Advisors: Why Delivering Great Service Just Isn’t Enough

Advisors: Why Delivering Great Service Just Isn’t Enough

This week-end I was reminded that a good product and good service aren’t enough. A quick experience with Apple reinforced (in a good way) that a great experience is all about managing client expectations.

What Does Managing Expectations Look Like?

On the home-front my son was desperate to download a new game on his iPad (obviously). For some reason, I was getting an error message that I couldn’t fix so I ultimately resorted to the ‘contact support’ button on the Apple site.

I clicked on the support link and a screen came up to tell me that help was on the way.  Apparently I would hear my phone ring in less than two minutes. Having spent nearly an hour, earlier in the day, trying to find someone to help me at my internet service provider, this was music to my ears. Better still, it actually happened; the phone rang within 60 seconds.

At this point, Kyle (my new best friend) came on the line and immediately put me at ease about what was happening and went about fixing the problem. After some time, he came back on the line with an apology. He had contacted the wrong person and was now on the line with the right person. He didn’t want me to wonder what had happened to him.  At every point of this small interaction, Apple effectively managed my expectations.

I felt better about Apple after the call (and the problem) than I did before.

Why Should You Care?

Here’s what we know from our 2016 study of 1,000 investors.

  • Eighty-four percent of clients, who provided a referral, said their advisor had outlined the service they could expect in the next 12 months, dropping to 68 percent among those who did not.
  • Seventy-eight percent of the most satisfied clients said their advisor had outlined the level of service they could expect in the next 12 months, dropping to 48 percent among dissatisfied clients

4 Things You Can Do Differently

When it comes to managing client expectations, Apple did a lot of things right and I think we can learn something from this simple experience. This example relates to managing around a potential service issue, however the lessons relate to how we manage client expectations more broadly. There were four specific things that made a real impact.

  1. Make a commitment. Apple drew a line in the sand and said they would call within two minutes. Managing expectations effectively means setting the parameters so everyone knows if the experience falls short or is better than expected. In our world this is the difference between saying “we’ll return a call within 2 hours” and saying ‘we’ll get back to you as soon as possible”. Trust me, we all have a different definition of ‘soon’.
  2. Tell them what you’re going to do and then exceed it. Once the parameters have been set, exceed them. If Apple had called within two minutes without telling me that they were going to do that, it would not have felt quite as extraordinary (and I probably wouldn’t be writing about it). And, if they had committed to two minutes and been just 60 seconds late, I would have been mildly disappointed, despite a quick turnaround.
  3. Describe the next experience, not the final outcome. For me, this is the most important point. Notice that Apple told me exactly what I would experience next – the phone would ring. They didn’t jump straight to the ultimate goal (which was to resolve my problem). This is genius. They created a series of small wins that they could actually control. Let’s face it, when I first called they didn’t know if (or how quickly) they could resolve the problem because they didn’t know what it was. Despite that, they made (and made good on) several smaller promises that they knew they could control either way.
  4. Stay in touch. Once you shift from the simple things, like response time, keep the client informed. Kyle came back on the line so I didn’t have to wonder if my call had been dropped. By the way, Apple also gave me a choice of the kind of music I wanted to listen to while on hold. Nice touch.

The Elements of an Effective Plan

Managing expectations is, of course, about more than response times – it relates to the broader relationship. When it comes to managing overall expectations well, I think there are three things we need to do:

  • Define it. Define exactly what a client can expect, ideally linked to client segment. At a minimum that definition should include frequency of contact, other communications (e.g. education), client appreciation and scope of offer.
  • Document it. I’m a big believer in using a written service agreement that maps out what a client can expect. (You can download a sample here.) It’s something that is created and reviewed at the outset of the relationship and then as part of the annual review so you can look back and ensure you have delivered on your promises.
  • Communicate it. Don’t assume that because you have told a client what he or she can expect on the day you met, that they’ll remember. Expectations love a vacuum and they will expand to fill the empty space created by lack of communication. Review your service agreement as part of an annual review to remind clients of what you have done and discuss any gaps

Create a Service Agreement

The reason I love a service agreement is because it goes beyond managing basic expectations. Written well (and reviewed regularly) it can help clients understand: exactly what you provide, their role in an effective relationship and everything that you do to ensure that you are the best possible advisor.

For example, you might include the following in a service agreement:

  • Set the stage. Let them know how important they are and why you feel it’s important to map out what they can expect. Articulate your commitment to your clients.
  • Plan or portfolio reviews. Let them know how often you will meet with them and how (e.g., face to face or telephone).
  • Define the services you provide. Use the opportunity of a service agreement to reinforce the full range of services that you provide.
  • Service standards. Define your commitment to core service issues, such as response time to calls or problem resolution.
  • Team. Reinforce the importance of your team and the individual roles they play in delivering on your commitment to the client.
  • Client Education. Let clients know if and how you will educate them to help them make better decisions.
  • Continuing education. Let clients know how you invest in yourself and your team to stay current on technical or other client issues.
  • Client input. Let clients know if and how you get feedback from your clients to ensure you are delivering what is expected.
  • Your expectations. A service agreement isn’t just about what clients can expect of you. Take the time to explain what you expect of them (e.g., attending meetings) in order to do the best possible work.

If you’re interested in downloading a sample agreement, click the link below. You’ll need to edit to reflect your business, but it’s a good place to start.

Sample Service Agreement

Julie Littlechild
Client Experience
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Julie Littlechild is a speaker, author, researcher, and founder of She helps successful professionals and entrepreneurs design businesses that support ... Click for full bio

Sizing up Strategic Beta

Sizing up Strategic Beta

Interest in strategic beta ETFs is rising. A few simple guidelines can help investors pick from among the often-bewildering number of options.

The number of strategic beta ETFs has grown at 20% a year, consistently in good markets and bad, since the year 2000.[2] With good reason: Strategic beta ETFs offer a more thoughtful passive option than cap-weighted indexes—and they can do so with a more transparent process and lower fees than actively managed funds.

Bright future, dim past    

All well and good, but how should investors assess any particular strategic beta ETF? Close to 40% of these funds have been in operation for less than three years[2]. This lack of an established track record can make it hard to validate their claims. ETF sponsors may try to make up for that shortcoming with back testing, running simulations of holdings they might have had against actual past market performance, but that has its limitations:

Back testing doesn’t always account for fees, liquidity or transaction costs.

Back tests are “selection biased”—that is, back testers have a tendency (conscious or not) to engineer positive outcomes. Live outcomes are therefore likely to be inferior.

Too great a focus on recent history can lead to “driving in the rearview mirror.” While an index or ETF may solve the problems of yesterday well, an investor’s focus should instead be on solving the potential problems of tomorrow.

Three steps to an informed judgment

Because the indexes tracked by strategic beta ETFs are by design somewhat exotic, effective assessment of them calls for some digging:

  1. Investors first have to understand who the index designer and asset manager are (they may not be the same people). They should have a clearly expressed investment philosophy and the expertise to enact it in practice.
  2. The properties of the portfolio should reflect the investment philosophy. Not only does the transparency of ETFs allows examination of the holdings to ensure that this is the case, it also measures such as active share relative to a cap-weighted benchmark or turnover can indicate whether an ETF is performing as designed.
  3. Performance can also be used to confirm that an index is doing its job. While short-term results shouldn’t be given too much sway, the index designer should be able to explain when and why an index will perform and when it might not.

One key aspect of performance shared with traditional passive management is tracking error. Like earlier cap-weighted index tracking funds, strategic beta ETFs should have minimal tracking error to their own indexes. Beware, though, the tracking error to the benchmark can be large and dynamic, it is by this differentiation that strategic beta adds value.

Made to measure

Strategic beta does not defy analysis, despite its novelty. Indeed, it has a lasting advantage over standard active manager due diligence. Strategic beta, after all, is rules-based. What an investor sees in straightforward, well thought-out index composition rules is what the investor will get. In that sense, strategic beta is relatively immune to the personnel changes, style drift and index hugging that can challenge actively managed mutual funds.

Learn more about ETF due diligence here.


This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be a recommendation for any specific investment product, strategy, plan feature or other purpose. Any examples used are generic, hypothetical and for illustration purposes only. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, legal, tax and other professional advisors that take into account all of the particular facts and circumstances of an investor’s own situation.

Opinions and statements of market trends that are based on current market conditions constitute our judgment and are subject to change without notice. These views described may not be suitable for all investors. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations. Past performance is no guarantee of future results. Investment returns and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. ETF shares are bought and sold throughout the day on an exchange at market price (not NAV) through a brokerage account, and are not individually redeemed from the fund. Shares may only be redeemed directly from a fund by Authorized Participants, in very large creation/redemption units. For all products, brokerage commissions will reduce returns.

J.P. Morgan Asset Management is the marketing name for the asset management business of JPMorgan Chase & Co. and its affiliates worldwide. J.P. Morgan Exchange-Traded Funds are distributed by SEI Investments Distribution Co, One Freedom Valley Dr., Oaks, PA 19456, which is not affiliated with JPMorgan Chase & Co. or any of its affiliates.

For additional disclosure 

For a longer discussion, please see our recent publication Strategic Beta’s due diligence dilemma (J.P. Morgan, April 2017).

[1] Morningstar.

[2] Morningstar.
J.P. Morgan Asset Management
Empowering Better Decisions
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See how ETFs differ from other investment vehicles, learn how to evaluate them, and discover how ETFs can be used effectively to achieve a diversity of investment strategies. ... Click for full bio