1. Mike Brown cited the need for honesty as the foundation for a manager-client relationship. | 2. Randy Hallier talked about customizing those same relationships. | 3. One way to mitigate unrest is by anticipating volatility, said Brian Perott. | 4. Understanding client preferences is key, said Molly Kerr.

Managing Client Expectations

Given the volatility of the markets, participants were asked how they managed client expectations in so unstable an environment. “You prepare for volatility before you see volatility,” said Brian Perott, managing director of the Core Equity Group at Financial Counselors, Inc., “because once you’re in it, it’s almost too late.” Perott tries to meet with his clients proactively and call them before they call him.

“Managing client expectations is really something that has to be done during peace time,” agreed Chris Costello, CEO of The Retirement Planning Group. He spends a lot of time with his clients prior to market turmoil doing what his firm calls “lifeboat drills.” He observed, “We try and take folks through a scenario that could happen and talk to them about what their portfolio can do in those times.”

For Greg Spears of Creative Planning, it is all about “active communication and active listening.” Indeed, everyone stressed the need for regular communication. “Communication, especially in this type of market, is the key,” agreed Perott. Although there are obviously many ways to communicate, Spears insisted on the value of one-on-one meetings in which client concerns are addressed and their portfolios evaluated.

“We actually have been dealing pretty well with volatility,” said Pete Martinez, president of Insight Financial Services. His strategy is to take clients back to their investment policy statement: What are they there for? Why did they build the kind of portfolio they did? Once the clients are reassured that attention is being paid to the long-term view, they grow more comfortable with short-term fluctuations.

Kelly Jernigan, portfolio manager at M&I Wealth Management, a part of BMO Financial Group, suggested another way to build confidence: He makes his bank’s senior economic strategists as accessible as possible to his clients. This is all part of reinforcing the trust that clients already have in their wealth managers before any serious volatility kicks in.

For Brenna Stewart, wealth manager at Creative Planning, it is critical to have a long-term plan in place so that the clients feel secure about their financial independence no matter what happens.

“One of the things we do that might be a little bit different,” said Molly Kerr, senior vice president and portfolio manager for UMB Asset Management, “is to establish ranges within our investment policy statements.” These statements are customized based on client preferences, and they allow for flexibility in volatile times.

Randy Hallier sees the value of customization as well. “I try to understand my clients from the very first meeting in terms of what their personality is regarding investing,” said Hallier.
“Are they savers? Are they speculators? Are they really true long-term investors?” Having done that, he can do a much better job of establishing expectations and managing them.