Don’t waste economic and political uncertainty to show clients how you can shine

1. Ask questions and listen to the answers.
2. Drill down.
3. Think about what advice might help them — be creative.
4. Follow up, relying on the detailed notes that you took — repeat steps one, two and three and note what has changed.
5. Adjust your advice based on what you learned in step four.

Here are 5 things not to do:

1. Assume that all clients are experiencing the same stress about the same things.
2. Ask a question and then answer it for the client.
3. Jump to conclusions.
4. Use the same cookie-cutter advice to resolve all clients’ concerns.
5. Think that detailed notes are overrated.

Here is an example. Staminak (not his real name) is 62 years old and was looking forward to retiring by 65 based on the financial plan you prepared for him. He is now worried that his financial plan assumptions will not pan out. He thinks he will lose his job and have trouble paying his bills with the increased cost of living. He is sure he will not be able to retire at 65.

Staminak is proud, so he will not voluntarily share this with you. You met with him recently, so you wouldn’t normally reach out to him for another year.

Would contacting Staminak during a period of economic and political uncertainty be a good idea? Absolutely.

Meet him for coffee. This is likely different than your usual virtual meeting that focuses on KYC details.

Ask him a big fat question (step 1) like: How are things going for you with all the political and economic noise we are hearing? Give him time to gather his thoughts. Don’t jump in and suggest answers for him. If he provides a general answer like: We’re all stressed with what is going on right now, probe into what this means to him and how it specifically impacts his life (step 2).

If you have done a good job with Staminak before, you will know the industry he works in, the job he has, his liquidity needs and his personal goals so you might be armed with some guidance.

But don’t rush him or jump to conclusions about the impact he is experiencing. Encourage him to share with you. Use silence if necessary — it can be a powerful way to get a person to open up.

Now it’s your turn. Some of your suggestions could relate to financial services. He might need an updated plan with new underlying assumptions. You might need to adjust his account to satisfy any short- or long-term liquidity issues. Or perhaps you prepared in advance, and established that even if he doesn’t work for the next three years, he has saved enough that he won’t be severely impacted.

If he shares something with you indicating that you need to update his KYC form (his risk capacity and tolerance might have changed), take meeting notes and follow up as required by your firm’s policies and procedures manual to ensure that the risk profile is updated.

Beyond financial issues, you also might make other suggestions. The better you listen and identify issues that are underlying his financial concerns, the more creative you can be to help him (step 3).

For example, you might be able to introduce him to someone who has a job opportunity. This might not directly resolve his concerns, but it may get him to start to be more creative and empower him, which might reduce his stress and help him realize that you are a trusted advisor.

Finally, don’t think of this meeting as one and done. Following up (step 4) achieves two goals: Staminak will appreciate you as someone who cares about him as more than a source of revenue. And you will stay onside with regulatory requirements and your firm’s policies — knowing your client at every stage of your relationship and updating their forms and products in a manner that limits your exposure to unsuitable investment allegations. Further, you will be able to adjust your advice (step 5) as you get to know Staminak better, referring to your detailed notes to refresh your memory.

Advisor excuses

While each of your clients has unique concerns about political or economic changes, many advisors are not prepared to follow this five-step process, using any of the following excuses:

1. They don’t believe they are sufficiently remunerated to take this time with every client.
2. They have too many clients, so they do not have enough time to have this type of deeper conversation with all their clients.
3. They say that their clients are private and do not want to share this type of personal information with them.
4. They believe their clients are indeed cookie cutter, and so they can all be managed in the same manner to fulfill their legal and regulatory obligations.

None of these excuses serve advisors well. Clients will find another advisor who does care. You can get into trouble with regulators and risk a lawsuit for unsuitable investments.

Client-focused reforms make this type of deeper conversation with clients — along with the note-taking requirement — necessary. Don’t ignore this advice. If you have too many clients to do this properly, sell a portion of your business.

You have worked hard to stay out of trouble with regulators, not get sued and build strong relationships with your clients. Don’t waste a period of economic and political stress to become your clients’ trusted advisor when they need you the most.