Having difficult clients is part of the business and as a financial advisor, sometimes you have to have difficult conversations.
Although handling difficult conversations may bring about some angst, these conversations are essential to maintaining productive and trusting client relationships. Whether it’s about your fees or commission, or discussing your performance, your ability to handle a challenging discussion may set you up for either success or failure.
Some brokers choose to ignore issues, hoping they will disappear. Unfortunately, they rarely do and problems tend to persist. That said, if you sense that a client is discontent, discuss the situation and see if you can work together to meet each other halfway.
One way to mitigate the need for difficult client conversations is to keep an open line of communication with your clients on a regular basis. Doing so keeps the client apprised of investment decisions and lessens unwarranted surprises. Stay in touch via phone, email and in person, and inform the client of any strategic changes in investment style or occurrences in the market that can impact the portfolio. In addition, it is wise to inform clients on a regular basis of new research that has been disseminated by your firm’s research department.
If you have to have a difficult conversation with a client and are unsure of the best approach, here are some tips to guide you:
Take the lead. Initiating the discussion is always tough. While you may anticipate confrontation or awkwardness, it is crucial to take the lead and be proactive. Start with a warm social conversation, but rapidly move into – and clearly state the purpose of – the meeting.
Be clear about the issue. Understand what the issues are and how the issues are impacting your client and your firm.
Know your objective. What do you want to accomplish with the conversation? What is the desired outcome? What is non-negotiable?
Listen. Actively listen to what your client is saying without interrupting – he/she wants to be heard and air grievances or concerns. When you do not listen to what your client has to say, you will not be able to gather the information needed to understand the core of the problem.
Repeat concerns. Once the client has explained why he/she is upset, repeat the concerns. This ensures you that you are addressing the right issue[s]. If you need to, ask questions to make sure you identify the problem[s], correctly.
Acknowledge, but don’t agree. Author and blogger Mike Michalowicz says, “Sometimes agreeing with a client who’s displeased will add fuel to the fire. If you can acknowledge their position and shift the conversation to the resolution, you are moving away from the ranting and toward a solution.”
Resolution. Try to work out a final resolution by keeping follow-up goals, action plans and milestones in mind.
When all else fails and the emotional drain is no longer worth the effort, it may be best to cut your losses and move on, offers Michalowicz. “You get to spend your time working with more productive clients and one of your competitors gets your irrational client. That is a win-win.”
Summit Brokerage Services is a member of Cetera Financial Group, RCS Capital Corporation’s (NYSE: RCAP) retail investment advice platform.
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