The best definition of stress I have ever heard is this: Stress is the difference between expectation and reality. This is highly relevant in the financial services industry, affecting client retention. In this post, we will elaborate on this and discuss what advisors can do to improve retention.

Unmet Expectations

Let’s assume that after a great deal of time and effort, you finally land an appointment with a very important prospective client. You figure it will take 30 minutes to drive to his or her location, and wanting to make a good impression, you do not want to be late. Leaving on time, you encounter a very long, very slow train. After 15 minutes waiting in line with other motorists, you realize you will be at least 10 minutes late. How would you feel at that moment? Would you be relaxed or anxious? Would you be worried or unconcerned? Your response likely depends on your personal temperament and your expectation of the client’s reaction. Now let’s look at things from the client’s perspective.

Clients: Bob & Joan

Potential clients Bob and Joan found you via an internet search and scheduled an appointment to discuss a recent inheritance. After a few meetings, they decide to hire you. Six months into the relationship, things seem to be going fine. At the one-year mark, you suspect something may be wrong. When you inquire, they respond with, “We’re fine. There’s nothing bothering us.” You take them at face value and 90 days later, they inform you of their decision to go with a different advisor. You are stunned and bewildered. What happened? How did things go from fine to the point where they left you?

Communication Breakdown

In most cases, a relationship veers off track because of a breakdown in communication. In short, Bob and Joan expected one thing, but feel they received something different. Moreover, unless they are comfortable enough to be truthful, they may not tell you the real reason they decided to leave. To clarify, there are two sides to every relationship. First, the client must feel comfortable with the advisor so they can be vulnerable and completely honest. Second, the advisor must elicit trust from the client. In short, there must be an open and safe connection between the advisor and the client to sustain a long-term relationship. Without it, the relationship will be at risk.

Getting back to Bob and Joan, there are two issues at the center of this situation. Were their expectations reasonable? If they were, why did the advisor fail to meet them? If they were not, why did the advisor fail to uncover this?

We will explore this further next time and consider a few questions advisors can ask to help establish the type of relationship clients and advisors seek.

Until next time, thanks for reading and have a great week!