What We Have Here Is a Failure to Communicate

By Ray Sclafani

April, 2008 – In the first quarter of 2008, market volatility reached levels we hadn’t seen since 2002. Following double-digit declines in the equity markets, communication with your clients is more important than ever. Maintaining trust and a strong connection are the keys to strengthening your business during periods of heightened volatility.

To gauge the health of your communication strategy, take this short quiz. During periods of market ups and downs, which of the following actions best describe your approach to client communications beyond your top ten clients?

  • Do nothing. Your clients are comfortable with the market movements and trust you completely.
  • Get on the phone and tell your most nervous clients not to panic, everything will be okay.
  • Prioritize the clients you need to contact first, and then implement a comprehensive update on the market and their portfolios within the context of their overall wealth strategy.


I have outlined several steps to help get you on the right track.

Get organized. Successful advisors know what they’re going to say before they pick up the phone to call a client. Having an informal script or some talking points to which you can refer will help you present a clear message. Practice what you’ll say a few times on your own before dialing. Here’s a sample that you can adapt to the needs of your business: “I wanted to call you to let you know that I am fully focused and engaged with your account. With the recent volatility in the markets, I’d like to review with you what has happened and the impact upon your portfolio, as well as how this aligns with the wealth plan that we have designed together.” This sends a powerful message. It’s both a mission statement and a sound business model.

Connect with your clients. It’s essential to maintain your interaction with clients in both up and down markets. By calling them and offering a comprehensive market and portfolio update, you communicate that you’re engaged and trustworthy and that you truly understand their needs.

Be prepared. Some of your clients may reach out to you before you get the chance to call them. Have a response ready that you can articulate at a moment’s notice. Since many of your clients have been bombarded with the negative investment headlines of the past few months, it’s your job to share your knowledge and understanding about what has actually happened. Provide them with a reasoned and informed point of view to balance the fear-mongering that sells newspapers and attracts television viewers.

Offer them comfort and reassurance. When your clients chose you as their wealth manager, they did so because they believed that your recommendations and guidance would lead to positive outcomes. In volatile markets like the one we’ve seen recently, even the most faithful of clients may have their confidence shaken. To counteract that and help calm any fears, advisors should talk with their clients in words that are simple, consistent and credible. Difficult markets can forge client bonds that are strong and enduring-or create schisms that are unlikely to be easily overcome. Here is your choice and your opportunity.

Internal Obstacles

Tom, an advisor in the San Francisco Bay area, says that having a clear communication strategy for dealing with tough times has helped him build stronger client relationships and continue to attract new assets, despite uncertain market performance. “My clients understand their long-term asset allocation plans and generally aren’t too rattled by market fluctuations,” he explains. “Nonetheless, the significant market drops we’ve seen throughout the year have caught the attention of even my most unshakable clients.”

A big part of our communication strategy is teamwork, Tom adds. “It would be difficult for me to prepare for each call I need to make on my own, so I assign specific tasks to each of my team members to help me get ready.” During weekly meetings, Tom and his team review what needs to be done to prepare for upcoming calls. “It’s a big project, but our clients really appreciate us being proactive when market conditions are rough.”

Indeed, market volatility is a fact of life. And if recent fluctuations have tested or strained your client relationships, there’s still time to make improvements and do a better job of communicating with customers. With the ongoing credit crisis, inflationary concerns and increasing worries of a slowdown in the global economy, I expect that we’ll continue to see a degree of uncertainty in the markets throughout 2008. But, what may seem like a challenge is actually an opportunity to build stronger relationships with your clients. So, whether the markets are up or down, the key to success is having a clear and well-defined communication strategy that carries you through all market conditions.

Ray Sclafani is President of ClientWise LLC, an organization founded to support the financial advisory practice of the future. Delivering unique practice management strategies focused on client acquisition and retention, ClientWise provides coaching and training for leading financial advisors. For more information, e-mail ray@clientwise.com or call 1-800-732-0876.

Originally published in On Wall Street, April 2008.

Copyright Ray Sclafani 2008.