Plot twists in the financial lives of clients are a given, especially in these volatile markets, but financial planners can build successful long-term relationships by meeting clients where they are and avoiding pitfalls that could impede the relationship. Here's how.
Don't commoditize the financial plan
For every client who walks in the door, a financial planner drafts a personalized plan that includes baseline data. A common mistake among practitioners is treating that plan as the end product rather than the first chapter of a lifetime journey. When the plan is not treated as a living, breathing document, a planner runs the risk of basing the client's pathway on a static point in time instead of making ongoing diagnoses at critical turning points — and forgoing vital relationship-building opportunities along the way.
Determine a client's no-fly zone
Meeting a client where they are means creating a strategy that enables wealth to last through multiple generations. But recommendations must be ones clients can and will adhere to. Understanding that the best recommendation might be one the client is reluctant to follow allows a financial planner to arrive at wiser decisions. Let's say a client refuses to sell the historical home bequeathed to them by deceased grandparents, even if that's the best financial move on paper. Aligning advice with a client's belief system can preserve the relationship for years to come.
Steer clear of technical jargon
Industry studies have repeatedly shown that too many financial professionals use technical jargon when communicating with clients. Conversations filled with terminology that's beyond the client's frame of reference is a bar to effective communication. Instead of using the term "dollar-cost averaging," for example, discuss investing a fixed dollar amount on a regular basis regardless of share price. Likewise, don't assume a client recognizes the term "simple time-weighted returns." Break down the concept and explain it as the change in value of investments since the first deposit.
Evolve with the seasons
Keeping communication channels open during periods of market volatility will go a long way to building trust. Advisors who understand that financial planning is a dynamic, fluid process can plan for their client's future while at the same time expecting the unexpected in an unpredictable economy. During a bear market or an economic downturn, clients are more likely to check in with questions about their portfolios. If the planner has done their homework and communicates clearly, the client will fully understand their long-term strategy, making them less anxious and more prepared for their future.
Once a client's strategy is in place, their evolving financial plan should be reviewed every winter, spring and fall, at which times planners can canvass different topics pertaining to a client's goals and aspirations. Fine tuning individual plans are best done with internal support from dedicated staff or the leadership team and facilitated by top-notch planning software.
Financial planning is part science, part art. Through bear markets and beyond, committing to managing a relationship with flexibility enables a more sustainable service model for a financial planner's practice.
