In a world of instant gratification, we need to rethink and retrain our clients on how they assess progress. The reaction to some recent landscaping near my home gave me insight into the lack of patience some people have with a disciplined and trusted process, and how it relates to our clients and the expectations they have.
Nestled in the midst of a rural backdrop, the development I live in is dense with green grass and other foliage. The management company does an excellent job maintaining the grounds and the landscaper they contract with typically demonstrates a keen eye. They have been reliable especially during the past few winter seasons. Most of my neighbors agree that they have earned credibility.
Recently an area of grass which couldn’t grow properly due to shade, heavy rains and foot traffic needed attention. Not only did it look unsightly, but it was almost always a constant source of mud right near the entrance to our building. As usual, before a complaint could even roll in, there was the trusty crew replacing old plants, mulching beds, and laying down stones in a pretty shape over the ragged area next to the walkway. It seemed like a creative solution to the problem, that is until I got home from work and chatted with the others in the building.
The stones placed all around the other areas were a mixed blend of shapes, sizes, and colors. The new ones were all a creamy, solid shade of white. None of us could fathom the decision to use them. Were they left over from another job and therefore an easy fix? Were they going to replace the other side so that they at least coordinated? We suddenly felt like we were let down in some way. Sure, the mud and spotty grass were gone, but was this the best they could do for us? As the chatter went on the disapproval seemed to grow with it. It lasted for days, and one of the neighbors suggested she might even give the management company a call to discuss this rather odd choice.
The weekend came, and I had some time to scrutinize the rocks. It had rained heavily, and sure enough, there was no runoff or mud. One patch looked like it had toned down a bit where the water must have sat. I picked up a rock, brought it inside and ran it under running water rubbing it briskly. It was a pretty shade of brown. These rocks had a very heavy coating on them, which over time would dissipate into the ground, and they would indeed blend well with the rest of the landscaping. We just needed to be patient and let the summer rains wash it away. It was an excellent remedy to the problem and was consistent with the previous choices made by the landscapers.
Week by week I watched the stones fade and blend turning into different colors. I am sure that if my impatient neighbor had a hose handy, she would have gone out and washed them down immediately. In contrast, I embraced watching the slow and steady change and took time to think about why we all had doubted such a credible source in the first place. A few things came to mind:
1. We did not have enough information and understanding. Had we been told that this particular batch of rocks would need time to produce the desired outcome we would have been prepared. Make sure your clients are clear and manage expectations ahead of time. In my business, people want performance and instant gratification. In this environment that may mean taking on more risk.
Getting the client on board with WHY their portfolio is better for them in the long run versus a short-term gain, we can potentially mitigate losses and find other tax-efficient strategies to net more dollars. This approach helps to take the emphasis off returns and onto how the portfolio is serving their long-term needs and goals.It is necessary to assist the client to understand their goals and keep them on track towards attaining them. They sometimes forget their original objectives so it is essential that we remind them.
2. Even though our landscapers had proven results year after year, there was still room for doubt in our heads. Although it may seem unfair, never assume that credibility allows wiggle room concerning how you are perceived.We never had a reason to doubt, yet we did. People talk. Clients call with offerings that a friend or another advisor told them about and ask why we didn’t show them the same thing. It is usually the same story of underlying credit or suitability, and once they understand, all is well.
It is easy enough to get your clients’ portfolios on “autopilot” particularly with the use of money managers, or certain products. A “set it and forget it” mentality may seem tempting to free up more time to pursue other things, but the less contact you have with your clients, the more you allow room for someone else to do the talking.
Do whatever is needed to initiate authentic and proactive touches, even if it means hiring someone else to help you. You wouldn’t check in with your family once per quarter and expect to develop healthy relationships, so why is it any different with the client base who helps you to provide for your family? It isn’t.
3. Finally, we did not fully understand the process. The coating on the rocks serves a purpose as it washes off and sits between them, creating a barrier to buffer the ground from the constant moisture.
Similarly, the asset classes within a portfolio should be diversified enough to buffer against the erosion of inflation, sudden market downturn, and begin with the individual client’s END in mind. This practice may mean more slow and steady growth within the portfolio as opposed to robust returns at the expense of the whole. The discussion of budgeting or lifestyle changes may come into play.
It’s one thing to talk about product-specific recommendations, and an entirely different conversation when it comes tocommunicating your process. Getting the client to fully understand the “grand plan” is crucial to creating and maintaining client satisfaction and loyalty. Backing into a strategy by determining the end game first is how you write a better playbook.
When a team takes the field all they think about is winning. No manager ever wins without adjusting plays as needed or by assuming that a certain margin is required to do so. Although it may feel good to crush your opponent with a remarkable lead, all it takes is one extra point to win.
In a nutshell, the roots of the relationships you develop with your clients are only as strong and deep as the quality of the seeds you have sewn into them. Getting to the heart of what matters most by considering all aspects of the client’s needs, financial or otherwise, is how to bring the added value that they crave. It is within this space that we can educate our clients on how to become more patient with the process.