Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here.
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Dear Bev,
We are under siege. Clients are focusing on fees and our active management approach like never before. Our clients think they are more educated but we know they are not. We have always been fee-based and we charge a separate fee for creating a financial plan. We work with insurance carriers when our clients need it. We are very ethical and diligent in our approach, but having everything questioned gets under my skin. We would never take advantage of the clients we serve –we see ourselves as the protector of their assets. How do we confront these misplaced allegations and get back to the business at hand, which is preserving capital and making our clients more money?
Frank D.
Dear Frank,
“Under siege”? This is an interesting choice of words and gives me some insight into your state of mind on this matter. I completely and totally respect your view and your frustration. It’s hard for anyone to think they are being accused of something untoward when really they are trying to do the right thing. You sound very passionate about your business and your approach and your clients’ questions suggest that they don’t fully understand all you do.
That said, you are certainly not alone. The entire industry is “under siege” to some degree. The flow of assets from active to passive continues unabated. Research dating back to April shows outflows from active strategies of close to $35 billion. And it is reasonable for clients to ask about fees. If they don’t see their assets outpacing the S & P or other measurements, it is a natural reaction to ask why they are paying 1-1.5% for active management.
All of this said, I’m not suggesting that you are wrong or that your clients are wrong; I’m just trying to show objectively why their concerns are not a reflection on you or an insult to you.
I call dealing with difficult situations a “dance” we enter into. Your clients ask questions that seem to question your ethics and choices, it gets under your skin, you respond in a somewhat defensive or overly educational (i.e. patronizing) manner, then the clients are less sure they are getting the right answers.
It does not sound to me like clients are directly accusing you, more that they are inquiring and trying to understand. In fact, it’s better when a client raises an issue with you because it often means they want to be more educated and want to give you a chance to dispute their suspicions! Receiving their questions in a positive manner will allow you to maintain self-control and composure and provide more adequate answers.
You might also want to re-examine your approach. Can you explain the value of your service in more detail? Can you provide more insight about your investment process and why you believe in it? Can you provide additional information to clients in the form of blogs, events, one pagers, etc.? Take an objective view and try to put yourself into the client’s seat. What else could you be doing?
Realize that the client who seeks you out and questions is offering you an invitation. Take the invite and respond with an objective, open mind.
Dear Bev,
I am under the umbrella of a large firm that has recently had some negative news. I believe my clients see me as disassociated from the mother-ship except that I am able to leverage the resources. I’m wondering if I should be doing anything more proactive in my dealings with clients so they are assured I’m fine, they are fine and we are not impacted.
K.R.
Dear K.R.,
I spent years of my corporate career working for a large insurance company, but always in the investment sector. I remember once calling on a large pension plan about our alternative offerings and the plan sponsor proceeded to chew me out about how one of our insurance reps, ten years earlier, had sold his mother a bad policy. He said his piece and then asked me to leave his office! I learned how hard it is sometimes to disassociate from the name.
Of course, your clients are with you, for you. They didn’t actually hire the firm, they hired you to work with them. The best approach here is open communication. Talking about how disappointed you might be (assuming you are) in what your firm may have done, or be accused of doing. Talk about how you are not influenced in your decision-making (assuming this is true) and reassure your clients that you have a mind of your own when it comes to working them. I believe negative news should be confronted head-on, not with apologies or lengthy explanations, but by acknowledging what you know and explaining what will happen next at the firm to mitigate the negative situation.
Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry in 1995. In 2008, she co-founded Advisors Trusted Advisor to offer dedicated practice management resources to advisors, planners and wealth managers. In 2016 her firm relaunched the Advisors Sales Academy. She is currently a Lecturer at Suffolk University teaching undergraduate students Leadership & Social Responsibility. Beverly is a Certified Professional Behavioral Analyst (CPBA) and Certified Professional Values Analyst (CPVA).
She has spent over 25 years in the investment industry and has been featured in Selling Power Magazine and quoted in hundreds of media outlets, including the Wall Street Journal, MSNBC.com, Investment News and Solutions Magazine for the FPA. She speaks frequently at investment industry conferences and is a speaker for the CFA Institute.
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Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here. 
