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Putting on Your Best Face

Of the many tasks you manage, the toughest to master may be your face-to-face interactions with clients. The highlight of the day for some advisors, it is the most confusing and opaque of jobs for many others. Either way, poor client communication is a recipe for poor client relationships and slow growth. Disgruntled clients make it more difficult to bring in new business since most prospects come

Of the many tasks you manage, the toughest to master may be your face-to-face interactions with clients. The highlight of the day for some advisors, it is the most confusing and opaque of jobs for many others. Either way, poor client communication is a recipe for poor client relationships — and slow growth. Disgruntled clients make it more difficult to bring in new business since most prospects come through referrals from existing clients.

Here's a look at five common errors, and tips to ensure you don't make them in your own practice.

Mistake #1: Failing to manage expectations

At the beginning of your relationship with clients, you need to make clear what they can realistically expect in terms of returns and service. Unfortunately, many advisors fail to have this discussion with clients.

“Advisors tell clients they can expect a return of, say, 10 percent. But how many explain the return is going to be lower than that half the time,” says John Nersesian, managing director of wealth-management services for Chicago-based Nuveen Investments. The upshot: In a recent survey of 100 advisors by SEI, an Oaks, Penn.-based firm providing wealth management and other services to financial institutions, 39 percent reported that “unrealistic expectations” were a major cause of client discontent.

Your move: There's a lot you can do to get things off on the right foot when it comes to financial expectations. For starters, speak in concrete terms and offer specific examples. “Put it in client-speak, not investment jargon,” says Steve Onofrio, senior managing director of sales and support at SEI Advisor Network, a unit of SEI. Another tack is to use financial analysis tools, such as standard deviation, to make more explicit what clients can expect from good and bad markets. “That way, when the market goes down, you can tell them not to worry, it's exactly what we told you to expect,” says Charles Massimo, founder of CJM Fiscal Management, which has $120 million in assets.

As for managing service expectations, during your first or second meeting, lay out clearly everything you'll provide, from how often you'll have face-to-face meetings to whether you conduct educational workshops or send out newsletters. “It makes for a much better relationship,” says John Vance, an advisor with Raymond James Financial Services, a four-year-old practice in Valencia, Cal., with $82 million in assets.

Mistake #2: Handling complaints too slowly

A form gets filled out incorrectly. A check isn't mailed on time. A money transfer isn't made as directed. It's the rare practice where such mishaps don't occur. Trouble is, many advisors lack systems to address such situations quickly and efficiently. “People don't mind if you make a mistake. They mind if you don't address mistakes quickly,” says Stuart Silverman, president of Fusion Financial Group in Elmsford, N.Y., which provides marketing, consulting and broker/dealer services to 125 advisory practices.

Your move: You need a swift response system, which allows you or your staff to get back to clients with complaints right away and then find a speedy solution. Take John Burns of Burns Advisory Group, an Oklahoma City-based practice with $300 million in assets. Two of his four staff people do nothing but client service, answering all calls 30 minutes to an hour after they come in and getting back to clients by the end of the day with, at the very least, an update. So that clients know exactly whom to contact with questions or complaints, they're introduced to these individuals during their first meeting with Burns. The result: In ten years, he has only had to step in to solve a problem on one occasion.

Mistake #3: Not communicating enough

The fact is, advisors often spend a lot of time with new clients, only to back off after a while. But clients really hate it when you don't stay in touch. In fact, according to Nersesian, it's a major reason for client departures. “They don't feel valued,” he says. Indeed, according to SEI, about 27 percent of respondents said the root cause for poor client relationships was “lack of communication.” What's more, during market downturns, when clients are most in need of attention, many advisors retreat even more, fearing unpleasant conversations — which only makes clients feel worse.

Your move: You have to set aside time for regularly contacting clients. Consider Ted Lanzaro of Lanzaro CPA in Shelton, Conn. His assistant devotes about one day a month to going over his client list and determining what types of communication should be sent to each of his 300 clients. For personal cards, the firm uses a specially designed font that looks like Lanzaro's handwriting. Thanks in part to such efforts, Lanzaro has attracted about $15 million in assets in the one year he's been in business. And during a downturn step up your communication. “The really good advisors pick up the phone when times are hard, and reassure their clients,” says Silverman.

Mistake #4: Failing to address what really makes them tick

Most advisors are great at capturing a client's financial blueprint, but to build really strong relationships, that's not enough. “You need to dig deeper,” says Nersesian. “It's never just about the money. It's what the money leads to.”

Your move: Learn how to develop a more in-depth understanding of your clients' goals. Take the matter of retirement. You need to discuss not just how much they need to save, but what they might want to experience during those years.

Ask a series of open-ended questions to stimulate discussion and give you clues to follow up on. (Examples: “What's the most meaningful gift you ever made?” or, “If you knew you were going to die in five years, what would you most regret not having accomplished?”) It's not something that comes naturally to many people, so it may seem awkward at first. But, done right, it can also lead to a potential gold mine.

Take Matthew Chope, an advisor with the Center for Financial Planning, a Southfield, Mich., firm with about $700 million in assets. One particularly revealing exercise, he finds, is to ask clients to rate their level of satisfaction with a number of issues, such as work, cash flow and charitable involvements. One client, a small business owner, revealed he was especially dissatisfied with his charity work. After their discussion, the client decided to launch a program at his company, getting all 35 employees involved in cooking for a local soup kitchen. The client was so excited by the results, that Chope now handles the accounts of the client's two partners and the company's 401(k) plan.

Mistake #5: Ignoring the details

You and your client discuss a great mutual fund and you get the okay to sign him up. After the paperwork is completed, however, you discover that the client really hadn't understood what the fees would be. “You can't make assumptions about how well clients understand the details,” says Larry Tolbert, an advisor with Householder Group in Memphis.

Your move: To make sure there are no misunderstandings, continually double-check that your clients are clear on all of the fine points. Tolbert, for example, recently talked to a client about a new variable annuity, including the guaranteed lifetime income payment percentage. At their next meeting, the client came prepared to sign on the dotted line. But, just before he did, Tolbert revisted the income payment percentage — and discovered the client thought it was considerably higher than the figure they'd originally talked about. They discussed it some more and, eventually, the man still decided to go ahead with it. “I've never found a client who minded having another review,” says Tolbert. The bottom line: When it comes to dealing with clients, the devil, definitely, is in the details. But, clearly, it's worth the effort.

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