Manage customer expectations

Managing customer expectations is one of the most difficult and often frustrating aspects of a financial planning business. Although many clients may be quite reasonable when investing at a loss, there will always be people who are determined to vent their dissatisfaction to you over the phone, in writing, or in person.

However, there are many steps that consultants can take to help prevent most such outbreaks. That is by helping customers create expectations within reality. This sounds too simple, but when clients better understand what they can get from investing (and their relationship with financial planners), they are less likely to be angry about things beyond the planner’s control. This article will help you understand how to manage customer expectations and make the most of your relationship with them.

Key points

  • The relationship between the financial adviser and the client can be difficult because it has a lot to do with money and potential losses.
  • Many clients understand the risks and manage losses well, while others can resolve their frustrations through financial advisors.
  • Financial advisors must manage client expectations in order to build trustworthy relationships.
  • Consultants must let their clients understand what is under their control.
  • Managing these expectations is accompanied by education, maintaining perspectives, communicating the reasons behind poor portfolio performance, managing other expectations, and keeping customers away when needed.

Education: the first line of defense

As a financial planner or consultant, the first step before making any type of investment is to educate the client. This is especially true when the client has few investment opportunities.

Some customers may seek your services after hearing that their friends or family members have made huge profits from a certain stock or other investment. Unfortunately, this type of customer may not be aware of the risks involved or the possibility of disadvantages in order to achieve the same benefits.

Therefore, it is imperative to provide customers with realistic perspectives based on historical market performance from the beginning (and, of course, your legal and fiduciary responsibilities). When interpreting the various risk levels associated with different types of investments, it is also important to be able to judge the amount of emotional risk that a particular customer can bear. Psycho-financial conditions at least help provide basic concepts about the customer’s risk tolerance.

Keep the point of view

One of the hardest things to explain to clients is that investment performance is almost always relative, especially when/when their expectations are not met.

When customers are dissatisfied with the returns they receive from their portfolios, they may need to be reminded of how their portfolios perform compared to the overall market. If a customer’s assets grow by 5% within a year, the customer may not feel that they have grown too much. However, if you point out that the benchmark index has fallen by 5% in the same year, you may resonate with them.

As long as your customers’ holdings are as good as or better than the market, you can take strong defensive measures against their complaints. That is, of course, unless you promise them a minimum rate of return no matter how the market changes.

Dealing with poor portfolio performance

Unlike the situation where a client’s portfolio performs relatively well, if the client’s rate of return is lagging behind the market, you will need to be able to provide a good explanation.

Match your clients’ investment performance to the goals they set at the beginning of your relationship. If the investment portfolio grows at a sufficient rate to achieve these goals, then external market performance is irrelevant for all practical purposes.

In all this, you are not alone. Countless consultants have experienced these exact same situations. In the late 1990s, some consultants did not join the trend of the Internet age. As a result, these planners have to constantly explain to clients that, based on their respective risk tolerance, their investments are more conservative than the market.

Once the bubble burst in early 2000, these customers would feel relieved that their managers did not invest in those “certain” securities. You may not experience verification events like the bursting of the technology bubble, but if you put the best interests of your customers at heart, then you should effortlessly put their situation in perspective and give them peace of mind.

Manage other expectations

Although investment performance is the main area where customer expectations must be managed, in other service areas, customers may require too much. For example, customers who are upset about their investment performance may call you multiple times a day to see if their holdings are going up or down. They may also feel uneasy if you do not answer their calls in person or call them back immediately.

It is important to set appropriate boundaries with your customers regarding the type and level of services you will provide them, and then stick to it. No matter how you get paid, the fees you charge your customers are a measure of your value. Despite this, many clients either get nothing or don’t know the benefits you provide through research, analysis, and portfolio design. For people who buy consultants based solely on price, this problem will almost inevitably arise.

For ongoing callers, a good way to convey their point of view is to let them know that your time is precious and that you want to be able to provide the same level of service to all customers. Most customers worth retaining will respect this. If other customers are also investing, they may expect you to provide a lot of free services, such as free comprehensive financial planning or income tax preparation. If you charge separately for these services, you must ask your customers to pay for these services as well. If you don’t, then you open the door to similar treatment for all other customers.

Financial planners provide various services, including estate planning, retirement planning, risk management, tax planning, education savings, etc.


No matter how much service you provide, some customers will always become more troublesome than their value. Customers who are constantly trying to monopolize your time or resources need to prove that they can and will conduct enough business to justify your efforts.

For example, you may be more tolerant of continuous calls from customers with a portfolio value of US$2 million than customers with a portfolio value of US$10,000. If the customer refuses to understand your boundaries, then you need to give up the relationship with that person. This type of customer may be more suitable for discount brokers or other services with call centers.

Bottom line

Although there will always be dissatisfied customers, a large number of conflicts and dissatisfaction can be avoided by properly educating customers and setting realistic goals. In addition, if you only promise them what you can provide, they will have no reason to doubt you in the future. Regular meetings with your customers on a regular basis will enable you to do just that.


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