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Explain Client Services on Handling a Mistake

Date: June 2, 2021

As financial advisors, one of the greatest fears we have is losing a client. When a mistake happens, that fear suddenly feels all too real. It’s natural to dread that phone call or meeting where you have to explain what went wrong and confront an unhappy client.

While it might not seem like it, mistakes are not the end of the world nor the end of your career. If you have a clear approach for handling them, you can ensure that mistakes are addressed promptly, professionally, and with a much lower risk of losing the client.

Mistakes Happen

If you’re human, you’ve made mistakes. It’s going to happen. However, when it happens with your client’s finances, it feels a lot worse. It’s also a lot more important to handle that mistake professionally and correctly. Your clients need to be able to trust you with their money.

So, it’s not a matter of if a mistake will happen. It’s a matter of when it happens, how will you handle it?

Here’s an example from my own career:

A few years ago, I had a client request funds to cover some upcoming expenses. If there is one mistake you don’t ever want to make, it’s mishandling a request for money. Yet, that is exactly what I did. I processed the trade as requested but failed to set up the actual ACH to deliver the funds to the client.

When the money didn’t show, the client called in, understandably upset.

Upon receiving the call, I addressed the issue right away, saying, “I believe I messed up here. The funds have not left us. Let me get this sorted out first and then I will review what went wrong. I apologize. If you would like to speak with the advisor, I can set up a time to do so right away.”

I immediately transferred the funds and then reviewed what happened. After the review, I called them back and explained that it was my own error and nobody else’s fault. I dropped the ball.

I then told them that I would be implementing a double verification system on all money requests going forward to make sure this never happens again.

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How to Handle Mistakes

No matter what the mistake is, you should use the same basic approach to handle them in a way that demonstrates to clients that you are trustworthy and truly care about their financial well-being.

Here’s a 5-step approach you can apply to just about any mistake that comes up:

Step 1: Listen

One of the most important things you can do is listen. Let your client voice their concern and express their disappointment about it. Don’t interrupt them to make an excuse or dismiss the problem.

Listen first and then show that you’re listening by responding directly to what they said rather than just waiting for your turn to talk.

Step 2: Fix the Problem

Before you even figure out what went wrong, get the mistake fixed. In the example above, I made the transfer before reviewing what happened. The longer a client has to wait for the problem to be solved, the less patient and understanding they will be.

Step 3: Empathize

Your response to a client’s complaint should never be an excuse or an attempt to argue about whose fault it was. Instead, your response should start with a statement of empathy. Show that you understand what the problem is and why your client feels the way they do about it.

Step 4: Take Responsibility

Taking responsibility is key. If you fail to do this, your client is going to lose confidence in you.

If you try to evade responsibility and act like it wasn’t your fault, you’re effectively telling your client that you aren’t able to acknowledge or learn from past mistakes. This will make them worry that you’re someone who will continue to make the same mistakes over and over and deny any fault.

By taking responsibility, you’re not just fessing up. You’re demonstrating to your client that you’re capable of recognizing your errors and learning from them.

Step 5: Provide a Long-Term Solution

You’ve already solved the immediate problem but your client still needs reassurance that you’re taking steps to prevent this from happening again.

Clients need to leave this conversation feeling as if tangible change has occurred so that they can regain their trust in you and feel confident that they don’t need to worry about this mistake repeating itself.

In the case above, I explained the new double verification system that I would be implementing on future money requests to ensure that I never missed a fund payout again.

As long as you are transparent and prompt in remedying the problem, clients are a lot more forgiving than you may think. Even some of my most irate clients have forgiven my mistakes because I made sure to listen, show empathy, and maintain transparency the entire way through.

How to Handle Mistakes Made by Your Staff

If you want to grow your business, you will eventually need to hire staff to spread out the workload. When you have staff, you have to prepare for those staff members to make some mistakes. After all, they’re human, too.

When a mistake is made by someone on your staff, I recommend having that employee handle the client communication from start to finish. You should, however, supervise, to make sure that they are trained in the proper approach.

There are a lot of benefits to allowing staff to handle their own mistakes:

  • It empowers them with the tools and experience to sort out issues independently, so you don’t have to micromanage them.
  • It improves their confidence so that they can do their job better going forward.
  • It creates an environment of trust and transparency in the office that will ensure mistakes are identified and resolved quickly.
  • It’s a great learning opportunity.

Your staff won’t always get it right but that’s why you’re there to supervise in the event it goes wrong.

Your Next Steps

All financial advisors make mistakes at some point but it’s the ones that take responsibility, show empathy, and provide prompt solutions that are able to keep clients for the long term. I recommend taking a moment to create a step-by-step process based on the one I described above that you can use to train your staff and ensure a consistent and professional approach to future mistakes. You can also download a Word document with the above information that you can edit and make your own. Click here.

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