Every business has those clients that are difficult to deal with. These clients are usually irate, emotional, and short-tempered. Difficult clients are unavoidable in any business and while facing them, an advisor must have the temperament and patience to deal with them in a calm and professional manner no matter how unreasonable or inappropriate they might become. Failing to deal with difficult clients will not only lead to an upset client looking to terminate the contract but could also become a source of reputational damage.
Unfortunately, the business motto “customer is always right” isn’t always true. In fact, it could be considered very bad advice. Not all clients are always fit for your services and some are simply best to avoid. You will still be required to deal with them courteously but sometimes even that may not be enough. The following are some strategies for you to keep in mind when dealing with such situations or how to best avoid them.
Valerie Adelman is a 25-year veteran in the field and a certified financial planner with the Financial Asset Management Corp. in New York City. Her expert advice is, “The best way to avoid a difficult situation is to be clear about roles, responsibilities, and expectations when first engaging with a client,” said Adelman. “It’s a good idea to discuss overall investment policies and strategies upfront. In that way, when a discrepancy comes up, we can go back to our original assumptions and try to determine the source of any miscommunication.”
Your business would be better if you never had to deal with difficult clients in the first place. Although you can’t completely avoid them, there are certain preemptive measures you can take that can help you avoid uncomfortable circumstances and misunderstandings. They are best to share and take care of early into the onboarding process so that your client is well aware that sometimes things just don’t go as planned.
One of the most obvious things you must avoid at all costs is making promises that you can’t keep. Nothing is guaranteed in life and certainly not in the finance world. Take special care when wording your sentences. Instead of saying, “We are definitely getting this one” say “if all goes well, we will hopefully get this one.” furthermore, be reasonable about your expectations. Avoid voicing statements like, “We are definitely getting a 15% turnover on this one” when there is no way for you to guarantee it. Expected and guaranteed are two very different things.
Financial advisors are not all-powerful. Use phrases like “if all goes as planned,” “hopefully,” or “if nothing unexpected happens.” Your client should understand that when it comes to investment, most often, things aren’t in your control and surprises are always possible. If you feel your client is unaware of that, make sure to communicate this with them. Teach them to keep a “hope for the best and prepare for the worst” attitude. It is one of the best mottos to live by in the wealth management industry.
FINRA received 3,000 investor complaints in 2017, filed 1,369 new disciplinary actions, imposed $64.9 million in fines, barred almost 500 individuals, and suspended 733.
Make sure to document everything. Do you know how to avoid being one of these statistics? Document everything. It’ll save you from most of the misunderstandings, discrepancies, and even misrepresentation of data. Oftentimes clients are uncomfortable, ashamed, or simply choose not to share certain information. Don’t just assume: ask. Make sure all your legal documents are set, data updated, and all information vetted.
You can even vet new clients beforehand as well. Any clients that you may have secured through a referral or recommendation, if possible, vet them. Trust me, they are probably doing the same. It can help you avoid any future headaches due to difficult clients.
If unfortunately you are faced with an upset, angry, or emotional client, one of the best things to pacify the client is to change the environment. Whether they have contacted you through email or call, politely ask them to meet you as soon as possible. This comes with two benefits: it shows the client that you are ready to listen and gives you some time to prepare and investigate the matter.
Humans tend to do and say a lot they don’t mean at the height of the situation. One of the best ways to calm heightened emotions is to take a break and change the environment. Once your client is in front of you, make sure to allow them to speak and “let it all out.” Most likely they would have calmed down somewhat by then and are ready to talk just business without emotions.
There is a psychological concept called mirroring emotions. It can be as simple as unconsciously imitating the emotions, gestures, or words of the person in front of you, most often in a tense situation. If a client comes up to you angry or frustrated and has had their say, the first step for you is to avoid mirroring once it is your turn to speak. Do not get defensive and absolutely do not get upset.
You can diffuse the situation by appearing serious yet calm. Offer a drink, listen intently, and begin by asking further questions. Clarify where the misunderstanding was, what was miscommunicated, or which expectations were unmet. If you have had the chance to investigate and verify the matter earlier, proceed to explain to your client calmly and politely. If the source of the problem is not on your end, inform them you will contact the relevant parties to find out what happened or how the matter at hand is not in your control and explain how the fault isn’t yours. Some phrases that may help are “As I mentioned in the beginning”, “As our contract says” or “Unfortunately, it is something out of our control.”
But what to do in the case of justifiable indignation? Suppose something was miscommunicated or a deadline was missed and a guaranteed target not met. If the fault is yours: Admit, apologize and rectify. However, if the reaction of your client might be a bit over the top it is essential you keep your calm. Admitting a fault does not ruin your pride. If not anything else, it shows your client you are an honest person who is not afraid to admit their mistakes.
Sometimes the problem isn’t ever you and it is the client and you aren’t a psychiatrist. It isn’t your job to help your client fix their behavioral problems and people don’t change overnight. Therefore, If you have clients with which uncomfortable and difficult situations keep happening repeatedly then it is time to decide which is more important: your client or your reputation and integrity. It may be best for you to simply fire them. You might make no profit but the emotional cost may be too high and it may be best to cut your losses.
The most important thing to take from a difficult situation is to see how it can be avoided. Ask yourself what happened and how it could have been prevented. After every incident makes sure to strategize how to steer clear of such situations in the future. It may be best for you to document it and revisit our strategy before taking on each client in the future.
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