Clients often sever ties with their advisors when communication, or trust, breaks down. But rather than attributing blame to a single event, you should recognize that it is a series of inactions that tend to erode a relationship.
Relationships crumble for a variety of reasons, but sometimes, it’s what you fail to do that chips away at trust. If clients feel neglected or that their concerns are left unaddressed, they may question your intentions in having them as clients.
“It’s a trust business,” says David Andrews, portfolio consultant at Franklin Templeton Investments, in Toronto. “They’re founded and broken on that trust.”
Here are some ways to prevent the dissolution of a client-advisor relationship:
1. Set expectations at the outset
With greater pressure on advisors to position their practice as full-service providers, it’s incumbent on them to outline the extent of their relationship with clients. Clarity is crucial in avoiding misunderstandings or disappointments about your responsibility to clients.
“It’s important to define success and the parameters upfront,” says Andrews. “It’s critical at the outset to establish what makes [the client] unique and why the client should view the advisor as indispensable.”
If you’ve marketed yourself as a full-suite service, be prepared to meet those expectations. One person can’t handle the entire operation, so you need to have a reliable team in place, he adds.
2. Don’t lose sight of performance
While there are many layers to your role as an advisor, from managing emotions to educating clients, at its core, it’s still a performance-driven profession. Make sure you are taking time to go over statements with clients, whether the market is in free fall or on the upswing, says Andrews.
“[You] shouldn’t avoid looking at the results, and you better be prepared to deliver,” he adds.
3. Be proactive
Following a major political event or other triggers for sharp market declines, contact clients prone to be distressed over such news, says Andrews.
“[Initiating contact is] a way of defusing things that may be festering,” he adds. “If you wait, they may already be at the boiling point.”
Part of your role is to remind them to focus on the long term, and to put their goals into context. Do not dismiss their concerns, but be prepared to reassure them there’s a strong plan in place.
4. Demonstrate your commitment
Trust is built over time, and advisors need to “give more weight to having effective communication,” says Andrews. It’s worth keeping in frequent contact with clients, because it lets them know their interests are being monitored.
“Clients need to feel they are the advisor’s most-valued relationship,” says Andrews. “…[Many] would rather have a 10-minute phone call every so often versus every six months.”
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