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Financial Advisors: 11 Steps to Delivering Bad News to Clients

By ClientWise | February 18, 2014

If trees grew to the sky and the markets never declined, it would be relatively easy being a financial advisor…at least from the standpoint of sharing “bad news.” 

And…If ifs and buts were candy and nuts, what a Christmas we would all have! (Thank you, Don Meredith!) 

The truth is that financial advisors who know how to communicate and frame “bad news” are the real value-providers who stand out amongst the crowd. It’s one thing to be a cheerleader as the markets go ever higher, it’s quite another to provide steadfast guidance and leadership when the markets spiral downward. Yet, it is during these problematic periods, that financial advisors justly earn their keep. 

Delivering bad news — especially when it affects your clients’ financial lives — is never easy. And when these conversations are handled poorly, it can make matters even worse. 

What follows are insights that we have gleaned over the years that might be helpful to you as you frame your overall communication strategy in the delivery of “bad news”:


Lead with a neutral statement. Start with a simple statement of relevant information that the client can agree to. Neutrality encourages listening. If the first statement is controversial or contentious, too abrupt, or doesn’t give the client time to prepare for the message…the client will form counter-arguments in their head, or stop listening altogether.

Distill the bad news to one sentence. Once you’ve set the stage, deliver the bad news in one simple, clear sentence. Avoid building suspense, and leave no doubt about your message.

Make the communication as direct and clear as possible. Use clear language. Don’t get tripped up in your words by attempting to “soften the blow.”

Be honest and transparent. Give accurate information. If you don’t know the answer to a question, say you don’t know. Explain that you’ll find the answer, research the information accurately, and follow up with the client. Moreover, clients know instinctively when their advisor is trying to hide something. The more transparent you are in communicating the actual situation, the better the long-term outcome.

Include the “the bigger picture.”  Frame the news in the context of the clients’ longstanding goals and/or financial game plan.

Do not delay. Delivering bad news with due speed, or without unreasonable delay, is critically important. Sitting on bad news invites trouble. Such delays are costly, as conditions can continue to worsen. Bad news delayed is bad news compounded.

Focus on the facts when sharing negative news. Clients have an easier time embracing negative news when it is fact-based and emotion-free. Make sure your tone is neutral when delivering the news.

If there is an upside, share it…but do not dwell on it. Don’t overdo or stretch to find a silver lining. Overall, keep the tone of the message positive. On the other side of the coin, avoid words such as “bleak” or language that is downbeat or pessimistic. 

Leave the joking aside. In situations like this, humor can be very, very tricky, and is best avoided.

Keep your emotions in check. Even if you are upset by the news, try to present it without showing your distress. This is most likely the exact time when your clients need and appreciate your objective, independent, and impartial perspective.

Continue sharing information once the negative news has been released. After announcing negative news, you need to issue frequent updates as new information becomes available. Clients need to be informed so they don’t feel surprised by additional negative news.


(What have we missed? What would you add? What insights have you observed in how to communicate bad news to your clients?)


We trust that you find this discussion helpful.



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