Relationships are a two way street. Last week we looked at what a client should reasonably expect if they become your client . It’s obvious they are getting a great deal. Making the relationship work requires some effort on their part. What are your expectations?
Seven Expectations of Yours
Your prospect might get twenty benefits when they sign on as a client. You have seven expectations. They are very reasonable.1. Make time for portfolio reviews, calls. The client might complete a financial plan, accept your recommendations and hand over a check, but the relationship is not on automatic pilot. Put another way, it’s not strictly discretionary. They need to meet with you. Together, you assess progress toward goals. What’s working? What’s not? The client needs to interact with you.
Client Benefit: Clients like report cards. These periodic portfolio and relationship reviews are like report cards.
Advisor Benefit: The client is engaged. More assets might follow.2. Tell me if you don’t understand something. Advisors are professionals. We listen to analysts. They speak in jargon. We interact with peers. They speak in jargon. We assume everyone understands the terms. Using fixed income as an example, we talk about sinking funds, yield to maturity and weighted average life. No one wants to “look stupid,” so clients often glaze over and nod. People need to understand what they are buying.
Client Benefit: Clients feel more confident if they are in a friendly environment and can ask for explanations.
Advisor Benefit: If clients can’t explain how they’ve invested money to their spouse, they might call back and reneg the next day.3. If you are angry or upset, tell me. Clients jump ship for several reasons. They are prospected by someone else. They have good investments, but the stock market isn’t cooperating. They think you can predict the future, but kept this information to yourself. Like a pressure cooker, they let everything build up inside them. One day they move their account, yell, complain to the manager or use the word “lawyer” in a sentence. You want to take the heat as early and as often as necessary.
Client Benefit: Your client placed their trust in you. They deserve answers and explanations. You don’t want to try and read the tea leaves. You want them to get it off their chest.
Advisor Benefit: You have an early warning if the relationship is deteriorating.4. Tell me about lifestyle changes. Your company announced a restructuring. Divisions will close. Layoffs are expected. On the other hand, maybe you won the lottery! Maybe you’ve had enough of the rat race and have decided to pursue your dream of becoming a sculptor. Your financial plan likely assumes you will be working to age 65, adding money along the way. If the goalposts have been moved, tell me! Your financial plan is a dynamic document.
Client Benefit: If something big happens in your life, you don’t need to face it alone. If your advisor has advance notice, time may be on your side in terms of options for what to do next.
Advisor Benefit. You aren’t stuck behind the 8 ball, especially if the client needs to replace their salary by selling investments in a poor market environment.5. Share these great investment ideas you’ve heard about. Advisors build portfolios using conventional, mainstream investments. They’ve been through Compliance review before you even suggest it to a client. Your client hears about stuff on the Internet or watching late night infomercials. Cryptocurrencies are popular now. Buying gold coins has been touted for years. As an advisor, the last thing you want is a call saying “Sell everything. I’ve decided to buy frontier debt in emerging third world economies. I’ve been told I can’t lose!” It’s their money, but you want to have the chance to present a balanced picture of the risks and opportunities.
Client Benefit: Your client will have a second opinion available, at no additional cost. They might act impulsively, you can be the voice of reason.
Advisor Benefit: If another advisor is attempting to poach a client, you have some time to make your case.Related: How Advisors Help Protect Investors from Themselves 6. Changes in your career or job: If they change companies, you likely know about it. Phone numbers change. Maybe they relocate. When we open accounts, we know where a person works and what they do. Over the years, they may quietly climb the corporate ladder. They might become a control person, affecting how that can trade their company’s stock. They might move into R&D or a strategic planning position where they get word of impending takeovers. You want to be careful about potential inside information.
Client Benefit: You are in a position to also provide advice re: stock options.
Advisor Benefit: In addition to Compliance benefits, there’s referral potential.7. Introduce me to your children. Parents too. When you complete new account paperwork for retirement accounts, beneficiaries are named. As their advisor, you will probably meet them someday. You don’t want it to be at the funeral! You (and your client) would like any introductions to be made during happy times. Get them thinking about it. You may be in a position to help their parents too.
Client Benefit: Continuity. If your client is happy with you, they probably don’t want heirs reinvesting the wheel when they are no longer in the picture. They should rationalize: “If I trust my advisor, you should trust them too.”
Advisor Benefit: You have the opportunity to open accounts across generations, with your client as cheerleader.
These are all reasonable requests. Your client can see how they benefit. You benefit too.