Rethinking the Fundamentals of Client Communication

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A list of Dan Richards’ previous articles appears at the end of this article.

Dan Richards

Surely you’ve heard of massive numbers of investors who have severed relationships with their financial advisors as a result of the market tumult over the past year and a half.

In truth, that’s not much more than a popular myth portrayed in the financial media.  The vast majority of investors are working with the same advisors they were with a year ago – who they work with hasn’t changed one bit.

What has changed, however, is how they’re working with those advisors.

One outcome of the last while is that advisors will need to fundamentally rethink both the information they communicate and just as importantly how they communicate.

Changing these two key dimensions of your communication strategy – what you send clients and how you send it – will be critical to future success.

A major shift in mindset

In understanding the need to shift our thinking on communication, it’s important to look at the broader shift in mindset among many clients.

Until recently, most investors would respond to a recommendation from their advisor with “If that’s what you think, fine.”

Today, even if the same decision is ultimately reached, conversations are taking longer and investors are asking tougher questions – and often looking for back-up via direct access to experts. 

Indeed, many investors are looking to collaborate on decision making – that’s especially true of younger clients in their forties and fifties, but in fact can cut across all ages.

This is reflected in a comment from Paul Allan, Senior Vice President with Mackenzie Financial regarding research with high net worth investors from the consulting firm Investor Economics:

“High net worth investors are trying to get closer to their money and are listening to multiple sources of information beyond their financial advisor.

As a result, advisors need to spend more time addressing different viewpoints. Three years ago, clients would typically agree with financial advisor recommendations. Today, they want advisors to explain exactly why they are recommending solutions and strategies – and to provide evidence and support.”