Planning For The Unplanned: Setting Client Expectations





We recently came across this article about how Redtail CRM is working on new technology that actually scans incoming emails from clients, and alerts advisors to ones that have negative sentiment. This article, in combination of the recent market volatility, made us think of the inevitable pain point that advisors face when communicating with clients during market-related “buzz”.


There’s no way to predict the market fluctuations or the unplanned circumstances that come up in your clients’ lives. One way that advisors/planners provide value to their clients is through creating a financial plan that is centered around the client’s goals and by preparing for the “what-if’s” that could happen (good or bad).


Through that, advisors are able to create a sense of peace for their clients. However, as most advisors can attest, this sense of peace can easily be broken when there is a market drawdown or something life-changing happens in a client’s circumstance. No matter how bullet-proof your financial plan is or even if you are dealing with your rockstar client, human emotions and behavior oftentimes get the best of us.


Depending on the situation, advisors may default to sending out a blast email to calm everyone’s nerves or it may be spending your entire day calling individual clients. We all know that this is not the ideal way to handle the situation, but what else is there that advisors can do?


Read below for a few tips on how to better approach this pain point:

1. Set Expectations

Before you can even set expectations for your clients, you must make sure that you have your financial planning and client experience process down to a science. It’s important to be excited about, confident in, and strict with your process. This will allow you to firmly set expectations for your clients based on the service and value that you offer.


Once you get there, it is easy to set expectations for your clients. They will know exactly what you will provide and when. In addition, this is where you have the opportunity to set expectations on how you want them to work with you as a client.


This is important because if they do not respect and meet your expectations, than you will not be able to service them. If you can’t service them, they aren’t a client that you should be working with.


A great way to start off your relationship with a new client is to have “Client Engagement Standards”. You can learn more about this concept from an episode of The Financial Advisor Success Podcast with Michael Kitces featuring Carolyn McClanahan. Every advisor should make the effort to implement one.


Through these standards, you have the opportunity to be upfront with your client on how you will respond to the unpredictability of the economy, markets, and their lives. This doesn’t have to be a conversation where you tell them “I’ll never answer your call if you call during a 5% drawdown.” However, by setting written out standards for the client and yourself, you are able to articulate what they could expect during different aspects your service offering.


For example, if your Client Engagement Standards tie into their Investment Policy Statement based on their risk tolerance, you can literally have conversations ahead of time on the actions you would take if there were a specific shake-up in the market. You can paint that picture and have on the other side, what your standards are for how the client ought to act, as well as what they can expect from you in terms of communication. In this way, when an actual shake-up happens in the market, your client is much more aware of how their advisor is handling it. Doing this across all clients would lead to less stress and less emergency measures for you, the advisor.


2. Be Proactive

As mentioned above, there’s no way to predict the markets and what may happen in your clients’ lives. Nobody has a crystal ball.


However, as advisors, we do know with certainty that certain things will occur throughout an advisory client’s engagement. For example, if you have a client for over 10 years, there will almost always be some down years. A few other examples are that a client could lose their job, tax laws may change, a spouse can die, medical issues can come up, etc. While the advisor knows how to create “what-if” scenarios for those situations, that fact does not necessarily tell the client what they can expect when those types of things happen.

There are a few ways that being proactive can help here. First, advisors can create email templates in advance for different types of economic or market-related occurrences that may affect your clients. Instead of being reactive after a drawdown, have a rough template already created on what you’d want to say to your clients.


Second, for more client-specific circumstances, be proactive in having those conversations with your clients ahead of time. While those types of conversations are hard and nobody really wants to talk about them, it is the advisors job to plan for the unplanned. Running through those different scenarios during your initial planning process, or maybe even at a specified time during the relationship, allows for the client to tangibly see what would happen if “this happens or this, or this, etc.” You would also want to let the client know how you would help them during those unforeseen circumstances. By doing all of this upfront work, you are essentially putting your client in the best possible state of mind for the things in life that we all know will happen. This proactive behavior takes time and effort, but your client deserves it!


While it will never be the case that all clients will cease to get emotional or feel stressed, the tips above can drastically improve the efficiency in which you service your clients. Ultimately, this results in better serviced clients and a more productive firm. If you have questions about anything discussed above or would like help with anything related to you business, please do not hesitate to contact Nifty.

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