Be careful what you promise…
A few weeks ago, for some unknown reason, I glanced at the local newspaper’s glossy real estate insertion into the weekend edition. As a small farm dweller for almost twenty years, one ad caught my eye because of the photograph accompanying the pitch.
It was a very peaceful scene: a river setting with a gently flowing stream lined with whispering She Oak trees. It looked idyllic – the perfect escape yet it immediately struck me that the river frontage might have been the best thing about the offering. After all, if the house was brilliant or the land very fertile with high production capabilities, those aspects might have been more keenly promoted; brought to the fore in the advertisement.
River front, water front, harbour/mountain views or high investment returns – it’s all the same. Pitching all that might be good about a particular decision without mentioning the less salient aspects.
‘Harbour Views’
You’ve most likely experienced this yourself; found an advertisement for a residential property and arranged to inspect it only to be disappointed that reality didn’t match the pitch. The type of situation where the property did have ‘harbour views’ – so long as you stood on one leg on the toilet with the lid down while peering out the meshed sectioned of the frosted window.
Perhaps I exaggerate however the point I am trying to make is that in financial advice, less is definitely more. It’s a simple adage that applies to many aspects of life be they commercial or personal – under promise and over deliver.
For as long as I’ve been associated with financial planning and advice, there have been practitioners who have promised more than they can, in all honesty, deliver. It’s not too much of a stretch to suggest that there are advisers, no matter how surreptitiously, suggesting to both new and existing clients that 2012 style returns are on offer this year and beyond; that the worst of the GFC is well and truly over and that high returns are coming back.
There might well be advisers making claims about when the All Ords will crest 6,000 points with the 5,000 point mark now ticked off.
The truth is that none of us know what is really going to happen over the next month let alone next 24 months and so it falls to people giving financial advice to under promise to clients – to tell it ‘warts and all’. Tell them that there remains substantial economic risk in the world that could result in retracement of some (or all?) of the recent gains.
The truth, the whole truth and nothing but…
Note that I’m not in any way suggesting that you should attempt to over deliver on investment returns – you’ve got very limited capacity to do that without embroiling clients in excessive risk. The ‘over delivery’ I suggest you engage in is:
- Tell the truth, the whole truth, about what you can and cannot do for clients
- Provide the level of service you promised in your Statement of Advice – and some!
Don’t shortchange on the services you promised
Service is the only thing you can promise your clients. When the markets desert you – when portfolios retreat and portfolio income declines – all you’ve got is service.
Be sure to:
- Meet with your clients as often as you promised you would
- Provide them with the reports you promised and in a timely manner
- Undertake the professional interaction with clients’ other professional advisers in accordance with your SoA promises
- Return clients’ telephone calls when you and/or your receptionist promised
- Find reason to call them on a relevant issue when they might have otherwise not expected to hear from your firm
- Occasionally, personally, call clients when they might have been expecting a call from a support staff member – show them you’re prepared to ‘roll your sleeves up’ on matters other than high level advice issues
It’s not at all complicated. Don’t promise what you can’t deliver and deliver on what you do promise – and some!