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Some clients and prospects can have completely unrealistic expectations of the performance of their portfolios, as well as expect an impossible level of service.
While certain clients expect returns that are unachievable, these expectations may be rooted from worry and being fearful of their financial future. Advisors, therefore, are tasked with the tough job of calming their fears and establishing expectations that are more realistic in nature.
The key to managing client expectations, especially those that may seemingly be unattainable, is consistently demonstrating the value you provide as their advisor. When you always put the client first, you are showing them that you truly have their best interests in mind. Solid financial advice is invaluable.
Remind them that you are their financial partner and all of your points of contact with them should reinforce your value and expertise. With time this will build client trust and, while their worries may not completely dissipate, their unrealistic expectations should lessen.
If you reach a point, however, where their expectations continue to be completely unrealistic both in terms of your time and their expectations of performance, it may be time to consider firing them as a client. If your value is not recognized after significant effort, the stress of managing impossible levels of service is simply not worth it.
Standing out boils down to what makes you truly unique as a financial advisor. This is where the power of an extremely strong value proposition comes into play. Do you have a clear value proposition established that you believe in?
If you do, then stand firm in your confidence that your unique value proposition and the service you offer to clients is what separates you from the pack of other advisors.
While some advisors believe it is tough to compete with robo-advisors, the fact remains that robos will never replace human contact and connection. A recent study published by Million Dollar Round Table indicated that 85% of Americans prefer working with a human financial advisor compare to a robo-advisor.1 This is evidence that meaningful client relationships in which clients feel connected to you give you a substantial leg up when competing with robos.
According to Ron Carson, founder and CEO of the Carson Group, fees have come down one basis point over the past 10 years, yet the costs of services have tripled, except for portfolio management.
How can advisors combat fee compression? The same way they tackle managing expectations. Demonstrate value and don’t succumb to the doom of downward pressure on fees.
A fundamental way to show your value is by staying connected. Keep on top of your client communication. While client communication can also be seen as a challenge itself, having a disciplined process to keep in touch with clients regularly will reinforce your value as their advisor.
Whether the markets are good or not so good, send out weekly commentary. Publish a monthly blog. Send out a quarterly newsletter. Post daily to your social media channels. Call your clients regularly. Stay connected through strong communication so clients recognize the value of the fees they pay.
As with any profession, it is important to interact with your colleagues and your competitors to stay relevant in the marketplace. Joining associations such as the Financial Planning Association and the National Association of Personal Financial Advisors is a great way to share best practices and talk about challenges. They offer local, regional and national meetings to attend live, as well as tremendous resources to tap into as a member on the topics of practice management, marketing and other areas in which advisors need additional support.
The Bottom Line
Staying positive, embracing change and remembering why you became a financial advisor in the first place is the key to tackling daily obstacles. The bottom line is that you add value to your clients’ lives. Show your value at every opportunity!
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