Managing client expectations is one of the most difficult, and often frustrating, aspects of the financial planning business. Although many clients can be quite reasonable when they lose money in their investments, there wi🌼ll invariably be a few who ꧋are determined to vent their frustrations at you via telephone, in writing, or in person.

But there are a number of things that advisors can do to help prevent most of these outbursts. That's by helping clients create expectations within the bounds of reality. It sounds almost too simple, but when clients are better educated about what they can expect from their investments (and their relationship with their 澳洲幸运5开奖号码历史查询:financial planners), they are less likely to b🔥e outraged by things that are beyond the planner's control. This article will help you understand how to manage your clients' expectations and make the most of your relationship w💝ith them.

Education: The First Line of Defense

As a financial planner or adviso♏r, the first step before any type𒁃 of investment is made is to educate the client. This is especially true when the client has little exposure to investing.

Some clients may seek your services after they've heard of friends or family members reaping huge profits from a certain stock or other investment. Unfortunately, this type of client may not be aware of the risks involved, or the🔥 odds that are against them, in order to realize the same kind of gai🧸n.

It is thus imperative—and, of course, also your legal and 澳洲幸运5开奖号码历史查询:fiduciary duty—to provide clients with a realistic perspective based on historical market performance right from the start. Being able to judge the amount of risk that a given client can emotionally take is also important when explaining the various levels of risk associated with different types of investments. A psychological, financial profile will be helpful in providing at least a rudimentary idea of your client's 澳洲幸运5开奖号码历史查询:risk tolerance.

Keep Perspective

One of the hardest things to explain ꦇto clients is that investment performance is almost always relative, especially if or when their expectations ar🧸e not met.

When clients are unhappy with the returns they get from their portfolios, they may need to be reminded of how their portfolios are performing compared to the overall markets. If a client's assets grow 5% in a year, the client may not feel like they are getting much growth. But you may strike a chord with them if you point out that the 澳洲幸运5开奖号码历史查询:benchmark indexes dropped by 5% that same year.

As long as a client's holdings do as well as or better than the markets, you will have a solid defense against their complaints. That is, unless, you promised them a minimum 澳洲幸运5开奖号码历史查询:rate of return regardless of what the markets are doing.

Dealing With Poor Portfolio Performance

Unlike the situation where a client's portfolio is performing relatively well, if the client's rate of return is trailing the markets, you will need to be able to pꦇrovide a good explanation.

Match the client's investment performance with the goals that they gave at the beginning of your relationship. If the portfolio is growing at a sufficient rate to achieve those goals, then external market performance is, for all practical purposes, irrelevant.

You aren't alone in all of this. Countless advisors have gone through these exact same situations. In the late 1990s, there were some advisors who did not jump on the dotcom bandwagon. As a result, these planners had to continually explain to clients that they were invested more conservatively than the markets, according to their respective 澳洲幸运5开奖号码历史查询:risk tolerances.

Once that bubble burst in early 2000, those same clients would have felt relieved that their managers did not invest in those securities. You might not experience such a validating event as the 澳洲幸运5开奖号码历史查询:tech bubble burst, but if you have your clients' best interest at heaꦅrt, you should have little trouble putting thei🍒r situations in perspective and their minds at ease.

Managing Other Expectations

While investment performance is the chief area where client expectations must be managed, there are other areas of service where clients can demand too much. For example, clients who feel uneasy about their investment performance may call you several times a day to see whether their holdings are up or down. They may also get upset if you don'𝐆t answer their calls personally or call them back immediately.

It's important to set appropriate boundaries with your clients regarding the type and level of services that you will provide them, and then stick to them. No matter how you are compensated, the fees that you charge your clients are a measure of your value. Despite this, many clients either expect something for nothing, or are not aware of the bene♛fits you provide through research, pro🦩filing, and portfolio design. This issue will almost inevitably arise with those who shop for an advisor based on price alone.

When dealing with a persistent caller, let them know that your time is valuable and that you want to be able 澳洲幸运5开奖号码历史查询:to give the same level of service to all of your clients. Most clients who are worth keeping will respect this. Other clients may expect a plethora of free services from you, such as a free comprehensive financial plan or 澳洲幸运5开奖号码历史查询:income tax preparation. I💦f you charge separate fees for t🐎hose services, you must require the client to pay for those services as well. If you don't, then you open the door for all of your other clients to demand similar treatment.

Letting Go

No matter how many services you provide, there will always be some clients who will become more trouble than they ar🐼e worth. Clients who continually try to monopolize your time or resources need to prove that they can and will do adequate business to justify your efforts.

For example, you might be more lenient toward constant calls from a client whose portfolio is worth $2 million than a client whose portfolio is worth $10,000. If the client refuses to understand your boundaries, then you need to jettison your relationship with that person. This type of client may be better suited to a 澳洲幸运5开奖号码历史查询:discount broker or other service that has a call center.

The Bottom Line

While there will always🌸 be clients who cannot be please⛎d, a great deal of conflict and dissatisfaction can be avoided by properly educating your clients and setting realistic goals. Furthermore, if you only promise them what you can deliver, they will not have cause to doubt you later on. Proactively meeting with your clients at regularly scheduled intervals will allow you to accomplish this.