Advisor-client relationships must weather mistakes, market crashes and miscommunication. Which means it’s up to you to make up for missteps, smooth things over when clients overreact, and avoid provocations in the first place.
After a client’s insurance policy expired, Barrie, Ont. Sun Life advisor Melanie Adams signed him on to a new one. Soon after, head office sent the client a notice saying he’d be paying not only his new premium, but also the old one.
The problem—caused by a computer glitch—had happened to others, but Adams forgot to warn this particular client to ignore the notice.
“He was very upset because he thought we hadn’t cancelled the old policy,” she says. To fix the problem, she called the client to tell him he’d only be paying the new premium. Then she mailed an apology note and a $20 Tim Hortons gift card. She now has a checklist that reminds her to tip clients to this glitch, which still pops up occasionally, “so they don’t have that meltdown.”
Good process can prevent mistakes but, considering how many people you talk to every week, some will inevitably be unhappy.
“Clients have raised their voices, and challenged our ability to do our jobs. Everybody should expect that,” says Nicholas Miazek, vice-president and financial planner at Fiera Capital Corp. in Calgary.
The spark that sets clients off can come from administrative mistakes like a missed signature, tax shocks like a notice of reassessment and portfolio hits like a market crash.
“To the client, anything they’re unable to achieve, or have a particular question about, is the big deal of the day,” says Andrew Pyle, senior wealth advisor with ScotiaMcLeod in Peterborough, Ont.
Account handling issues, like the one Adams dealt with, are common causes of unrest. “When clients see money coming out of their bank accounts and they’re unsure [why], or they didn’t expect it on that date—that is not a happy client,” she says. Likewise, when deposits from accounts like RRIFs or LIFs are smaller than expected, clients may complain, says Miazek.
Since withdrawals from these vehicles are based on the prior year’s final balance, a dip in the market can result in a shock: suddenly, a client’s January installment is less than December’s.
“You can be blindsided by a client who calls in February and says, ‘Not enough money came into my account,’ ” he says.
Instead of waiting for that call, calculate potential shortfalls and ask clients if they’d like to pull money out of taxable accounts to compensate. “The following December, we were on top of this,” he adds.
Not your fault
Not everything that triggers ire is under your control, but you still have to deal with the aftermath.
1. Anger is an instinctual response to fear. The client’s likely worried about running out of money.
Pyle says that since “we haven’t really had a significant pullback or correction lately, you’ll find a lot of clients feel this is the way it should be. So it wouldn’t require that big of a correction to cause concern and anxiousness.”
Miazek says initial anger toward market drops can mask other emotions. “The client isn’t often mad that the market has come down. They’re mad that, with the market down, they may not be able to retire as early, or the plan’s been jeopardized.”
2. Providing context and perspective will show the client her future isn’t in jeopardy.
To calm clients’ nerves, he says, explain how long they actually have to recoup the losses.
“You have five years until retirement, but another 30 years post-retirement as well. So, we really have a 35-year horizon for your asset mix [to grow].” He also tells clients the number of years the fixed-income portion of the portfolio can provide cash flow for “while we wait for equities to recover.”
And he reframes market drops. “If the market corrects every six to eight years, this will happen many times before you pass away,” Miazek tells clients. “This is one of those opportunities to re-balance your asset mix.”
But sometimes, says Pyle, the portfolio may have performed worse than expected. Figure out why and correct it. “There are going to be situations where the advisor bought a losing security,” he says. Or a sector is having a bad year thanks to changing consumer choices, an unexpected drought or a civil war.
3. Help clients understand your process, and why it works in most cases (but not all).
Convey how you came to the original decision about the losing investment. Say to the client, “We would make that same decision tomorrow without this new information because we can’t forecast the future.”