Great Expectations: At What Cost?

When I meet with advisory firms, one of my favorite questions is “What sets you apart in your business and your community?” I wait a second then follow up with “Oh, and by the way, you can’t say client service.” It is always the last line that throws people off. I usually get some weak responses that flirt around the periphery of their business but you can tell that I just took their silver bullet away from them.

We usually conclude together that if everyone says that they deliver quality client service, then client service is not a differentiator of your business.  Of course, I could argue (and I’m sure you could, too) that not everyone actually does a great job of client service.

Satisfied or exceeded?

When I think of any positive client service I have had in the last few years, the one thing that almost always comes to mind is that the person or firm exceeded my expectations. The challenge is for us is to set expectations with our clients that can be met and sometimes exceeded. In other words, if you base your practice on your ability to outperform the markets, you will undoubtedly set yourself up for a disgruntled client. The only scorecard for an investment-focused firm will be a client’s performance statements. We can’t control the markets or the economy, so what try? Much worse, why set those expectations with your clients? (Even if you did outperform the market in 2008, were they referring you because you got a -30% return instead of the S&P’s -37%?)

What is it worth in dollars?

A good friend of mine (Rey) put it into perspective for me. He suggested that we try to quantify the cost of dealing with missed expectations with clients. He said, If a firm helps the client understand that the advisor is in the business of client goals ( their value prop) from the beginning, they do not have to spend as much time talking clients ’off the ledge’ every time something happens outside of their control.” Rey’s suggestion was if you quantify how much time you spend fixing missed expectations and multiply that by your hourly rate, you would realize just how important it is to start off on the right foot or at least begin communicating what you do today.

Year-end review is a great time to start

As I have written in the last few posts, most of us are probably getting ready to start our year-end client reviews. This year, instead of jumping into the performance statements or a big discussion about the economic environment in 2011, why not start with an exercise about the client’s expectations about you and your services. Remember, what is important is that the client feels that you are meeting (or exceeding) his or her needs. It is not about your expectations, it is about them. Unless the client knows what to expect, they will make up their own minds and judge you accordingly. I can’t think of a better way to make sure you are on the same page than to ask!

Helping you prep

Lastly, if you need help preparing those year-end review meetings, I will be co-hosting a webinar on January 30th at 4 p.m. EST featuring an economic update and outlook, along with  meeting best practices. (Register Now) 

You don’t need to be a client of SEI to attend. I think you will find the content useful in your review meetings and help you to get started toward more efficient meetings.

Share Button
John Anderson

John Anderson

John Anderson is the creator and lead author of Practically Speaking blog and Managing Director of Practice Management Solutions for the SEI Advisor Network.

Learn More About John Anderson



HNW Whitepaper

Recent Tweets