2 Best Practices for Managing Client Expectations

How do you effectively manage client expectations? Not an easy question, says Keith Johnson, and one that advisors have traditionally failed to adequately answer.

Johnson, vice president of practice management at Denver-based managed account provider Curian Capital, notes than when a clients come into a meeting, they bring with them all sorts of preconceived expectations. Advisors have most likely done extensive data mining on the client, but they don’t go nearly as deep to identify and address these preconceived notions.

“There are really two areas to cover in any client meeting; the expectations that surround investment performance and returns and the client’s expectations concerning the advisor relationship,” he says. “There hasn’t been as much focus on the latter, but thankfully this is beginning to change.”

Any risk tolerance questionnaire or investment policy statement is “just a measurement in time,” Johnson argues. However, expectations change as market conditions change.

“There is no one questionnaire that will span the client’s lifetime, but that’s how too many advisors use them, as a one and done. It should be that every time an advisor has a meeting with a client, the IPS should be discussed and, if need be, revised over and over.”