Client reviews: Conducting client reviews in difficult times (Part 2)

Money Management
June 16, 2020 AEST

In Part 1, we looked at why the client review meeting is so important, particularly in these difficult times. Here we outline the steps to take in the actual client review meeting.

1. Build or rebuild rapport

To build relationships you need to understand the uniqueness of your client’s circumstances. It only takes five minutes to read your file notes and remind yourself of what’s important to them, or to build on your knowledge by exploring these aspects of their life.

Even though this meeting, at least for the moment, will most likely need to be conducted virtually, spend some time reconnecting. You could do this by discussing things like:

  • Children;
  • Extended family;
  • Pets;
  • Work; and
  • Hobbies.

2. Set the agenda

Take control of the meeting. This could be done by saying something like:

“The reason for meeting today is to review your financial situation. Before we begin, can I confirm you have set time aside and don’t need to rush off?”

Then introduce the agenda:

“There are lots of things to cover today. I’ve prepared an agenda so that we don’t miss anything.”

This approach provides the client with an outline of what will be addressed and confirms that you are in charge and have a plan for the meeting.

You could then ask your client if there is anything they want to discuss. In this way you are reassuring them that they also have some influence in the meeting. They may want to raise emotional issues or grievances. Rather than address these immediately, with limited time to consider a response, listen to them, ask for clarification if needed and make notes. You can then address these issues at an appropriate time in the meeting.

3. Work through agenda items

Include the following agenda items:

Changes in circumstances and financial goals

One of the most important aspects of the review is to understand changes in the client’s circumstances. If you don’t have an online reverse fact-find or client portal to gather this information before the meeting, have a checklist of questions so that nothing is missed.

Review the client’s goals with them and confirm whether they are still relevant or require adjusting. Also check if the client has any new goals.

Portfolio performance

Provide context around the broader investment markets so that clients can see how their portfolio performed in relation to the market. Show them an investment markets update document or PowerPoint presentation and discuss how the performance of their portfolio and individual investments compare to the overall performance of the market.

Any performance concerns raised by the client can now be addressed in detail.

“You said earlier that you were concerned about the fall in value of your investments. Let’s look at how stockmarket performance is affecting your portfolio.”

You will also be able to relate any portfolio changes back to the information you have presented.

The next step is to show the client how the portfolio performance relates to their broader goals. This is best done through modelling software. Use a simple chart to show the end goal (e.g. retirement) and how this year’s investment returns have impacted on those goals. Next, discuss strategies to get them back on track, if necessary.

Changes impacting the plan

Generally, three types of changes will impact the client’s plan:

  • Circumstances – change in income, children finishing school, reaching retirement age, etc;
  • Legislative – taxation, superannuation, pension, Centrelink; and
  • Market conditions – interest rates, currency, share market valuations.

Changes can then become the basis for a conversation around opportunities or threats to the client’s financial plan and a starting point to explore and model strategies to improve outcomes.

In the current COVID-19 crisis, the following changes may require discussion:

  • Income planning – interest rate reductions may increase cashflow for some clients. Others may be struggling with lower incomes due to job losses and business closures;
  • Insurance planning – clients may have a better understanding of the importance of insurance after seeing first-hand the effect of lost income;
  • Debt planning – some clients will have increased their debt by using credit cards, lines of credit or deferring mortgage payments. They will require help to understand and restructure their debt position; and
  • Estate planning – unfortunately many older Australians will die this year, many without an estate plan. COVID-19 may have given clients a better appreciation of the importance of having one.

By taking this approach you have confirmed your value and provided comfort to the client that their goals can still be achieved.

4. Ending the meeting

As the meeting draws to a close, summarise what has been discussed with the client by ticking off the agenda items. Agree to a list of actions that you and the client need to complete after the meeting.

Ask your client if they are happy with the meeting and your services in general. If they are not, address any issues raised and determine if a failure can be rectified or a compromise reached.

The next step is to present your new ongoing service agreement (or relevant authority) and confirm that your client is happy to remain a client for another year at the agreed fee.

If you are introducing a change in the fee structure then this is the time to discuss it and answer any questions.

Finally, explain to your client that you are available to help their work colleagues, friends or family members that fit your criteria and would benefit from your services.

The role of technology

As a result of COVID-19, many advisers will be conducting virtual reviews for the first time. But whether conducted online or in person, using visual and interactive tools will greatly improve the experience.

Technology also simplifies the review process. For example, it is now possible for clients to update their information online before the meeting and this information can flow through to various tools and modelling calculators.

Technology also helps you efficiently meet your financial planning compliance obligations. It is much better to have compliance automatically embedded in systems and processes than to retrofit it manually afterwards.

The more efficient and thorough your review process, the more clients you will be able to service – and the more those clients will value your service.

This article was originally published in Money Management.

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