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    How Should Financial Advisors Deliver Bad News to Clients and Prospects?

    Posted by Partners Advantage on Tue, Oct 18, 2016 @ 05:57 PM

    Delivering bad news is always a very difficult thing to do. It’s difficult with our family and friends. It can be even more challenging with prospects and clients as our relationship with them is generally more professional than personal.


    Unfavorable News Can Be Surprising

    The first thing we want to remember is the element of surprise. When we are going to surprise someone with bad news we must first soften the situation with background material. Explain to the client: "When we made the decision to do X, we discussed that the potential problems with that decision were Y, and given the current environment of Z, that premonition became reality and this is what has occurred."

    Don't Wait to Tell Your Clients

    Secondly we should make sure that the delivery of this information is timely and we did not delay delivering this information. Any delay could be perceived as stalling or being less than honest, even if it was out of fear of the repercussions. Waiting to deliver bad news can also result in having less time to implement corrective actions.

    Present the Facts

    Next we must make sure that we include all the facts: good, bad or indifferent. The facts are the justification for the situation. Omitting any facts is being less than honest and only serving our agenda. Serving our own agenda at the expense of our clients is the best way to destroy a professional relationship. We must be a responsible adult. We have to take the bad just as we do the good. Many times it will be hard to do, but we should always look for the positive in the situation, if any exists, and make sure that we aren’t perceived as delivering doomsday or end of the world information. There is most likely a silver lining somewhere in the situation. It’s very important to find it and point it out.

    Provide a Solution if Possible

    Last but not least, make sure we have a solution or alternative to the current situation. If there is not any alternative, be professional. Soften your voice, lower your tone, look the other person in the eye and share the information with them in a soft and gentle tone. We can say almost anything to anyone if we say it the right way and focus more on the delivery instead of the content. If we say it gently, it allows the other person to maintain some level of self-respect and integrity as well as allowing them to move forward in a healthy, mutually respectful way, which ever direction that may be. 

    Delivering bad news doesn’t have to be the end of the world, but financial advisors must deliver it the right way or it could be the end of a relationship.

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    Tags: practice management


    This content is for informational and educational purposes only and is not designed, or intended, to be applicable to any person's individual circumstances. It should not be considered as investment advice, nor does it constitute a recommendation that anyone engage in (or refrain from) a particular course of action.