5 ways to strengthen and maintain client relationships

February 14, 2024 8:00 AM

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Family feuds, divorce and stress management aren't often the first things that come to mind when discussing financial advising. But as clients' lives become more complicated, advisors are finding themselves in the emotional-support hot seat.

Juggling financial advice alongside clients' personal issues is no easy task, and the best advisors will take a proactive approach to navigating these client conflicts.

"Money is emotional," Gerri Walsh, FINRA Foundation president, recently said on one of the organization's podcasts. "But research shows that when you are in a heightened emotional state, whether it's positive or negative, you are less likely to make optimal decisions when it comes to your money. And so, being able to diffuse the emotion, to take people out of the ether of a fabulous pitch, to have people look at the hard reality of their financial situation, really requires getting away from that fight or flight element of the brain."

Regardless of a client's specific emotional situation, it's almost certain outside stressors are impacting the way they think about their finances. According to a recent FINRA Foundation and Fontes Research survey of 1,095 adults, the vast majority of respondents said that money affects their capacity to make important changes in their lives (79%), their health (72%) and their relationships (69%).

Financial Planning's recent reporting digs into the many ways wealth managers can arm themselves with new skills, certifications and even business models to respond to any unexpected client stress or need that will impact their financial standing, from health care emergencies to divorce.

These specialized skills can increase credibility for wealth managers, but leading advisors caution their peers to be deliberate as they expand their skill sets, and to manage their own expertise (and client expectations) without stretching themselves too thin.

"Be very clear in what your value proposition is, and (do) not deviate from that," Ash Chopra, the founder and CEO of registered investment advisor Syon Capital, recently said on a 2023 panel hosted by VettaFi. "If you start to deviate, that's where you're taking business risks."

Check out some of our latest stories and expert tips for shoring up client relationships and future-proofing your business.

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Clients divorcing? Consider earning your CDFA designation

As more couples aged 50 and over are getting divorced, an increasing number of financial advisors are working to earn their designation as a Certified Divorce Financial Analyst. The "gray divorce" trend can create fresh financial vulnerabilities for newly split couples who are fast approaching retirement age.

"When you have somebody who doesn't have sufficient retirement assets that were going to fund the retirement for two people, and now you're dividing that in half, it's an even smaller nest egg," said Carol Lee Roberts, the president of the Institute for Divorce Financial Analysts, which maintains the CDFA designation.

The unique credential has been around since 1993 and continues to gain respect within the wealth management industry. In recent years, J.P. Morgan has put over 150 people through the program, Roberts said.

"We're going to see a point where simply having your CFP is not enough," she recently told Financial Planning. "There's such a variety of niches to be served."

Read more:

Meet the CDFA, a certification for advisors with wealthy clients facing divorce

Senior Couple Meeting With Female Financial Advisor In Office

Attract existing clients’ aging kids

Financial advisors might need to reevaluate their business strategies as the "great wealth transfer" begins. A report from Cerulli reveals that only 20% of affluent clients plan to stay with their parents' advisors.

To avoid this problem, John McKenna, a research analyst at Cerulli, believes advisors should involve their clients' children in financial planning decisions earlier.

"If you have a client who's a parent, and they have millennial kids who have these needs, that's half the battle won," Mckenna recently told Financial Planning's Dan Shaw. "Something like this can start maybe as a convenience relationship, but it doesn't mean that convenience relationship can't become a choice relationship."

Read more:

Roughly 80% of affluent clients don't want their parents' advisor. Here's what to do about it

Calm clients’ money fears

Concerns about money are ubiquitous, and that stress can eat at clients — even those who seemingly don't have as much to worry about: The FINRA Investor Education Foundation revealed that 88% of adults in the U.S. worry about money, including 86% of those making over $100,000 in income.

"This is where I think financial planning is just as much of an art as it is a science," Stanley Funches of Intelus Wealth Management recently told Financial Planning Chief Correspondent Tobias Salinger. "Most financial planners are really good with numbers, but how do you deal with the actual people and get them through the process?"

At Funches' advisory practice, he takes several approaches, including giving clients the space to simply talk about their experiences with money.

"You would be surprised at how much you could draw out of a person, because their memory will actually color their behavior and thoughts about money," Funches said. "You may have to take a nontraditional planning approach."

Read more:

How can financial advisors ease ubiquitous money fears?

Prepare for UNHW family crises

Family conflict management and resolution has become an undeniable part of wealth management, particularly for ultrahigh net worth clients, who are demanding more mental-health related services, especially as younger and millennial family members seek out and normalize therapy.

"If you've been doing this work for any significant period of time, and if your clients view you as a trusted family counselor, it's likely you have received that late-night or early morning call from frantic parents about a child in crisis," Glenn Kurlander, managing director and head of family governance and wealth education at Morgan Stanley, said on a panel at the company's Family Legacy and Governance (FLAG) Institute near the end of 2023. "Without being melodramatic, the stakes are not about minimizing gift and estate tax, but literally maybe about matters of life and death."

Read more:

How advisors can handle UHNW family crises: Morgan Stanley panel

Prepare to support the wealthiest clients — via financial guidance and more

The number of families with a net worth of more than $30 million has increased, and they are looking for guidance from their financial advisors in all aspects of their lives aside from finance.

Syon Capital CEO Ash Chopra recently discussed working with ultrahigh net worth clients as an RIA on a 2023 panel hosted by VettaFi, including the challenges faced and how to maintain these wealthy clients.

"Clients come to us for more than just financial advice and guidance," said Chopra, who pointed to a client that recently turned to him for support during a health care emergency. It was an experience that led the advisor to partner with a concierge medical service going forward so that clients could get instant personal medical support during a health emergency. The management of wealth at this high level, he explained, often extends to "all-encompassing" support for [clients'] culture, their education, their lifestyle."

Read more:

Godfathers, feeding tigers, à la carte: how RIAs can win UHNW clients