Improving the Adviser-Client Relationship, Part 1

The first part of a two-part series on the insights of behavioral finance that pertain to areas of the adviser-client relationship is presented. The adviser-client relationship, as with all relationships, works best for everyone involved when the ground rules are established at the beginning. Some r...

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Bibliographic Details
Published in:Journal of Financial Planning 2009-12, Vol.22 (12), p.28
Main Authors: Olson, Bryan, Riepe, Mark W
Format: Article
Language:English
Subjects:
Client relationships
Financial planners
Guidelines
Online Access:Get full text
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Summary:The first part of a two-part series on the insights of behavioral finance that pertain to areas of the adviser-client relationship is presented. The adviser-client relationship, as with all relationships, works best for everyone involved when the ground rules are established at the beginning. Some recommendations include: 1. Establish and communicate an understandable corporate investment philosophy and disciplined process. 2. Avoid making overconfident statements to clients. 3. Communicate realistic odds of success. 4. Be clear about what you, as the adviser, do and do not control. 5. Make clients aware of what can go wrong with your recommendations. 6. Make clients aware of the time frame over which success of a recommendation should be measured. 7. Take special care with clients prone to optimism and betrayal aversion. 8. Be cautious about risk tolerance assessments performed during periods of extreme market movements. 9. Probe the client about risks they haven't experienced. 10. Understand the client's past experience working with advisers. 11. Prepare an investment policy statement.
ISSN:1040-3981