Managing Client Expectations: How to Answer 3 Common Questions

David Moon
David Moon

01.28.20 in Compliance & Regulation

Estimated Reading Time: 5 Minutes (857 words)

Compliance and Regulation

Being an auditor has given me the opportunity to speak with many of our advisors and see, firsthand, the best practices they’ve implemented for working with clients. But even with their own established procedures in place, they often wonder if what they’re doing is enough, and are curious about how other advisors are managing client expectations.

Based on what I’ve seen in the offices I’ve visited, I’ve noticed that there are three common client questions asked most frequently. Here, I provide answers to help you better prepare for when your clients come to you with these questions.

1) “When Did We Discuss This?”

You’re no doubt familiar with the old compliance adage, “Documentation is paramount.” Still, documentation problems remain a recurring theme during audits for many advisors, particularly when it comes to advisory accounts and rollovers. It’s always important to ensure that you and your clients are on the same page by documenting everything you discuss.

To help keep the lines of communication open, here are a few documentation strategies you may find useful:

  • Before each meeting, consider emailing an agenda to your client that covers anticipated discussion topics and the paperwork he or she should bring to the meeting. This allows the client to be proactive in preparing questions and thinking of discussion topics of his or her own. Once the meeting is concluded, be sure to include the agenda and any notes from the conversation in your client’s file and to make any suitability updates in the account profile.

  • Do you have an assistant? If so, have him or her sit in on all client meetings to take detailed notes, which you can then use for review and comment. Be sure to upload these notes to your contact management system.

  • In all instances, a detailed postreview/discussion summary email or letter is the best means of summarizing your client meetings. This creates an opportunity for clients to confirm their understanding of what was talked about and clarify any misunderstandings. Each summary should recap the meeting so a third party can review the details discussed during the meeting.

2) “Will My Assets Be Safe if There’s a Recession?”

Part of managing client expectations often means assuaging distraught clients’ financial anxiety through education. Many advisors have told me their clients just have a level of distrust in the market, so the advisors are spending more time educating clients than ever before.

As part of this emphasis on education, many advisors choose to reach out to their clients with market letters that discuss the general state of the economy. A market letter can include:

  • Discussions of broad-based indices

  • Commentaries on economic, political, or market conditions

  • Technical analyses concerning the demand and supply for a sector, index, or industry based on trading volume and price

  • Statistical summaries of multiple companies’ financial data, including listings of current ratings

  • General recommendations regarding increasing or decreasing holdings in particular industries or sectors

  • Discussions of general market conditions and outlook that do not make any recommendations or promote a product or service

If you’re not comfortable writing your own letters, see if your firm has preapproved market commentary or general education communications. Whatever you decide, I think you’ll find that these communications not only provide valuable insight into market conditions, but also allow you to offer clients an enhanced level of communication and service. Just be sure to retain copies for your records.

3) “Is My Personal Information Safe with You?”

Identity theft and information security continue to be big client concerns. So, how can you calm clients’ information security fears? Here are a few strategies you can implement to help reassure your clients that their confidential information is in good hands:

  • Use a detailed flowchart to show the levels of information security. For instance, the chart could outline firewall, antivirus, and spyware protection, as well as various other security protocols, including encrypted email.

  • Have a staff member accompany each client to your personal office. Although this may seem like a simple practice, it reassures your clients that visitors don’t have unfettered access to file cabinets, fax machines, and the like.

  • Encourage prospective clients to meet not only with you but with each member of the staff. Introducing clients to everyone with access to their information is a smart way to help quell clients’ security concerns. Plus, it’s a nice personal touch!

  • Ensure that your reception area is staffed at all times. If third parties were allowed to stroll through the reception area and into the office, your clients might doubt your office’s security. Once again, what seems like a simple practice can go a long way toward reassuring clients that their information is safe.

Creating the Best Client Experience

Putting best practices in place is the first step in effectively managing client expectations. But, it is your attention to detail and adherence to good compliance procedures that will help you mitigate any potential risks. The practices I’ve discussed here may not work for everyone, but they may help provide a solid base for the future of your business—and ease your clients’ minds, too.

Editor’s Note: This post was originally published in January 2016, but we’ve updated it to bring you more relevant and timely information.

This material is for educational purposes only and is not intended to provide specific advice.

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