Revenues are on the rise and business is stable. Although the markets are somewhat fickle, clients are generally satisfied with the way their financial planners and advisors are handling their affairs. 

According to industry professionals, though, advisors could lose valuable clients if they become lax on seven important principals of customer relations. They are not exactly capital offenses, but if advisors let these habits creep into their practices, the consequences are almost as serious:

1. Assume that you know what is important to your clients.

Advisors tend to push a lot of information out to clients, especially about how the markets are performing and about themselves and their practices. But it is important that advisors reach out to clients personally and find out about them, says Matt Cooper, president of both Beacon Pointe Wealth Advisors and Beacon Pointe Private Client Services.

“It’s a big problem,” Cooper said in a telephone interview “Many times, advisors are big talkers and not good listeners.” The practice management experts at TD Ameritrade Institutional say advisors should frame client around three important questions: What are they trying to fix, accomplish or avoid? 

Many times, advisors’ questions are around the asset management or investment mix and not long-term goals, so you are starting off with one strike against you, said George Tamer, director of institutional sales at TD Ameritrade Institutional. Also, advisors to confirm what the clients’ goals are every time they meet, in case a major life event has shifted their priorities.

2. Fail to communicate.

Lack of communication is one of the top reasons investor clients fire their advisors, Tamer said. Clients do not necessarily need to know if they are up 3% on the market, but they do want to know if they are on track to meet their financial goals. It is worse when advisors fail to keep in touch even in dire circumstances, according to Cooper.

3. Sharing too much.

In this digital age, computer users are well acquainted with the “share” button at the end of news stories, blog posts and other Internet content. When it comes to using social media, however, Tamer says advisors should tread carefully. Sharing too much information and doing so too often is a turn off, Tamer said. “If you are misspelling words, spouting off your own personal political views or if you are at the golf course and you hit a great shot, the client doesn’t want to see that,” Tamer said. 

He added that he has seen advisors learn from those mistakes. In one instance, an advisor posted an update about a golf session. In person later on, a client responded: ‘I saw that you were playing golf instead of managing my portfolio.”

4. Changing the routine.

Clients do not like surprises, Cooper said. If a firm normally sends quarterly performance reports on the 10th business day after the quarter close, but needs to do so on the 12th day in the next cycle, tell clients ahead of time.

If a particular staff member, who used to be in close touch with clients, has moved on to another role at the firm, give clients plenty of time to get used to the new person who will pick up their calls. This might seem like a minor change in the context of running the whole firm, but changing processes without prior notice can make a firm look unreliable. “Those are the things that erode clients’ trust and the advisors’ credibility,” Tamer said.

5. Always letting the customer have the final say.

This is not a contradiction of tip No. 1. There are times when an advisor should stand firm, be vocal and let a client know if he or she is about to do something detrimental to the long-term financial plan. You don’t want to agree with your clients at every turn. Sometimes you have to save them from themselves, hold the line and prove the point for them. “In the long run they’ll do something [wrong] and blame you for letting them do it,” Tamer said. 

6. Dropping the baton.

Your practice has a solid relationship with a client who has heirs. So far, so good, but if you are not including those more junior members of the family in meetings, it could become a problem, according to Cooper. He recalled one situation at a firm in which the heirs of a client disliked the estate-planning attorney. The principals did not know the next generation well enough to smooth over the relationship, so when the client died, so did the family’s patronage with the firm.

7. Signing up ill-matched clients.

Financial planning and advisory is a relationship-based business, but that does not mean every potential client belongs at your firm. There are times, especially when investment temperaments and philosophies differ, when passing the client on to another firm is the best move for the client.

“As a fiduciary, you need to do what is in the best interest of our clients,” Cooper said. Time is finite, and it is far better to hand that client over to a firm whose work style and investment philosophy complement that of the client, instead of incurring the costs and discomfort of a poor relationship that will end anyway.







Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access