Advisors should set the right expectations in the minds of their clients from day one.
Every businessmen has to deal with difficult clients and financial advisory is no exception. Some clients are easy going while others never stop nagging.
In this article we’ll explore how advisors can tactfully manage difficult clients.
Manage expectations
It is important to set the expectations right from the very beginning. “The best way to avoid conflicts is to set client expectations right in the first meeting. Under promise and over deliver,” says Nikhil Kothari of Etica Wealth Management.
Advisors should understand client psychology to deal with clients effectively. “Patience and good understanding of investor behaviour is important to manage difficult clients. Advisors should understand the natural behavior of clients in an event of any loss”, says Rajesh Chheda of Finance Factory.
Keep them informed
Advisors say that informed clients are always better. Thus, it is always important to keep your clients updated.
To avoid disputes in the future, advisors should diligently document every advice rendered to clients. Nisreen Mamaji of Moneyworks Financial Advisors says, “Documenting every communication helps. It will safeguard advisors if clients decide to take any legal action against them.”
However, Nisreen Mamaji says that advisors should try their best to retain clients, “Asking clients to leave should be the last option. It is best not to onboard them in the first place. Advisors should try to understand their clients well before onboarding them. However, dealing with difficult clients is a good learning opportunity for advisors.”
Be realistic
However, some advisors caution that one should not spend too much time with clients who do not generate much revenue for their business. Time is the biggest asset in financial advisory business, they say. “Time spent on a particular client and the revenue generated should be in sync,” points out Nikhil.
It may not be possible for advisors to get along with all clients. Some clients can be over demanding and have unrealistic expectations. In such cases, advisors can part ways with such clients. “Advisors need to be honest to themselves and to the clients. It is just not worthwhile holding onto something that isn’t working,” says Rajesh.
Suresh Sadagopan of Ladder7 Financial Advisories agrees “There are some clients who do not trust advisors and question their credibility. Advisors have no choice but to show them the door. Advisors should always work with clients who are aligned to advisors business philosophy.”
Summing up
· Under promise and over deliver
· Educate clients on what they have invested in
· Update clients and alert clients before things turn bad
· Reach out to clients who suffered loss before they approach you
· Present similar case studies of past event.
· Keep records of conversation
Let us know how you deal with difficult clients.
Do share your views…
