Retirement Watch

Last year's lesson: Be frank, frequently

Silence isn't golden, so be prepared to tell clients the bad news along with the good

Jan 31, 2010 @ 12:01 am

By Noreen Beaman

Irish playwright George Bernard Shaw's quip, “The problem with communication is the illusion that it has been accomplished,” assumed more relevance in the financial industry in 2009 than at almost any other time in modern history.

Clearly, last year was an unusual period for everyone in financial services — in all the ways that “unusual” can be taken to denote something we hope will never happen again.

Although living life in a rearview mirror is seldom practical, it would be foolish if financial advisers and their product partners didn't learn at least one vital lesson from last year: the value of clear, consistent and practical communication.

As if to underscore this, a 2009 survey of 4,500 investors by J.D. Power and Associates noted that their relationships with their advisers was important, and in some instances even more important than their portfolio performance.

The study also bears out that improved communication by advisers may increase investor satisfaction.

So what were the major communication takeaways from last year that we can incorporate into our 2010 practice-management regimen?

There is nothing to be learned from the ostrich.

Most people tend to avoid being bearers of bad news, most especially when our livelihoods could be adversely affected. We have learned, however, that clients place more value on having bad news explained to them than they do on hearing that their portfolios are outperforming. As clients age, advisers will need to spend more time with them, focusing on distribution and communicating the best way to withdraw from their portfolios while continuing to increase their remaining assets.

“I want to be alone” worked for Greta Garbo; it probably won't do much for you.

Communicating isn't a solitary activity. Your product partners should be in a position to provide you with access to their intellectual capital, top economists, written materials, conference calls and market updates. Information overload isn't a concern when a lifetime of savings is at risk.

Communicating with clients isn't a “one-and-done” activity.

Advisers should have a plan for regular outreach in good times, and especially in bad times. Clients want to take a more active role in their financial planning and want to stay informed about what is happening in the marketplace. This requires more regular contact with them, as well as providing them with multiple ways to get information, including client newsletters, conference calls and websites. It is important to remember that people prefer different ways of getting information; providing multiple options helps make each client feel as if his or her needs and goals are being met.

Eschew the obvious, especially when facing stiff head winds. Simply put, make it a point to offer your clients practical advice or special insight, particularly when you are giving them bad news. Again, your investment management partners should be able to help with this.

Fair-weather friends don't build lasting relationships — or their own practices.

We have all heard stories from clients who never, or hardly ever, heard from their advisers while the markets were in free fall. My guess is that not many of those advisers still have those clients' business. Being a trusted adviser requires consistent outreach regardless of how bad the situation may be.

• If your investment management partners don't offer you products with built-in client-communication mechanisms, it's time to look elsewhere.

When we consider developing a new product, understanding how the adviser will communicate both the benefits and performance to clients is among our most important considerations. Few methods of communication are too primitive or trivial as long as they convey the message clearly to the client.

For instance, some products employ the use of color to convey a message. We can generalize and say most humans have psychological associations to colors — red provokes attention, yellow prompts caution and green is associated with going forward safely, as in the green line used by Fidelity Investments in its TV commercials.

It is important that any successful practice-management strategy include a systematic approach to client communications. If we have learned nothing else from 2009, it is to stay in tune and in touch with our clients no matter what news we have to share with them.

Noreen Beaman is a principal and chief operating officer at Brinker Capital, an investment management, adviser support and communications firm.

For archived columns, go to


What do you think?

View comments

Recommended next

Upcoming event

Nov 19


New York Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in six cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print