they need our objective, expert advice, and understand that we have the knowledge and experience to help them reach their financial goals. Making rash decisions simply to satisfy anxious clients does neither party any good. This circumstance is no different than if a doctor performed reconstructive nose surgery instead of fixing a broken arm because that’s “what the client wanted.”
Being Proactive Is Your Best Ally
Ultimately, your clients just want to know that you are there for them. They want to feel that everything is OK as long as their financial advisor is watching out for them. In times of market volatility, it is critical that advisors proactively communicate with their clients. Again, this is no secret within our industry. And yet, the number one complaint of disenchanted clients is that their advisor never communicated with them. This comment has been included in almost every written customer complaint I have ever seen. Don’t wait for your clients to contact you. Call them. Write them. Do anything you can to “be there” for them. Sometimes advisors create problems for themselves by avoiding difficult interactions. Inevitably, this leads to client attrition. Instead, be proactive. Call your client, admit to a mistake, and make it right. They will respect your honesty, and the fact that you didn’t simply brush your mistake under the rug.
A Message During Volatile Periods
Now I know what you’re thinking: I can’t possibly call all of my clients every time we experience a few bad days in the market. That may be true, but it doesn’t mean you can’t be proactive.
Here’s an example of effectively communicating with your clients:
Within our OSJ network, several advisors recently distributed a letter to their clients after two particularly poor days in the market. The letter thanked them for being clients, assured them that their advisor was aware of the situation, was monitoring their investments, and thinking about the client.
The correspondence also reminded the client how they originally collaborated with their advisor to construct and implement a plan that considered their financial goals, investment objectives and risk tolerance. The strategy was designed for the long-term, and that market volatility was expected and discussed at length at the outset.
The letter further stated that unless the client’s financial goals, investment objectives, or risk tolerance have changed, the plan remains valid. It did, however, also urge the client to contact their advisor if, in fact, their objectives have shifted.
This type of client outreach is more than just proactive. It speaks volumes to the client and, most importantly, communicates to them, “I’m here for you.”