Typically, we think of proposals as singular endeavors. This could mean anything from getting married to securing a deal, or, in the case of financial advisors, gaining new business. However, advisors must be concerned with not only building up their book of business, but also retaining their existing clientele. An advisor’s “reproposal”—the active process of servicing clientele, tending to their needs and reminding them why they sought you out—toward current clients is just as vital as initial proposals for prospects.
When it comes to financial services, the proposal stage allows advisors to connect with the client or prospect to better understand their goals, concerns, likes and dislikes from the outset. This is typically an exhaustive process, usually peppered with risk questionnaires, in-person meetings, exchanges of written documents and close examinations of comprehensive financial plans. Traditionally, once a client has accepted a proposal, the cycle begins wherein advisors provide them with quarterly reviews and regular planning updates throughout the year.
However, with the market’s severe volatile turn and once-dependable revenue streams becoming increasingly unpredictable, customers are changing their behaviors. New entrants into the investment world and seasoned investors alike have felt the sting of 2022’s market conditions and watched their portfolios dip in value. As unfortunate as it is, leeriness is a logical response: in times of instability and precarity, it makes sense that clients would be anxious about preserving their assets through any means possible.
Times like these pose a steep challenge to the advisory world. During periods of market volatility, advisors should be asking themselves: how can we assure clients that we have their best interests at heart and are providing value they cannot get elsewhere? With market fluctuations leaving investors increasingly antsy about the day-to-day management of their portfolios, advisors need to address this surge in demand.
For all the frayed nerves stirring about right now, there is opportunity for meaningful reflection and realignment. Advisors must take a step back and acknowledge that times have changed, and as such, the same tactics they have relied upon may no longer be enough to establish prolonged business relationships. As the pandemic forcefully illustrated, technology is a powerful tool for client interaction, but it often leaves something to be desired as far as forging “human” connections go. With that said, technology equips advisors with a litany of tools for engaging customers in the reproposal process and doing so consistently can go a long way toward cementing these connections organically.
The first step in managing information and client expectations is maintaining an open line of communication. While transactional dialogue is inherent to the advisor-client dynamic, sticking strictly to business at all times does not endear you or your services to investors. Sincere emotional engagement is critical, and advisors who can connect with clients professionally and emotionally are more strongly positioned for success. While it is a key piece of the puzzle, wealth management is not just about investing assets and estate planning: any advisor who offers to help submit an investor’s taxes, review a child’s financial aid forms, or assist in navigating a family death is more than likely regarded as irreplaceable by clients. If you are not providing this degree of consideration, investors can always change course and find a competitor who does.
An increase in availability and communication should also bring corresponding increases in specialization. Until recently, the specific model portfolios assigned to clients mattered less; because everything went up, both active and passive approaches reliably ensured returns. Now, with volatile market conditions, it is far more important to take risk, capital preservation and possible downsides into account for portfolios.
Because downsides are far more pronounced than they were even a year ago, this necessitates further transparency and acknowledgment of risk. Clients want to be fully cognizant of possible problems with their portfolio, which means the reproposal process should delve into loss potential as much as it does projected returns. In this economic environment, clients want to ensure their fears are heard. Not acknowledging potential losses would be a quick and unnecessarily tone-deaf way to lose investors’ confidence. However, having a holistic understanding of the myriad scenarios they face and articulating why they are still coming out ahead—or how you can adjust their plan if needed—communicates that you care just as much as they do. Even if you come bearing bad news, the ability to emphasize the long-term value you bring to their portfolio and how you are shielding them from risk underscores the importance of your services.
The capacity to address clients’ individual needs requires an appropriate infrastructure. Fortunately, technological improvements have made it easier than ever to comprehensively crunch client data and integrate the details into an accessible platform. This means that every client interaction – whether an emailed report detailing portfolio changes or an in-person meeting—can benefit from straightforward personalization.