Setting expectations is an important part of success in life, however most individuals fall short. One of the biggest mistake made by financial advisors, as well as most other salespeople, is not setting realistic expectations with their clients up front. Setting expectations in your personal and professional lives will reduce stress, conflict and failure. Most individuals will be happier and more flexible with you if you let them know what to expect in a given situation.

Many advisors have a process they use once they obtain a new client. However, many of them don’t set expectations as part of this process. People need to be told what to expect in the future so they are not blindsided with unexpected information. It’s just human nature to be alarmed or scared when hit with surprises. This probably goes back to our survival instincts thousands of years ago when surprises sometimes meant death. After all, if a Neanderthal man was unaware there were dangerous animals on the other side of a hill, he may not be prepared to defend himself. However, if he was better informed, he could come up with a plan to have dinner instead of being dinner.

Granted, the outcomes today aren’t usually so drastic, but in this analogy you should make sure your clients are well-informed. Not setting expectations won’t result in death, but may result in the loss of a client. Clients’ expectations need to be set for several things: market fluctuations, realistic returns, communication & follow up, index comparisons, time horizon, risk/reward, etc. Your clients need to be active participants in their financial plans. The more they understand the better.

We have all had panicked clients call when the market drops or their portfolios are not keeping up with the averages. There is no way to stop this entirely because you will always have emotional clients. However, the better you are at setting expectations up front, the less frequently this will happen.

Informing a client that you will be calling them quarterly or semi-annually with an update is very important. This way they know you care and are watching over their finances. When they know their trusted advisor is watching over things for them, they will be less stressed. I would use these updates to talk about the overall market and economy as well. Spend 10 to 15 minutes educating them on various financial topics. Clients respect you more when they are educated and know what to expect regarding their financial futures. A well informed and happy client usually results in more referrals. Happy hunting!

Rick Rummage and his firm the Rummage Group are the “sports agents” for financial advisors.  They help advisors find the best firms in the industry. They can be reached at or 703-435-2822.

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