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  • Christopher Shea, CFA

3 Tips for Advising Clients Who Want One Thing but Need Another

Updated: Nov 26, 2017

An an adviser, you've probably come across the client whose expectations, goals, and preferences don't necessarily line up.


For example, you might know someone who wants to build wealth for retirement while also trading in risky stocks - only to become very agitated when those stocks don't perform.

In meeting diverse and sometimes conflicting client needs, it's helpful to have a toolkit of robust investment strategies...we can help you get there.

How can an advisor manage these situations? We suggest the 3 following approaches.

The investor who is concerned about building lasting wealth but who also wants to take risky bets can be a particular challenge. A desire for returns competes with a desire for legacy, and performance that is perceived as either too weak or too high can cause internal conflicts.


The core problem here is that any single person is more complex than a simple goal or character trait - so it makes sense that we want our portfolios to be similarly multi-faceted.


In this case, try to manage the situation by separating out the competing narratives.


For example, maybe this investor wants the excitement of soaring returns or the feeling of control that comes from adaptig to changing market environments. See if you can't uncover the basis of the "competing" storyline to find out if there's something you can do to accommodate it - such as a separate account or budget for stock picks, or an allocation to a more tactical strategy.

2. Create internal benchmarks

Internal benchmarks are the answer to the question, “What constitutes success?”

If you’ve ever encountered a client who compares everything to the latest S&P 500 return, you know how important this is. Depending on the underlying objectives, a diversified portfolio is not the S&P 500, and thus the comparison is always going to be incomplete.


But while advisors know this, their clients don’t always believe it.


To get ahead of the issue, it can be useful to establish clear and measurable “success” criteria for each client’s investment strategy. This gives more actively involved clients something to measure, and it helps you to define the terms of “performance” in a more accurate way.


You could define a target expected return, or you could get more specific. For example, maybe your goal for one client is to accurately capture the true rates of return across different markets and asset classes around the world, or to aim for a particular level of volatility.


Your metrics could also widen in scope to include tax management objectives or social responsibility, depending on your client’s priorities.


In all cases, the metrics should match the client, and by taking the time to discuss the underlying narratives behind an investor’s preferences you’ll be able to build the performance measures to match.


3. Find the pain points


Unfortunately, even with a clear delineation of personal priorities and a personalized set of performance metrics, you might still encounter the occasional panicked phone call or anger about returns.


The fact is that money is emotional, and no matter how good the system is, there will be times when your clients react emotionally to news, rather than rationally.

So what do you do? Talk through the pain points rather than at them.


For example, for the investor who wants bigger returns, it can be easy to dive into the logic behind a diversified investment strategy and the benefits it can have for their portfolio. But this might not get to the bottom of the issue.


Instead, ask about what’s driving the turmoil at not beating the S&P 500? What’s the feeling? Is there something they’re worried at outside of the return itself? There might be something more going on underneath the surface. Finding out what it is could not only help you find ways to address it, but it could go a long way towards deepening your relationship with the client.


Obviously, not every client is interested in emotional subjects, but just asking the questions can prompt some reflection – and hopefully some answers. performance


Develop the right strategies


In meeting diverse and sometimes conflicting client needs, it’s helpful to have a toolkit of robust investment strategies.


That’s where we come in: CataSelect offers a suite of low-cost, conflict-free ETF portfolios across 3 unique investment methodologies. Whether your client is looking for alpha, active risk management, or market performance – or a combination of all of them – we can help you get there.


But asset management is just one piece of the investment process. To help you strengthen and deepen the client-advisor relationship, we also offer a wealth of up-to-date communications tools to engage your clients and support your value proposition. All are branded with your company look and feel to seamlessly integrate with your brand identity and marketing.


Meet the emotional, practical, and sales needs of your advisory relationships – learn more about the CataSelect investment and practice management solutions today.

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