Changing Affluent Expectations

Phoenix: Following a presentation I delivered on "Affluent Expectations in Tough Times," Mike said, "My clients are continually calling—it's as if they expect me to know when the markets are going to stabilize ... it's gotten to the point that I'm convinced my clients have unrealistic expectations.

Phoenix: Following a presentation I delivered on "affluent expectations in tough times," Mike said, "My clients are continually calling—it's as if they expect me to know when the markets are going to stabilize ... it's gotten to the point that I'm convinced my clients have unrealistic expectations."

Obviously it is impossible for me to determine whether or not Mike's clients have unrealistic expectations from our brief conversation. But what is quite clear—and our research continues to reinforce this point—is that most affluent clients have unrealistic expectations of their financial advisors. Why? Because not long ago the markets appeared strong, clients were making money, and both clients and advisors were getting greedy. So why bring up something that might interfere with landing a new client? Bearing this is mind, many advisors opted for the path of least resistance and avoided establishing realistic expectations at the beginning of the professional relationship. And it is virtually implausible to manage expectations that have never been clearly established.


Couple this with the fact that most advisors still have too many clients, don't have a clearly defined service model and service tends to be reactive rather than proactive. If, like Mike, you are getting too many incoming calls from your clients during these challenging times, it is a warning signal that your service model needs either a tune-up or a major overhaul.

The fact is that being on the receiving end of poor service is what's causing the greatest amount of dissatisfaction amongst affluent clients. In tough times, shoddy service leads clients to believe you are an unprofessional and shoddy advisor.

The level of affluent dissatisfaction has prompted many media outlets to publish questions that investors should ask their current or prospective advisors. Take a deep breath as you read through these questions and PLEASE take this as a signal of what, in some shape or form, clients will expect from the affluent client-advisor relationship. The following is a partial list of questions that affluent consumers are being prompted to ask by the media and consumer groups. If your clients and prospects are not yet asking these questions, it is likely they have been exposed to them, which means they probably will be in the future.

34 Questions:

  • What services do you provide?
  • How do you provide these services?
  • How do you get paid relative to each of these services?
  • How long have you been in the business?
  • How long have you been with your current firm?
  • How many firms have you worked with?
  • Why did you change firms?
  • Did you get paid to change firms?
  • Did you get paid to stay at your current firm?
  • What is your educational background?
  • What licenses and certifications do you have?
  • Have you ever been disciplined by the NASD or other regulatory agencies?
  • Can I have a copy of your NASD form?
  • Do you prepare comprehensive financial plans?
  • How long does it take to complete a comprehensive financial plan?
  • What do you charge for this comprehensive financial plan?
  • How many clients do you have?
  • How much money do you manage?
  • What type of clients do you have?
  • How often will you contact me and how?
  • How will you determine my risk tolerance?
  • What type of due-diligence do you conduct to ensure my money is "Madoff proof"?
  • How is my money going to be protected?
  • How often will you meet with me to review my portfolio?
  • Will you be handling my account personally ?
  • Will you be executing my financial plan personally?
  • Will you keep me informed with every investment decision you make on my behalf?
  • Will you be organizing, coordinating, and keeping all financial documents up-to-date?
  • How many full-time associates do you have assisting in providing the services you described?
  • How long have these associates been working with you?
  • What is the role of each of your associates?
  • Can you outline your service model?
  • What are your office hours?
  • Do you have names of clients, CPAs, and attorneys you have worked with who I can call?

Granted, few clients and prospects are currently asking all of these questions. But as I mentioned earlier, you can expect them in the future. Which is why you—and every member of your team— should be able to answer these questions with ease and confidence. TARP money, the Madoff scandal and the general economic meltdown have created a media field day. As these entertainers disguised as journalists continue to report scandalous behavior and fuel the fires of fear, affluent expectations are being framed accordingly.

The emphasis is now on the advisor—not the firm. The trust factor with national firms is at an all-time low, and now clients are focused on the professionalism of the individual advisor. Our research on both the affluent and the rainmakers continues to tell us that there is tremendous opportunity for advisors who are able to stay ahead of these challenging times. That said, it is important to realize that affluent expectations regarding financial professionals will never be the same.

Raise your game. Be able to handle serious due-diligence and background checks. You will not only survive this financial tsunami, your future will be bright.

Once again, we want to thank all of you who have emailed comments and questions to us. We will continue to do our best to answer each one. If you have any topic suggestions or special requests, please contact Rich Santos, publisher of Registered Rep. and Trust & Estates magazines, at [email protected].

TAGS: Research
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