Set solid expectations and boundaries with new clients

I can almost guarantee that your clients will have a better experience working with you if you mindfully manage their expectations right from the first meeting.

Conversely, unless you have ongoing conversations about expectations, new clients will create their own realities. Those may be derived from past experiences, their personalities, what a friend has told them about their own advisors, what they’ve learned from their careers, and so forth.

While it subtly begins in the first moments of our first meeting, my setting of expectations really shifts into gear when I begin to address future portfolio losses. This is key. I take the time to clearly educate a new client about what they should anticipate. We look at historical intervals and I illustrate, in dollar amounts, how much they can expect to lose over any short-term market cycle.

With the best of intentions, I then say something such as, “Over the next 20 years I’m highly confident this portfolio and our strategies will serve you well. But just know this in advance, there will be a couple of years where you’ll think I’m heaven-sent and you enjoy fantastic gains. And there will be a couple of years where you’ll be devastated because it feels like you’re losing money. I have no way of knowing what even our first year together will be like, but it might well be one where you fantasize about causing me physical harm.”

I learned that if the first 12 months of a client relationship coincide with a major bear market, either once I remind them – or they recall that conversation themselves – they are far less likely to make the mistake of selling out of their investment plan.

The next rung of expectation-setting typically revolves around my team. If you have staff, take the time to educate the client about who does what. For example, you may want to explain that he should direct all calls and emails to your assistant, who can solve most matters. If it’s something that requires your attention, the assistant will of course escalate it to you.

Then there’s connecting via phone. There will be times when the client will need to speak with you. Rather than leaving you a message, and you calling back and getting their voicemail, instead, schedule phone appointments, which ensure a time-saving connection and allow you the opportunity to get up to speed about what they are hoping to achieve.

Another key expectation revolves around how often the client expects to speak with you. Is it quarterly, semi-annually, weekly? You have your own idea of what the perfect cadence is, but your client may have completely different ideas. For example, just this week I spoke with a client who told me he was still adjusting to me as his previous relationship was with a broker who called him before every trade.

He equated that with good service.

Setting expectations and establishing boundaries will not only make your life easier, but it will also decrease anxious communication and pave the way for a better client outcome.