Top 10 myths about clients

Advisors often find themselves working to dispel common misunderstandings clients fall into. But we would do well to turn the mirror back on ourselves and understand that we too are not immune to swallowing whole what amount to figments of our imagination.

These are the top 10 myths advisors hold about their clients:

1. They would tell me if they were unhappy

People tend to avoid confrontation and keep quiet until a better alternative comes along – then they jump. Make the effort to see your clients often and try to discern any signs they may be withdrawing.

Read: Decoding client behaviour

2. I’ve never lost a good client

Dissatisfied clients often hollow out an account by moving some assets while retaining a shell of the original relationship, which now produces much less revenue. The client finally leaves, and the advisor rationalizes the break by telling himself “it was a small account anyway.” When assets transfer out, politely ask why and respect their decision. Keep in touch and learn how things are working out elsewhere.

3. My clients understand what I’m talking about

Advisors use industry expressions and we mistakenly assume clients always understand them because they don’t ask for clarification. But often the reason they don’t ask is they’re embarrassed to admit they don’t understand. Try slowing down and spelling things out: explain to them that “ETF” means exchange traded fund, for example.

4. My clients know what I do for them

In good times some clients think anyone can do your job. In bad times they may think you’re watching helplessly from the sidelines. Even if you review their portfolio regularly and confirm the asset allocation is in order, let them know you’ve done it. Years ago I was advised that when conducting a quarterly portfolio review, remind the client when the last two reviews took place.

5. Some clients have unrealistic expectations

They don’t think so! Maybe someone in the background is competing for their business. If they quote an interest rate, for example, that’s out of line ask them where they got their information. But be polite and avoid a condescending tone.

Read: Segment your clients

6. My clients trust me

It’s been said that trust is built slowly over time but can vanish in an instant. Trust is based largely on communication and understanding. If the market is volatile and investments lose value, clients can lose faith. When this happens remind them why they invest and of the long-term horizon they need to think in terms of.

7. My clients know I’m thinking about them

How many clients do you have? 100? 500? They may think you have 2,000! They don’t know you may work with a small number of clients and that you know them all personally. Let them know how long your client list is. This is especially useful if the list is on the short side, as it will make each client feel they’re getting a good piece of your attention.

8. My clients understand I can’t predict the market

Once a crisis has passed some clients think the signs were so obvious you had to have seen it coming. Unfortunately, they may think, you were busy getting your friends out of the market early while leaving them to suffer the effects of the decline. Avoid these poisonous assumptions by keeping in touch in volatile times and explain that your decisions are always made based on the best information currently available.

Read: How to rein clients in

9. There’s nothing you can do

If a client announces they are leaving we often think the relationship is over for good. But advisor relationships can be like real-life romantic relationships: they aren’t necessarily over for good when they break up. You have a history with your client, and that counts for something. Ask for a final meeting, on their terms, and include the spouse if they are listed on the account. Give it your best shot to win them back.

10. They’ll come back once they realize it was a mistake to leave

No they won’t. Even if they realize it was a foolish move, pride will get in the way, so you need to meet them halfway. One advisor I spoke with contacts former clients and after acknowledging their reasons for leaving, inquires into whether things are now working out as hoped.