Break it to me gently: how to have tough talks with your clients

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Break it to me gently: how to have tough talks with your clients

There are times in every financial advisor’s career when he or she must have a challenging discussion with a client. Perhaps an investment strategy didn’t perform to expectations. Maybe the client isn’t saving the way you both anticipated when you drew up their financial plan. Or their ex-spouse left them with a financial disaster.

Whatever the situation, don’t try to hide from it, hoping that the issue will resolve on its own or that the client won’t notice. Use this step-by-step guide to navigate through difficult discussions with your clients.

  1. Set the stage. Try to have the discussion in person, in a quiet, private place without distractions or interruptions such as ringing phones. If you can’t meet in person, be sure to make the call from a quiet location and ensure the client isn’t multi-tasking (including driving) during the conversation.
  2. Be truthful and transparent. Present the situation honestly and transparently. Explain the reason for the current situation, without making excuses or judgements, in simple, clear language. If you confuse clients when delivering unpleasant news, they may think you are hiding something.
  3. Capture their thoughts. Try to understand the client’s perspective by asking open-ended questions. This helps you understand how they see the situation and it helps turn the meeting into a dialogue. You can use this information to structure next steps.
  4. Acknowledge their feelings. Emotions may run high. Your client may feel angry, frustrated, or sad. Acknowledge their feelings, whatever they are, without judgement. Don’t dwell on their emotional state, but don’t try to talk them out of feeling the way they do.
  5. Show leadership. Be calm and speak in a controlled manner. Seeing that you aren’t panicking will give the client more confidence. Take charge of the conversation and steer it towards the most important part: your plan.
  6. Present a plan. Remember that the bad news is just one part of the story you’re telling. The second part is how you’ll deal with the situation. Explain your recommendations and be sure the client is comfortable with your plan. You may need to make some compromises, but it’s important to that they agree with the course of action. This will help you end the conversation on a positive note.
  7. Follow through. Whatever you do, the most important thing is to follow up in a timely fashion with the agreed-upon next steps.

With practice and a little planning ahead of time, you’ll find that you are more confident when you need to have a tough talk with one of your clients.