With the introduction of MiFID II and the forthcoming requirements, one which really stood out was the communication around portfolio falls.
As quoted in FT Adviser “MiFID II requirement for clients to be informed when portfolios fall 10 per cent or more has created confusion among advisers, discretionary fund managers (DFMs) and platforms over who must take responsibility for the communication.” From a technical and practical point of view there is a focus in the industry as to whose responsibility is it to communicate this and how the communication will take place – especially as this communication is to take place within one working day.
From Mischievous Marketing’s perspective we are interested in the potential impact of such news to a client from a psychological and relationship perspective. Therefore, the focus of this post is on how to communicate bad news effectively.
Tell them it is coming – explain the changes which are coming in with MiFID II and what will be happening in the review process. This way, if anything should happen they have been forewarned and will feel more prepared.
Invest in the relationship – step up your communication processes so your client has a closer relationship with you. Should bad news come they won’t feel like they only hear from you when it is negative.
Provide a plan of action – your clients are likely to be quite concerned and wondering where the news leaves them. They will appreciate a direct response from you as they depend on you for support. This is will leave them feeling reassured that you are competent and in control with their situation. This is important as it will help maintain the trust and confidence in your relationship.
It’s personal – ideally you want to be able to know how particular clients will respond – some might be more relaxed whereas others may be very unsettled. If you know how your clients are likely to react, you can plan your contact accordingly.
Even if it is being dealt with by your investment partners ensure you get the notification straight away too. As systems alone aren’t enough – think about the impact of the news on the client, it may make them feel vulnerable so don’t just let a provider email be fired off to them without a follow up. Pre-empt questions or concerns and build in your own wrap around care. It may not be possible for you to deliver this within one day but ensure you build in a phone call or some contact and highlight when their next review is and that you’ll go into more depth then.
Above all else, remember that while this may be an area of compliance and best practice from a regulation point of view, it is a lot more than business for your client. Don’t forget the impact is on your client as it will feel very personal to them. So, you need to think about going beyond processes and notifications and thinking about it from an individual’s perspective as this will allow you to build on your client relationships.