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Portfolio > ETFs > Broad Market

Lessons from the Financial Crisis: A Systematic Approach to Client Relationships

By Mark Schoenbeck

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We are approaching the one-year anniversary of the day the Lehman Brothers, one of Wall Street’s biggest brand-name firms, declared bankruptcy. If you’re a financial advisor, you recall what happened next: The market went into a freefall, assets and revenues plummeted, and client trust and confidence were challenged.

Now may be a good time to pause and ask yourself, “How did I respond to the challenges the market presented? Did I merely react from phone call to phone call, or did I have a systematic communication plan in place that dictated my activities and client relationship management strategy?”

In retrospect, advisors with a clear, systematic, disciplined communications plan not only fared better, but grew their businesses substantially during this period. A communications plan saves time and creates efficiency during “normal” markets; during a crisis, it can give you the direction and confidence necessary to capitalize on the opportunities created by volatile markets.

As you evaluate how your communication plan fared during the past year, keep in mind some of the best practices taken from top insurance advisors throughout the industry.

Act with conviction
If your clients perceive you as timid, unprepared, or evasive, they will be far more likely to leave you for someone offering the confidence they need. Do your homework before every client conversation. Begin with an honest appraisal of their financial situation, then shift to specific strategies or recommendations for keeping them — or getting them back — on track. Acting with conviction reminds them that you are the right advisor to help them navigate toward their financial goals.

Conduct in-depth client rediscovery
You based your clients’ investment plans on your in-depth discovery process, exploring their circumstances, goals, and risk tolerances. Market volatility may have done more than change their portfolio value; it may have also changed the goals and assumptions underlying your entire plan. Conducting a rediscovery process will establish new, realistic expectations; form the basis of any updated recommendations; and restore your clients’ faith in your process.

Listen actively
It is critical to understand your clients’ emotions regarding the market before you can help them focus on what needs to be done next. That requires active listening. Don’t form responses while your client is talking. Ask clarifying questions that demonstrate that you grasped their thoughts. For example, “What I’m hearing you say is that you are wondering if you can still retire when originally planned. Is that right?” Do not rush this process. Allow your clients as much time to speak about their emotional response as they need. The simple acts of listening, acknowledging, and offering support can build loyalty that keeps clients with you for decades.

Reinforce the process
Conducting rediscovery and, if necessary, recalibrating your client’s investment plan reinforces your ongoing investment process. You need to make it clear that you are not scrambling for a response to the market, but returning to the same systematic process that has always been the foundation of your recommendations. By taking a holistic approach to their financial well-being, you will give your clients guidance that may reduce their emotional responses to short-term market volatility.

Improve communication
By providing clients with a complete outline of future plans for meetings, telephone conversations, and agendas, you can dramatically improve satisfaction and retention. But don’t just “stick to the plan.” A quick call and some straight talk in response to events may help reassure your clients’ fears. Get creative by hosting conference calls or events featuring guest speakers and experts on topics most important to your clients. Your efforts will remind them that you are working and thinking on their behalf.

Deliver ‘wow’ experiences
Your relationship with your clients goes beyond their portfolios. By delivering random acts of kindness that demonstrate your knowledge of your clients as people, you can deliver a “wow” experience that reminds them just how much they are valued. These can be as simple as a nice bottle of wine, tickets to a ball game, or a book on a subject you know interests them.

One of the biggest lessons to learn as we approach the one-year anniversary of the Lehman bankruptcy is the need to manage client relationships and communication proactively. Fortunately, the solution is well within your control. Taking a systematic approach to client relationship management will make your operation more efficient in good times and better positioned to capitalize on opportunities created by the challenging times.

Mark Schoenbeck is chief marketing officer and director of practice management for Genworth Financial Wealth Management. He can be reached at [email protected].

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