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Staying On Top of It

Savvy investors know how to keep customer complaints down and profit from those they can't

Teresa Wietzikoski listened patiently to a customer complain about a sudden drop in the value of his insurance policy over the phone two years ago. When he threatened to fire her, Wietzikoski, an advisor and president of Diversified Wealth Management in Atlanta, invited him in for an exit interview. At the meeting, he was so impressed with her interest in him and her desire to fix his problem that not only did he decide to stay with her, but he later referred several family members to her as clients.

Ed Gjertson, vice president of Mack Investment Securities in Glenview, Ill., and an NASD arbitrator, tells of a similar gripe with a different response and outcome: One advisor who avoided his complaining client wound up having to face him in front of an arbitration panel.

While the market is reaching levels not seen in years, advisors have much to be wary about given the steady drumbeat of corporate scandals and complaints. Last year, according to the NASD, customer complaints reached 5,137, up from 4,495 in 2002, the year the market started rebounding.

To be sure, not every advisor is forced into arbitration for letting wounds fester, nor do they all make money off of salving them. But advisors who listen to clients, keep them well informed, take care of complaints as they arise and handle all the other things that makes for good client relations stand to gain a lot with just a little extra effort.

The Best Defense

Frequent communication with clients is probably the best defense against grievances. “That puts off the majority of complaints,” says Don Patrick, a branch manager with Integrated Financial Group/Securities America in Atlanta.

Clients are less likely to get worked up if they see that their advisor is listening to them, says Patrick, while at the same time advisors are better able to spot signs of discontent when they stay in touch with clients. To that end, Patrick has his reps contact clients at least 20 times a year, including email and thank-you notes after conducting a new piece of business.

During especially rocky times, advisors should consider revving up such contact. For example, when the market tanked from 2000 to 2002, Michael Clancy, a vice president of CIA Financial Group in Shelby Township, Mich., added regular written market updates to his usual twice-yearly meetings and quarterly phone calls. It seemed to work. While the NASD handled a surge in arbitration hearings during this period, Clancy continued to see just as few complaints as he did in the 1990s.

Communication works both ways, of course. Advisors should also use their contacts with clients to keep them informed about fees and other charges, as well what kind of service they can expect from the advisors and the kind of returns clients might receive from their investments. That way, when clients get bad news, advisors can often lower the temper of their disappointment by gently reminding them they were coached in the past to remain open to such possibilities.

“You need full disclosure of all the moving parts,” says Rod Hansen, a regional vice president of Pacific Life in Boca Raton, Fla. He points to a client who came in to see him, complaining that while his investments had declined about 10 percent, the fees hadn't changed. Hansen referred to their previous discussions about fees, as well as the long-term prospects for returns. The client calmed down.

Julie Stalnaker, an advisor with Raymond James & Associates in Venice, Fla., always goes through monthly statements with clients, so they understand how to read them. With older customers on a fixed income, she also spends time discussing basics like how the bond market works. Then, if accounts call to complain about an investment, she can gently reiterate the lessons already imparted. When one client recently called, asking why his fixed-income portfolio was down from the month before, says Stalnaker, “I could tell him, remember when we talked about that and why it might happen,” she says.

Dealing With Complaints

When complaints do occur, it's best to have your assistant trained to screen phone calls. That way, he or she can warn you before you talk to the client, “So you're not answering unprepared,” says Lloyd Williams, a business coach with Lloyd Williams & Associates in Nova Scotia and Dawsonville, Ga., who specializes in working with financial advisors. Then, when you take the call, you can request a meeting or phone call to speak in greater detail later on, giving you at least a few hours to research the problem.

Another possibility is to make sure clients have someone else they can contact. “Sometimes, people don't want to hurt their advisor's feelings,” says Larry Gekiere, Jr., managing partner with Navigation Financial Group in Dallas.

For that reason, he sends a letter to all new accounts introducing himself as the firm's registered principal and offering himself as a resource. Recently, a client of another advisor called, explaining that, while he liked the rep, he also felt the man was talking down to him.

For example, he wanted the rep to explain such concepts as rebalancing in more depth, rather than just brushing it aside and acting as though it were something too complicated to discuss. Gekiere talked to the rep, who was surprised by the complaint, then arranged a three-way meeting to discuss the issue. The problem stopped after that.

If possible, request a face-to-face meeting. “They need to be able to see sincerity,” says Katherine Vessenes, president of Vestment Advisors, a Minneapolis firm providing coaching to financial advisors. No matter how you communicate, however, it's important to talk to the client as soon as possible, preferably within 24 hours of the initial call or email to the firm. Then, let them vent their anger — without your interrupting or becoming defensive. In some cases, “just getting them to vent will solve a huge percentage of problems,” says Vessenes.

Once advisors and their clients reach an agreement on what has to be done, advisors need to set a time for when they'll resolve the problem. Preferably, they should take care of it in less than three days, according to Hansen.

Wietzikoski, for example, received a call from an irate retiree three months ago, wanting to learn why his annuity check hadn't been deposited in his account on the first of the month. After letting the man talk, she promised to get to the bottom of the problem within 24 hours, also checking to see that the client was satisfied with that proposal. By the end of the day, she and her assistant had pinpointed the culprit — the client's bank had messed up — and arranged for the money to be deposited in the account immediately. Then, Wietzikoski revamped her entire system for making sure that all retirees' checks were deposited on time. Her efforts paid off. In just two months, the client referred three new accounts to her.

Following Up

Once an advisor has taken care of the complaint, it's important to get back to the client to let him know what happened, then checking in at least one more time to make sure everything is OK. Williams points to an advisor who faced a client who was angry because his mortgage check hadn't been deposited in his account. After listening to the client patiently, the advisor asked for a day to find out what happened. His discovery: A new staffer had misunderstood how the procedure worked and had sent the check out late. So, the advisor called the client back the next day, explained what had transpired and promised that, if it were to happen again, he would help the client find another advisor.

Thirty days later, he called to make sure the check had gone through. His attention to detail paid off when the client started providing a steady source of referrals. “He became one of the advisor's biggest advocates,” says Williams.

Even if a client's complaint doesn't seem legitimate, advisors usually should just act as though it is. “Even if we can prove the person wrong, we don't,” says Clancy. “You can win the battle but lose the war.”

One of his clients recently insisted that he had requested a beneficiary change to his IRA when he hadn't. Although the correct discussion had been noted in the firm's database, Clancy didn't mention it, and simply made the requested change.

You can even use unfounded complaints as an impetus for improved service. Williams, who also worked as an advisor, recalls a client who complained that his year-end contribution to his retirement fund hadn't been made, even though the man hadn't mailed it until Jan. 3. In response, Williams changed his system for handling such contributions, mailing a letter to all clients asking that checks be mailed before Dec. 15, then continuing to mail a reminder monthly. The next year, the client got his contribution in by Dec. 1.

Finally, advisors need to realize they can't always win with some clients, but they can make their own lives easier by avoiding the inveterate naysayers before taking them on as clients. That means probing prospects for their feelings about services they've received from previous providers and what they've liked or disliked about those experiences.

“Do a little due diligence on them,” says Vessenes. “People who have been unhappy with many other providers they've worked with will most likely not be happy with you.”

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