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Clients Are Saying Nasty Things About You (Aug. 17)

By Thomas Coyle December 30, 2016

This year, FA-IQ readers’ favorite client servicing article (published August 17) explained how winning clients over as promoters can boost referrals and revenue.

“A good name is better than precious ointment,” the Bible tells us — and Fidelity adds that the good name of your wealth advice practice, arguably your most valuable asset, is hurt more by detractors than it’s helped by well-wishers.

Citing the White House’s Office of Consumer Affairs, Bob Oros, head of the RIA part of Fidelity’s custody and clearing business, tells FA-IQ that word of bad customer service reaches twice as many ears as praise of good service.

Whether that’s because complainers talk loud and long, or because we’re more attuned to bad tidings, Oros isn’t sure. But he’s certain the impact a detractor can have on a business’s reputation has been amplified by social media.

“In the past, if I had a negative experience with a company, I’d tell some people one by one and then probably stop.” says Oros. “Now consumers can get that out to hundreds if not thousands of people at a time online. It’s a game changer.”

So it might be handy to know, even generally, how many malcontents there are in the financial advice marketplace.

According to a newly published Fidelity survey, 55% of millionaires are“promoters” of their FAs. These customers, the fund company says in a recent press release,are“loyal to their advisors and likely to recommend them to others.”

But another 20%are detractors, clients who are“unhappy enough that they may leave their advisor or discourage others from working with them,” according to the Fidelity.

For this reason, says Oros, an advice firm needs a plan to turn naysayers into fans — who, according to Fidelity, are generous with referrals and keep more of their money with one advisor.

Matthew Etter

At Krasney Financial in Mendham, N.J., and Fort Lauderdale, Fla., the first line of defense against detractors is working with new clients to set realistic goals bounded by proper expectations and a healthy respect for risk and loss tolerances, says the firm’s managing director Matthew Etter.

From that base, he adds, it’s easier to build a relationship “that’s good enough they’ll pick up the phone” when something goes wrong, and not let the resentment simmer.

And when alerted of a crisis, Etter says he and his team spring right into careful and deliberate action.

For example, a while back a client of Etter’s had a an important question for his custodian but couldn’t find anyone there to answer it.

As it happened, the client was sufficiently comfortable with Etter to call for help — and it was a matter the advisor could have quickly resolved with help from contacts at the custodian.

But he didn’t jump right in.

“I got the call while I was driving, so I asked if I could call him back when I got to the office,” says Etter, whose firm manages about $700 million. “I explained I wanted to be sitting down, taking diligent notes and giving him my full attention when we discussed the matter.”

He says he slowed things down in the name of making an accurate assessment of the problem, and because “I know people want to be heard.”

More important, Etter thinks a client who is vexed about a service issue needs to be part of the fix.

“I feel empowered when I can help a client who wasn’t happy,” says Etter.

And the client he helped with the custodial snafu? Etter says he has since “turned around and given us multiple referrals to family members.”

FPC Investment Advisory in San Francisco guards against detractors by trying to make sure new clients are a good fit for the firm — philosophically and emotionally as well as in terms of investment outlook and service expectations.

This, says CEO Bijan Golkar, means about half the prospects the firm interviews don’t make the cut.

Among other signs of trouble to come is a prospect who’s bitter about past advisors. While other firm’s ex-clients may have legitimate gripes, there are also serial complainers who have difficulty finding any firm they’re happy with.

And then there’s the beer test.

“You have to want to sit down somewhere and have a beer or tea or whatever it is with a client,” says Golkar. “If you’re not comfortable enough with someone to do that,you shouldn’t be working with them.”

Oros agrees. The Fidelity executive says such interpersonal ease is vital — both to getting frank feedback from clients and to keeping advisor-client ties strong and healthy over time.

“Two-thirds of promoters view their advisors as friends,” he says, citing Fidelity’s millionaire survey.

And while it is helpful to reach out frequently and meet in person regularly, Oros contends that “friendships don’t develop because you sit down together four times a year.”

Rather, close relationships grow from meaningful contact that develops from co-designing, implementing and maintaining robust financial plans, and from keeping family members in mind and involved.

“It’s a matter of lots of small interactions,” Oros says of the family part of the strong-ties equation. “Things like following up to ask how their kid’s game went in the context of an ongoing, planning-centric relationship can really add to the depth of a relationship.”

It’s also important, says Oros, “to engage clients on their terms.” This will dictate how many face-to-face — or remote video — meetings to have, how individual client’s reports are formatted, and to what extent on-demand “robo” services are required.

“Clients should be able to reach out 24 hours a day, seven days a week and get answers when they have questions,” says Oros.

“The technology is already there,” he adds. “Advisors just have to think differently about how to apply it.”

Read the original article, published August 17, here.