One of the biggest reasons rookie financial advisors often struggle early in their careers is because they do not do a good job of managing their clients’ expectations, says Jasmin Bergeron, Montreal-based director of the MBA program in financial services at l’Université du Québec à Montréal.
“Many new advisors overpromise and under deliver,” Bergeron says. “They will promise anything just to please their client up front. But the client will, in the end, be disappointed because the advisor’s promises didn’t match up with [actual outcomes].”
Most unrealistic promises — and disappointments — involve rates of return. But there are many other ways, beyond dealing with rates of return, to manage your clients’ expectations.
Bergeron offers some tips on how you can make subtle changes to your practice in order to meet (or exceed) client expectations:
> Avoid blind promises
A key component of managing your clients’ expectations is identifying the limits of what you can and cannot control.
As a good advisor, you are, no doubt, eager to dispel any fears your client might have about market volatility or the year-over-year performance of a particular stock or mutual fund.
However, making blind promises to your clients such as “returns will come” or “the market will improve” may create unrealistic expectations. In the long run, Bergeron says, it could actually put you deeper in the quicksand.
To avoid such disappointments, many successful advisors recommend discussing the inevitability of occasional market downturns early in the client relationship.
> Set achievable goals
The key to meeting client expectations, Bergeron says, is managing client expectations.
For a simple example, take a listen to your outgoing voicemail message. Do you say you will return calls as soon as possible?
How soon is as soon as possible? To the keen observer, you are setting an unrealistic expectation about the time it would take to return a call.
Instead, Bergeron suggests, say something along the lines of “we will return your call within 24 hours.” That way, if you manage to return the call in only two or three hours, the client will be impressed by your responsiveness.
Says Bergeron: “It’s a simple way to set yourself up to succeed.”
> Show interest in your clients
Another common mistake among new advisors is “over talking” in an effort to impress a new client or prospect. This is a phenomenon Bergeron has studied for many years. In fact, he completed his doctoral thesis on this subject.
There is a strong correlation, he says, between the amount of time an advisor spends listening and asking good questions, and increased levels of client satisfaction and sales.
This observation supports another one of his findings: You will win more clients in two months by showing sincere interest in them than you would in two years by trying to look interesting.
“Listen to your clients,” Bergeron says, “and they will love you.”
This is the final instalment in a four-part series on rookie mistakes.