How often can you easily tell your clients that the recession can affect their lifestyle or career despite having enough savings? Communicating a piece of bad news is a test of your commitment to clients. It is never easy and often brings up uncomfortable emotions for clients as well as for you. But the way you share this information determines how your clients react to it.
Let us look at a few tactics on how you can deliver bad news to your clients.
Anticipate and present facts
One of the main reasons why delivering bad news can be stressful is because you do not have a plan to address the situation proactively. To explain any situation to the client, you need to know them well. You need to know their habits, strengths, weaknesses and their ability to cope with adverse situations. For instance, if one of the spouse is earning and the other one spends a lot, this creates a trouble in the family’s finances. While giving bad news, if you anticipate that client’s reaction will be a denial, be prepared to present them with the facts. “For every meeting, arm yourself with the facts. This is essential when you are giving any information against the client’s choice. Also, prepare answers to questions that you feel clients may bring up during the meeting,” says Vinod Jain of Jain Investments.
Be direct
Avoid building suspense. Clients want to know how the situation they are facing can affect their lifestyle or savings. Also, in your nervousness, you may end up talking more which can confuse clients. Just be direct about what is not going well.
Generally, if your first statement is controversial or negative, clients may not be ready to digest this fact and they can counter question you. Thus, prepare the clients and deliver the bad news.
Don’t delay
Do not delay to deliver a bad news. Such delays can make the situation worse. This is generally not appreciated by the clients. “Do not delay giving out bad news because it can erode clients’ trust. Don’t use jargons because this may make the situation worse,” advises Hemant Rustagi of Wiseinvest Advisors.
Avoid telephonic conversations or emails
A face-to-face meeting is always a better way of communicating bad news than a phone call or email. The harsher the news, the more important it is for you to deliver it personally. Lovaii Navlakhi of International Money Matters feels that human emotions are best expressed when you meet the client personally. “When you are breaking any bad news, meet them personally and discuss it. Many a time, misunderstandings occur while discussing serious issues over phone calls,” says Lovaii.
Provide options
After communicating the news and making the client comfortable with the new development, it is time to present the action plan. You should meet your clients with the list of options or solutions on how to deal with the bad news. Let them know what you are doing to make up for the loss. For instance, in the event of a market crash, tell them the importance of focussing on the long term. “Don’t meet the client with the sole intention of telling the bad news. Offer solutions on what can be done so that it doesn’t hamper their financial health,” says Nikhil Kothari of Etica Wealth Management.
Remember that bad news for the client is usually bad news for the advisors too. It depends on how well you deliver it. Empathize with your clients and make an effort to tell them that you understand the situation. Make an action plan to overcome the hurdles in the client’s financial growth.
