Checking perception vs reality: How clients view advisers

15 August 2017 | Topical insights


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Commentary by Francis M. Kinniry, principal with Vanguard Investment Strategy Group in the United States.

Are you a golfer? How long does it take you to play a round? I've heard the average time is about four hours. All I know is that at my home course in Pennsylvania, our time is tracked, and if you typically take longer than four hours to complete a round, you're not allowed to play before 2 p.m.

A survey1 found that 58% of players rated their pace of play as faster than average while only 5% said their pace was slower than average. Compare that with how golfers viewed their counterparts' pace of play. On that question, 56% rated their fellow golfers as slower than average and only 2% said most other golfers were faster than average.

As individuals, we tend to believe our superior play makes us quick on the links while our fellow golfers plod along. It's often the case that how we perceive our own abilities doesn't match the reality.

When it comes to your practice, how do you ensure that your perception of how you're serving your clients matches the reality? Consider these three key points.

1. Set expectations early in the relationship

Do many of your clients believe you're a financial soothsayer? It's common that investors overestimate the ability of their advisers to predict market movements and make timely transactions based on those predictions.

When economic events capture headlines and affect the markets, investors often believe their advisers will spring into action, selling and/or buying investments at the perfect moment.

But we know that's not the reality. That's why it's critical for you to establish early on in your relationships with clients the expectations of the services you'll provide. You offer more comprehensive advice than simply choosing which investments should be in a client's portfolio.

As advisers, you play the same role as professional swing coaches and tour caddies. You've walked the course, learned where the obstacles lie and planned a course of action. You steer your clients to the investments that are right for them. You insulate them from outside noise and protect them from their inflated performance expectations and their inclination to react emotionally to a piece of market news.

2. Solicit your clients for feedback

Serving your clients well may not be about simply delivering better performance. In fact, Spectrem Group research tells us that 67% of millionaire investors would consider changing advisers if the adviser failed to return their phone calls in a timely manner, while only 43% would leave if their portfolios underperformed compared with the markets.2

Routinely solicit client feedback and act when you identify opportunities to improve. Consider conducting a survey and continually ask clients how you can serve them better.

Outstanding client service is the key factor that will help you build your practice by increasing client referrals and retention rates.

3. Look at your competitors

Does your competition offer anything that you should also offer? Be open-minded in trying new ideas or experimenting with new technology. A little dose of humility can go a long way by allowing you to continually evolve your practice and stay ahead of the curve.

Ultimately, this type of self-assessment of the value you provide to your clients will keep your game sharp. Having a keen self-awareness of where you provide value and where your opportunities lie is a good thing. If you review your practice regularly, I have no doubt you'll succeed and deliver great client service in both perception and reality.

1 Dean Knuth, 2015. "Pace of play" (Golf Digest survey). Accessed at
2 Vanguard, in partnership with Spectrem Group, 2016. The affluent investor: Five key findings and action steps for advisers.

Fran KinniryFrancis M. Kinniry
Principal, Vanguard Investment Strategy Group

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Important information:

This information is directed at professional investors and should not be distributed to, or relied upon by, retail investors.

This article is designed for use by, and is directed only at, persons resident in the UK.

The material contained in this document is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so.

The information in this article does not constitute legal, tax, or investment advice. You must not, therefore, rely on the content of this article when making any investment decisions.

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. Past performance is not a reliable indicator of future results.

The opinions expressed in this article are those of individual author and may not be representative of Vanguard Asset Management, Limited.

Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Conduct Authority.


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