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Financial Planner Blog

Clear Expectations Lead to Longer Lasting Relationships

By Suresh Sadagopan, CFP

Believe it or not – we are constantly trying to sell, convince or persuade people to agree with our way of thinking. This is irrespective of what we do in life.

A mother needs to coax and persuade her children to brush their teeth well, eat healthy food, study their lessons properly and keep good company.  A teacher needs to instill the love of the subject in the students and needs to impress upon them the need to study their lessons regularly and do well in their examinations. A supervisor needs their subordinates to trust them, make them do the work they are entrusted with and carry the mandate of the department/unit forward.

We are all in the business of persuasion, all the time. In our case, financial planners, have lots of work to do before a client completely trusts us. Getting the clients to trust us is the foundation of a long-term relationship.

After being in the business for a while, new clients may come from referrals and therefore have preconceived opinions and expectations about us.

There is a lot of work that goes into building solid foundational relationships with clients that eventually flourish.

Setting CLEAR Expectations

The first step in building a relationship is identifying the client’s expectations, validating the expectations if they are right or correcting them if they are wrong. This is a very important step if you are trying to achieve long-lasting relationships. Lots of times, clients may come in with unrealistic expectations of what a planner may do for them.  For instance, I have found that some clients come in thinking that we will be able to grow their current income by 2-3%. This is one expectation I have had to do away with.

While setting expectations, it is important for the client to understand what they will get out of the engagement with their financial planner. This is a very important step as it will become touchstone against which the future performance will be measured. It is a very good idea to specify in writing what the client should and should not expect from the relationship.

Once the expectations are set, the engagement will run much more smoothly.

Professionalism in ALL Interactions

There are going to be some expectations which are essential for a financial planner to fulfill. We cannot wriggle out of these and still have a satisfying client relationship.

For example, almost all clients want their financial planner to have a deep knowledge in the planning area, as well as appropriate experience to handle the relationship. They want their planner to be a professional. The planner should exude professionalism in every interaction – from the communications being sent, promptness in responses, returning calls etc. As their consultants, we need to inspire confidence, as clients share their aspirations, fears and secrets with us. One expectation we can be sure of is that clients expect us to be deeply interested in their well-being.

Clients NEED to Trust You

After setting the expectations and fulfilling all the things that clients take for granted, the planner needs to build trust.

Simply delivering on the expectations that were set in the beginning of the relationship is at the heart of building a trusting relationship. This might seem simple but it is not. These expectations need to be met relentlessly, week-after-week, month-after-month, for years, which is difficult to maintain.

There can be upheavals in the client’s life, in the market or economic conditions, changes in income/ expenses or other aspects of finances. The financial planner who is continuously by the client’s side, through it all, is the one who will have the client for life.

Trust builds over time and there is no alternative to building this trust other than being there for the client consistently.

Existing Clients Give Referrals for FREE

It is this trusting relationship that ensures longevity of the relationship and also results in referrals. For financial planners, both of these are critical. Existing clients are the bedrock for a practice. New client acquisition is best done in our business through referrals. There is no cost associated with these two. Anyone who has ever spent time acquiring new clients would know the large amount of time, effort and money involved in that process.

While a good first impression will help with acquiring new client, it is the continuous client engagement and relentless pursuit of professional duties that is going to ensure that the client sticks around. However, the planner’s persuasive skills will be on full display throughout the engagement with the client. At various points, the client will have to be coaxed into giving up unrealistic goals, pointless investments or unwanted expenses. At other points, clients will have to be guided down the path of fiscal prudence, regular investments and reasonable targets.

The persuasive skills of the planner will especially be tested when the markets sky-dive or when there is a huge run-up in an asset class. For example, when there is a market crash, clients will want to exit, whatever the costs and in the latter they have to be held with a leash to save them from themselves! Keeping the client on the straight and narrow path is a full time challenge for financial planners like us. Done well, it turns out to be a rewarding career option!

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