You have been keenly awaiting for this movie "Dear Zindagi", because it showcases your favourite actors Alia Bhatt & Shahrukh Khan, and you are expecting it'll be a nice, fun loving and comedy movie. You get the tickets booked in advance and are in high spirits for watching the Saturday night show with your wife. The movie started and you could barely understand what was happening in the first half, still you did not give up hope and thought there would be some spice in the second half, which added further to your disappointment. At the end, you come out of the movie hall,and give your verdict "Kya bakwaas picture thi". The best actors, cinematographers, directors of the industry were behind the scene and it involved a lot of time and money. Yet no use, Why??? Because your expectations were not met, and when expectations are unmet, it results in nothing but displeasure.
The same happens when, irrespective of your best efforts, you and your client decide to go separate ways. "Expectations mismatch"
Managing your client's expectations is a difficult yet an essential job of a financial advisor.
When you are set to begin a relationship with a client, there are expectations on your end that the client would be honest while disclosing vital information about his family, finances, assets liabilities, goals, etc., that he would listen to you when you give him advice, that he would keep patience, etc. Similarly, the client has plethora of expectations from his financial advisor. "Superior Returns" is the basic expectation which every client expects from the advisor. Apart from returns, the client looks forward to a lot of things, which may depend on individual requirements and personality traits. One client would appreciate if you are closely in contact with him, meet him every fortnight, greet him Good Morning, Good Night, etc. while another client may find it bugging. Your client may communicate some expectations to you explicitly, and some of them may be implicit, then it'll be your job to hear what's not said.
The success of your business depends on how well you manage client relationships. At times, clients choose to end the pact because there was a mismatch in what he was expecting and what was delivered, in spite of him generating excellent returns. And we as financial advisors try to look back and wonder what happened, what if things were sorted before.
Following are some key tips which can help you in managing your Client's expectations:
Understand the client's requirements: Before working on execution, you must first completely understand the client's requirements. He can be an ideal equity client considering his age, income level and other demographics, but he may not have the appetite to take risk or he may have some other commitments like funding his sister's wedding and is therefore not in a position to risk the principal. So, the advisor must do an exhaustive study of the client's needs and responsibilities and then start working on his financial plan.
Be Honest: The basic rule of financial advisory is, "Always be true to your Clients". Do not ever give them false hopes and never promise what's not certain. So, if there is no guarantee by the investment provider, do not give a personal guarantee that "Sir, it is a master product, I can guarantee, you'll double your money in 3 years". When it doesn't actualise, expectations are shattered, you will not only lose that client but also many future clients because the victim will make sure that you are not getting any business from any of his acquaintances in future.
Do not overcommit & underperform: In fact, try the other way round "Undercommit & overperform". When you overcommit, higher expectations are set, and when you are not able to perform to that level, it results in dissatisfaction. But when you do not commit and the client's portfolio performs beyond his expectations, it yields contentment.
Ask & gauge what's not said: The client doesn't express and that expectation is left unmet. Your client may or may not specify all his expectations and needs. As a financial advisor, you must ask questions because there are a lot of important points that he may omit. Further he may not explicitly express a lot of things, and you have to carefully observe your client's behaviour and gauge what might be important for him. This will require time and experience, but it really works.
Keep in touch: Keep your client in the loop always. Send your client regular updates with respect to his investments and other important market updates, which may impact his investment. Make it a habit to meet him once in a while. Do not "not respond to his calls or mails" ever, the client must never get a feeling that he is being ignored.
Doctrine of substitution: Empathy is another basic rule of a successful financial advisory business. The advisor has to step into the client's shoes and understand his position. You understand that in volatile markets the investment is bound to fall, but your client doesn't. He only knows one thing, his hard earned money is vanishing. Your job as an advisor is to place yourself in his position and explain the reason behind the loss and help him believe in his portfolio.
The bottomline is recognize your client's expectations and align them to his portfolio and your relationship with him. Follow the above pointers and manage your clients' expectations in all stages of your relationship cycle.
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