• Al Townsend

Managing Expectations

One of the greatest challenges for advisors in the current market environment is managing client expectations. The reality is that advisors may not know how vulnerable client relationships are in periods of extreme volatility or prolonged down markets. The only solution is to have both a strong investment discipline and an effective communication strategy that are designed to retain and grow assets through a full market cycle. Without this in place, advisors run the risk of experiencing dramatic swings in their AUM and revenues.



It is important to evaluate your client communication strategy to assess how effective it will be managing client expectations during bull, bear, or prolonged flat markets. As markets change, clients’ expectations for the performance of their investments also change. Clients can react emotionally (behavioral tendencies) to different types of investments as they go up and down and can cause them to make bad decisions. You need to objectively review and challenge your investment beliefs, the portfolios your clients have, and how well you are communicating the value of your advice.


How strategic are your client communications? Clients’ satisfaction levels are constantly changing based on how they interpret and react to all the information they are exposed to. Left unchecked, their expectations for performance in their portfolios will change effecting comfort level and perceived value of the advice they have been given. Advisors need to constantly be aware of their client’s satisfaction level and have a strategy to manage client expectations to ensure retention of those assets over time.


Here is a suggestion, make sure you are surveying your clients on a regular basis to understand what their level of satisfaction is with your advice and service. Written surveys can be hit or miss. A more personal approach, is when you talk to a client, include a couple of probing questions about their concerns about the market or their portfolio and what type of information they would like to see from you. Make sure you know what on-line services they are accessing as these may be telling a completely different story from the one you are communicating.

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