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A friend of ours once shared the story of a family of his acquaintance and their experience during a fierce thunderstorm. It was late at night and everyone was already in bed when the storm broke. It was a real doozy: frequent lightning, loud crashes of thunder, and rain beating against the windows.
After about the third thunderclap, the parents heard the sound of small feet thumping on the floor, coming down the hall toward their room. In rushed their 4-year-old, who proceeded to leap into his parents’ bed. “Mom and Dad, I’m scared of the storm,” he said in a trembling voice. His parents, of course, wanted to comfort their son, so they snuggled and, being people of faith, reminded the tyke that the Almighty would protect all of them from the storm.
The little boy thought about this for a few moments, as the rain continued to batter the house. And then he said, “Well, I know about God and all that, but right now, I want to be with somebody who has skin on!”
Can you relate? When things are really uncertain and even scary, you want someone you can talk with, preferably face-to-face. Advisors know this better than anyone – or should.
At the core of that communication for most advisors is constant encouragement for the clients to keep their “eyes on the prize.” They need to be convinced to avoid getting distracted by short-term noise, to stay committed to the long-term strategy they’ve established with the advisor’s help, and to remember the historical lessons the market has to teach about diversification, rebalancing, and avoiding the urge to attempt to time the market.
All of these are valuable and wise things to help our clients remember. But despite the value of thinking long term, our clients still want to know that their advisors are paying attention to the short-term changes brought about by the unexpected events that life sends our way, day after day. Sure, they understand that the house is probably going to outlast the storm, but they still want someone “with skin on” to assure them that this current scary thing – whatever it is – will likely pass without doing permanent harm.
Keeping them Informed
We all know that our clients want to hear from us regularly, right? And yet, like the basics of any effort, we always need to keep returning to the fundamentals, solidifying them as habit. In the same way that Vince Lombardi used to start every training camp by holding up a pigskin and saying, “Gentlemen, this is a football,” advisors need to continually assess their client communication systems and schedules with fresh eyes.
After all, it’s not a given that “what we’ve always done” is going to continue to be effective indefinitely. For example, according to Y Charts’ 2024 Advisor-Client Communication Survey, clients say they understand about 6% less of what their advisors told them this year, compared with their level of understanding last year.
Is that because the information is 6% more complicated, or have advisors, collectively, become 6% less effective in their communication? The answer matters, because in that same survey, clients indicated that less communication equals lower confidence in their advisor. Seventy-one percent of those who were regularly contacted said they had confidence in their advisor, compared to only 22% of these who were contacted infrequently.
Earning and keeping their trust
An advisor we know recently shared a story that validates this observation. Upon acquiring a client who came to him due to an unsatisfactory experience with a previous advisor, he realized that it was especially important to provide an outstanding onboarding experience.
He said that his firm didn’t do anything they wouldn’t do for any new client. The team generally focuses on clear and prompt communications, preparation for client meetings, and meticulous detail when gathering information. His firm looks to do everything it can to ensure that the asset transfer and onboarding is as transparent and user-friendly as possible.
The client had come to him near the end of the pre-COVID bull market and subsequently experienced the wild ride of 2020. Through all the ups and downs, the advisor maintained a steady flow of communication on current market and other events, taking proactive steps to ensure that all clients knew he was “minding the store” on their behalf.
During one Zoom meeting with the client in 2021, the advisor remembered that the team was growing concerned about the inflationary implications of the expanding money supply. However, markets were still trending higher and would continue to do so through the end of the year. The advisor repeated his go-to advice for clients, that they should continue to focus on what they could control such as diversification, rebalancing, and their end goals.
“I can’t tell you how much it means, even when things are crazy in the markets, to have someone who is both knowledgeable and focused on my accounts,” the client told him.
Even during the market doldrums of 2022, with inflation punishing not only equities but also fixed income portfolios, this advisor continued communicating, updating, coaching, and urging all his clients to stay the course, to remain calm and committed to their strategies, and to trust the markets to do what they do best.
The same client, in the fall of 2022 – when the S&P 500 was close to its lowest trough of the year – told him: ‘I really appreciate the time you’ve taken with me, especially over the last few months, when the markets haven’t been great. I wonder if you’d be willing to talk to my kids.’”
As it turned out, the client had two sons who had taken over the operation of her very successful business. They were looking for a fresh management approach for their company’s 401(k), a plan holding significant assets with about 30 covered employees.
Not long afterward, the client approached the advisor about a friend of hers who was selling a business and retiring. The friend needed advice concerning the sale and also required a referral to a qualified estate planning attorney. The advisor was able to provide access to the needed resources and, in the process, brought another significant influx of assets under management.
The point of this story is that staying in regular touch with clients – through thick and thin – is the gold standard for increasing client confidence and building your business. Clients want to know that you know what’s going on, even if current events don’t have direct implications for their portfolios.
You always want them to be thinking long term, but they want to know that you’re keeping an eye on the short-term swings. Knowing you’ve “got their back” will make them much more likely to trust you on the advisability of staying the course.
Your strategy can be as unique as your firm. In addition to your regular client meetings, you can use newsletters, email blasts, social media, or any other method that works consistently for you and is effective for reaching your clients.
Just remember that your communications should reflect an awareness of current events, both in the markets and on pertinent economic, political, and international fronts. The more knowledgeable you are – and the more you consistently communicate that knowledge in the context of your clients’ concerns – the more solid the bond of trust your clients will feel, and the more value you’ll add to the relationship.
Gretchen Halpin is the co-founder of Beyond AUM, which provides growth, client experience, and advisor experience support to financial advisors to drive business success. Over the course of her 25-year career, Gretchen has founded more than five businesses in addition to serving as the chief strategy officer for one of the financial services industry's leading wealth management firms. She has been featured in Advisor Perspectives, Financial Advisor Magazine, and Forbes for her insights and has served as a speaker at numerous industry conferences, including NAPFA, Financial Planning, and Invest in Women. She also serves as a facilitator in Financial Planning Association’s Women and Finance Knowledge Circle community.
Are you looking for help to boost the quality of your client communications and improve your firm’s marketing strategy? Contact our team today to start the conversation.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
