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Tag Archives: client retention

What’s the Best Way for Advisors to Handle Client Disputes?

Break at business meeting


There are a lot of rewarding aspects of being in the financial planning industry. But that doesn’t mean everything is rosy for financial advisors. As with any profession, there are challenges that trained financial advisors have to face. And in some cases, advisors have to deal with very unpleasant circumstances and handle client disputes.


One example of a very unpleasant circumstance most certified financial planners have to deal with at some point in their career is a client who thinks their advisor harmed them. While advisors already act with a fiduciary standard, there’s no guarantee that every client will think that’s enough. The reality is if something goes very wrong for a client, chances are they’re going to blame their advisor.


When this occurs, it can create a significant headache for an advisor. It’s important to understand that the fallout from this type of situation can happen regardless of whether it’s the client or advisor who’s in the right. The worst case scenario is if a client escalates the matter to the point where it has to go to court. Dealing with an arbitration panel can also be a very stressful experience.


Financial Advisors Need to Be Proactive


Many financial advisors assume that if they treat clients well, communicate clearly and adhere to ethical standards like not misrepresenting any aspect of an investment, they won’t have to worry about any significant client disputes. Although that approach and desired outcome will hold true for the majority of clients, there are always going to be problematic clients looking for a financial advisor.


The best case scenario of working with a problematic client is they only waste an advisor’s time. The worst case scenario is this type of client drags an advisor into arbitration or an other legal venue. Since trouble clients present a lose-lose proposition, the best thing an advisor can do is learn how to avoid them.


Manipulative behavior, constant victimization, major delusions, radical moods or goals that are disconnected from reality are all signs of a truly problematic client. If any of these behaviors are exhibited during an initial consultation, the best action an advisor can take is politely declining to take on the individual as a client.


Despite their best efforts, it’s not always possible for an advisor to avoid taking on a dysfunctional client. There are plenty of examples of clients who don’t start showing the major warning signs of trouble until they’re already in a relationship with the advisor.


If major issues start to arise with a client, advisors need to go the extra mile to ensure they document everything. By having comprehensive documentation, advisors can protect themselves in the event that things get escalated to arbitration.


In addition to carefully documenting everything related to a problematic client, advisors shouldn’t hesitate to look for the right opportunity to amicably end their relationship. By being proactive with these kinds of actions, financial advisors can minimize their negative interactions and focus their energy on all of the things that make this profession so great.

Many Advisors Are Missing Out By Not Marketing to Millennials


Recent research shows that many trained financial advisors are missing a significant opportunity by not making it a priority to engage with potential clients that fall in the millennial demographic. The 3rd annual Advisor Anxiety Survey found that a full 56% of financial advisors are focused on this demographic less than other demographics or not at all.

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How Financial Advisors Can Help Clients Focus on Planning and Strategy


Most people are inundated with financial information. However, that doesn’t mean the information is making their lives easier or helping them make the best financial decisions. Instead, it simply adds to the confusion of people wondering what exactly they should be doing with their money.


Whether it’s when they turn on their TV or open a magazine, individuals are presented with an ongoing stream of ads for different financial products. Although there’s nothing scammy or inherently wrong with the individual elements of most of those financial products, the real issue stems from the cumulative impact all of this messaging has on people’s perception of financial planning and investing.


The mindset that many people get stuck in is thinking that if they can just find the right financial product to put their money in, they’ll be set. In reality, while the investments people making are obviously important, what’s more important is the plan they first create.


Certified Financial Planners Need to Take the Lead with Planning and Strategy


Individuals will be very happy once they have a plan in place and are able to see the positive impact it has on their financial well-being. That being said, there’s no guarantee that they’ll be fully receptive to the focus on planning at the very start. The reason it’s often necessary for trained financial advisors to take the lead and fully communicate the importance of planning is clients often come in with their interest solely focused on a specific financial product.


Primarily seeking advice about whether or not they should invest in a certain financial product can initially make it hard for a client to see the bigger picture. The good news is as long as financial advisors are patient and take time to communicate why those types of decisions are best made in the context of an overall plan, most clients will come around to seeing the value in taking this kind of approach.


Financial Planning Professionals Can Use This Situation As An Opportunity


People’s interest in the financial products they see advertised isn’t going to disappear any time soon. What financial advisors need to understand is that’s not a big thing for them. Instead, it actually presents an opportunity. Advisors can use the interest people have in financial products to attract new or potential clients.


Once an advisor is in a consultation, they can use the importance of planning to demonstrate to the client why it’s so vital for individuals to have knowledgable professionals who can provide guidance along the path to accomplishing financial goals.

Do You Know Your Clients’ Real Goals?


A lot of certified financial planners think they know what clients want. At the same time, many financial planning professionals are frustrated by their lack of client retention. While planners should have the skills and knowledge to provide solutions for their clients, that doesn’t mean they have to blindly figure out what their clients want to accomplish.

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