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.
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.”
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.
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.”
And, sometimes, this lack of forecasting meshes poorly with client forgetfulness.
If clients get foggy about agreed-to portfolio changes, and the results are less than stellar, you’ll hear about it.
Miazek says sending a copy of the meeting minutes where the decision originated can usually placate a client. But it doesn’t always work. If she misunderstood the change, or if the forgotten portfolio change led to lower returns, the advisor has to explain and reinforce the choice.
Pyle had a client who complained he was only earning 0.5% on his cash, which comprised a relatively high portion of his portfolio. Previously, “he’d actually [said] he wanted to keep some cash for liquidity [and ready access, citing] concerns about health and longevity.” Pyle suggested a money-market account, explaining it would generate higher returns while still being liquid.
The client agreed, but a few months later, he “wasn’t understanding why [he was] getting T-slips for interest,” even though Pyle had outlined and documented that implication.
So they switched back. “We made the client aware that the return would go down,” he says, which wasn’t a problem. “The concern over return was temporary, versus the bigger concern of liquidity. When we went back to just cash, he felt more comfortable.”
Own your mistakes
Not all clients let you fix problems. “The people who are most angry will not call,” says Adams. “They’ll simply move their business.”
So when someone confronts you or threatens to leave, take advantage of the opportunity to make amends. Set up an in-person discussion, Pyle suggests, because “short-temperedness is worse over the phone, by email correspondence, by letters.” Most people are calmer face-to-face.
“Some advisors may be reluctant. They may be thinking, ‘What am I walking into?’ ” he says, but you have to “trust that if you deal with the client directly in that situation, you can resolve the issue.”
It’s best to address the problem before moving to routine business. Otherwise, “it will be on the client’s mind while you’re talking about everything else,” says Miazek. And let a client air grievances before you say too much. “Do not interrupt and try to counter their fears right away,” Miazek advises. Note her concerns, and when she’s done speaking, reiterate them. Then explain how you’ll fix the problem.
“The technician has to take a back seat to the psychologist,” says Miazek. “That tends to take us 90% of the way there. The rest is getting the technical details wrapped up.”
If the problem can’t be resolved during the meeting, assure the client you’ll research it and get back to her. Set a date to follow up, and then meet it.
It’s tempting to shift blame onto staff or a technical problem. Don’t.
“Whether caused by a junior associate in my office, someone from the investment counsel or the custodian bank, all their mistakes are really my mistakes,” says Miazek. Clients care less about blame than about how the advisor will resolve the situation, adds Adams.
If clients get angry frequently, says Miazek, re-evaluate the ways you communicate, how often and what you talk about. A lack of chemistry can also lead to more fights, says Pyle. In that case, consider referring the client to a colleague because it’ll be better for both sides.
When a fight sours an otherwise sound relationship, a frank talk will either prompt the client to change her attitude, or to leave. An exit may be difficult to accept, says Adams, but the resulting relief for both parties will ultimately help a novice stay passionate.
In a decades-long advisor-client relationship, a misstep or downturn is bound to happen, but the partnership should be strong enough to recover, says Miazek.
“Families fight too, and if you’re going to have a good relationship it has to be an open one,” he says.
“You have to accept the fact that, sometimes, people will yell at you.”
4 more ways to calm clients
“I understand this wasn’t what you intended. Here are steps we can take now to resolve things.”
“There are solutions to this. Let me look into them and get back to you tomorrow by noon.”
“I know this is important to you. It’s also on the top of my list.”
“Tell me what you’re most worried about, and I’ll listen as carefully as I can.”