Unfortunately, the price that is paid for this uneasy dynamic is that the customers are lost and reputations are tarnished. It's important to remember that in spite of how difficult it may be to listen to someone attack you for the diminishing size of their portfolio, it's better that they tell you how they feel. Telling you will always be preferred to having them run about the marketplace telling everybody else when you can't defend yourself against what is happening.

Affluent Investors Suffer A Crisis Of Confidence
Tough markets affect everyone in different ways. Soaring gas prices have prompted more people to abandon their SUVs in favor of more fuel-efficient vehicles. The weak dollar means European vacations are now painfully expensive, especially for families. And shrinking retirement accounts hint at the unpleasant trade-off of either working longer or scaling back your lifestyle.

Earlier this year, Russ Prince and I conducted a series of telephone surveys with affluent investors to get a feel for how the current economic climate is changing their financial plans and goals, if at all. What we learned was eye opening and presents a natural opportunity for advisors to engage with their wealthy clients, whatever mood they're in.

In March we spoke with 406 affluent individuals with investable assets ranging from $500,000 to $7 million. Besides learning that more than 90% have a dismal view of the economy and are skeptical of the short-term prospects for a market correction, we also found that nearly all had lost money since the beginning of the year. Their plans for the future were just as sobering: A large majority plan to take some or all of their assets away from their advisors, find new advisors and warn their family and friends to avoid specific financial professionals and firms (Exhibit 1).

In mid-July we went back to the phones, this time speaking with 498 individuals with $1 million or more in discretionary investable assets. While an equally high percentage of respondents plan to decrease the assets they have with their advisors, many have tempered their emotions. Far fewer plan to switch advisors or go out of their way to criticize the financial professionals with whom they work (Exhibit 2).

-Hannah Shaw Grove

Bad News First, Please
So, what can be done? What advice should financial advisors consider? Let's start from the proposition that you want to retain your clients for many years, and that every few years there will be financial cycles that will put your client relationships in jeopardy. The most successful advisors and financial organizations will believe that more client communication during difficult times is healthy-even if it is uncomfortable.

Let's divert the conversation a bit here. Disappointments, deceptions and doubt are all present from time to time in the best of personal relationships. Couples who work through these problems can end up with stronger connections. Those that don't frequently break up. That's not so different from business relationships. It's not the problems that are the problem. It's how those problems are discussed and handled that determine whether the relationship gets stronger or fractures. Any two individuals who avoid a forthright discussion of the issues between them may eventually find it easier to disband the partnership than move it forward.

We need a different mind-set about complaints and encouraging difficult conversations about money. Seeing a complaint as a gift is a good beginning. After all, expressed complaints mean that the customer is still talking with us. They may actually have some good advice we can use to improve our approach to other investors. And if we handle our clients' concerns well, we have a chance to prove our worth. If advisors get better at how they respond to complaining customers, and if they see complaints as gifts, clearer lines of communication with customers will be opened.

If advisors shift their mind-sets to view complaints as opportunities, they can also more readily learn from difficult situations. Customer complaints continue to be one of the most available-and yet underutilized-sources of consumer and market information. As such, they can become the foundation for an organization's quality and service recovery programs.