Help your clients keep their cool

Clients can become emotional for a variety of reasons, the most common being dissatisfaction with the returns on their investments. But clients can also become emptional because they are dissatisfied with your service, fearful of market volatility or simply lacking knowledge of the way markets work.

Whatever the trigger of clients’ emotional reaction, your job is to help them keep their cool, which can in turn reduce their stress and keep them invested.

Otherwise, says Aiman Dally, president of Copia Financial Solutions in Toronto, “They can make irrational decisions, including taking their business elsewhere.”

Some clients are more emotional than others, Dally says. But if you establish clear expectations ahead of time, they are less likely to become emotional, unless you clearly fall short of their expectations. And expectations should not be only about performance, Dally says. They should also be the services you provide and your relationship with the client.

Tina Jakma, financial advisor with T. Jakma Financial in Thornhill, Ont., says that having a financial plan with clearly defined objectives that clients understand is critical to preventing emotional reactions.

“Clients will stick to their plan,” Jakma says, and remain calm, if they know they are not falling short of their goals.

Here are some tips for helping emotional clients keep their cool:

> Manage expectations
Clients will remain calm if you meet or exceed their expectations. For example, Dally says, if you promise to return their calls promptly or meet with them twice a year, make sure you keep your promise. “Clients can get pretty upset if you fail to keep your promises,” he says.

Regarding the performance of clients’ investments, remind them of your investment philosophy and beliefs and give them comfort that you are looking out for their best interests.

“If they understand, from the outset of the relationship, how you manage their money,” Dally says, “they will not react emotionally when markets are uncertain because they will expect you to be on the ball.”

> Communicate frequently
“Be proactive in communicating with clients, providing them with reassurance whenever necessary,” Dally says. If market conditions are volatile, he says, contact your clients: “Don’t wait for them to contact you.”

As much as possible, customize your communication for each client. Make it personal and avoid taking a “cookie cutter” approach.

“Ask them for feedback on how well you are doing,” Dally says. Asking clients for feedback puts the ball in their court, prompting them to tell you whether they are happy with your service. This gives your clients some degree of control over the relationship.

> Educate clients
When your clients have some understanding of the way the markets behave, they will face periods of market uncertainty with much more calm. Remind them to focus on the long term and to ignore short-term market fluctuations, Jakma says, thereby reducing the probability of emotional responses.

> Clarify your role
Jakma recommends that you remind clients of your role as their advisor —and that you are there to help them achieve their investment objectives. By taking the worry off their shoulders, they will not be stressed out about short-term returns, knowing that you are focusing on their long-term well-being.

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