4 Tips for Effective Client Communication

“I speak Curian Capital, the advisor speaks advisor and the client doesn’t speak either,” says Keith Johnson, vice president of practice management at the aforementioned Denver-based managed account provider.

Johnson made the observation by way of introduction to the topic of effective client communication. It’s a hot topic at the moment, as empathetic communication takes more of a front seat with the recognition that not all clients think and act alike. But for advisors that are tempted to dismiss it with a “yeah yeah” wave of the hand, Johnson has four areas he’s zeroed in on to attract, and retain, more business.

1). Financial jargon — “When I came to Curian, I quickly realized they were using different jargon than the firm at which I previously worked,” Johnson observes. “It’s just the nature of the business and something we all do. Now imagine that each advisor does it in their own practices and it’s all completely different from what the client understands.”

While noting it’s something like “who’s buried in Grant’s tomb?” he quipped, “Ask a client how many stocks are in the S&P 500. You’d be surprised by the answer. These are the things advisors just assume clients know.”

Discussions of risk, in particular, often confuse the client because of a misunderstanding of how the term is defined.

“It might be thought of as fluctuations in the portfolio, or a lack of diversification or any other number of possible uses. To reduce confusion, advisors should use the term ‘loss’ instead of risk.”

Of course, the plethora of information can also cause confusion.

“Say a client can’t sleep and gets up in the middle of the night. They’ll flip on the TV to a commercial about throwing all their assets into gold. They’ll flip the channel and it will be real estate. Flip again and it’s a repeat of that night’s Jim Cramer or Suze Orman. Each client meeting should be a conversation about what they’ve heard and where they’re getting it.”