How To Successfully Frame Client Expectations

Clients often come to an advisory firm with preconceived notions about what we do, who we are and how we can help them. Whether you’re meeting with a prospective client or continuing work with a long-term client, I encourage you to use these tools to help establish solid expectations and ensure both you and your client are aligned on their financial aspirations.

Use open-ended questions to gauge expectations.

Clients typically know what they hope to achieve when they seek financial guidance, but they aren’t always fully aware of the full scope of our offerings. When meeting with a prospective client, I like to start the conversation by asking open-ended questions, such as: “What made you choose to call me and set this up?” or “What are you financially unsatisfied with right now? What problems are you currently facing?”

As they respond, I try to remain an active listener and avoid interjecting as best as possible. When you give a client the floor to speak, you will often uncover their true motivations for seeking an advisor and identify any unrealistic expectations that you will need to address during the remainder of the meeting.

Present visuals to bolster understanding.

One of the most common issues I run into with clients is the age at which they’d like to retire. Clients often have unrealistic timelines of when they want to retire based on their savings. To help put this into perspective, I like to use a financial modeling software to visually show them how long their current retirement savings will last them if they were to retire at the time of their choosing. When clients see visual evidence that their savings will last them only a year or two at most — and the difference even a couple extra years of work can make — they are much more willing to reframe their expectations.

Visuals not only help clients understand complex subjects more easily but are also easier to remember than a verbal explanation. Using visual tools is a powerful way for advisors to help clients better understand their point of view and align on realistic goals.

Be transparent about risk.

Managing risk is a key part of our job, and it requires open and honest conversation with clients in order to manage expectations. Although dips in the market are often viewed as negative, they’re perfectly normal and necessary for a healthy market.

I like to start out all initial conversations about risk by making this disclaimer and framing fluctuations in the market as a positive. This reassures clients that ebbs and flows in the market are not a cause for major concern. Additionally, it’s important to discuss how different investments react to risk. For example, an annuity with an income guaranteed rider is relatively low risk; however, it will require a higher level of investment and will most likely have a lower return in comparison to a higher-risk investment.

When evaluating a client’s portfolio, I like to discuss the risk protection of each of their investments and how that may alter its return potential. Establishing these expectations is key to reducing the possibility of clients being upset or surprised by the performance of their investments.

Take your clients’ temperature randomly.

This last tip may seem a little unconventional, but I like to call clients randomly and simply check in, especially if I haven’t spoken to them in a while. Even if I have nothing in particular to talk about, clients almost always appreciate hearing from us, and it often leads to us discussing a question they’ve been meaning to ask but haven’t had the time to connect on.

This is a great way to keep the lines of communication open between you and your clients and ensure you are aware of any challenges they may be facing. If they are facing challenges, this provides an opportunity to proactively discuss and realign. By simply picking up the phone, you grant yourself and the client the chance to naturally discuss potential miscommunications in expectations and restore them.

Michelle Hoesly, CLU, ChFC, MSFS, CPC is president of Resource 1 Inc., a registered investment advisory firm. Hoesly is currently a registered representative with Ceros Financial Services, Member FINRA/SIPC. She is a 43-year MDRT member, past chair of the Top of the Table and served as MDRT president in 2014. She currently resides in Virginia Beach, Va. She may be contacted at [email protected].