For financial advisors, high-levels of client trust are especially mission critical. That is why when a corporation/broker-dealer is smacked with a scandal it can threaten the core business of the financial advisors even when the wrongdoing was centered in a different business center and all of the financial advisors continue to operate above reproach.
Financial advisors must be proactive in dealing with negative publicity generated by the corporation that employs them otherwise they may see their book of business not only stop growing, but it may begin to shrink. Here are three key strategies you can adopt to protect yourself when faced with bad press because of your company cousins.
Increase the Level of Communication with Clients
As soon as news of the scandal is public you need to communicate with your clients right away. You need to explain that the scandal has nothing to do with you or the asset management services you offer. When pressed you also need to explain that the company is taking the matter seriously and implementing changes to make sure nothing like what has occurred can ever happen again.
You need to admit there was a problem, that it was serious, it is being dealt with appropriately, and that it had nothing to do with you or their money.
After this first message, you need to continue to stay in touch with your clients more frequently than perhaps you did before the scandal. The future messages could be short emails or postcards. They shouldn’t reference the scandal. Instead they should focus on the positive things you provide them and the security of your relationship. Your clients will need to be reminded of the value you provide so that they will think twice about moving their money. These messages could include actionable personal finance tips, inspirational messages, or anything positive that reminds your clients you are thinking about them and carefully watching their money.
Increase Your Prospecting Efforts
If you are proactive and have a good reputation with your clients, most corporate scandals will not do too much damage to your book of business. But, scandals like the ones that continue to impact Wells Fargo advisors may damage your source of new clients.
People without a relationship with you will be harder to attract. You may even see the number of leads coming from your corporate employer drop to zero.
Instead of panicking you need to hit the proverbial streets. You need to greatly increase your personal prospecting efforts. You need to leverage your existing relationships with clients and other professionals who know and trust you. You can leverage that trust to help prospects see that your financial management practice is untainted by the scandal.
Prospecting will be harder after a scandal, but if you want to continue to grow your business you will need to be doing more prospecting, not less.
Make sure your prospective clients know you are open to answering questions, even uncomfortable ones. The only way to heal the damage done by a scandal is to work harder to build trust.
Transition to a New Firm
Sometimes the best thing you can do for your personal happiness and your business in the wake of a major scandal or series of negative incidents is to leave your current broker-dealer and transition to a new firm.
Making the transition to a new broker-dealer is a common and fairly painless event.
When considering this option, you should think of your career as the investment it is. Sometimes you have to advise clients to move out of a stock or asset class to prevent further losses. When it comes to your career, it may be time to move on and build on a stronger foundation elsewhere.
Cutting edge tools like Instant Offer from 3xEquity, which enables financial advisors to receive 2 or more offers for their book while remaining completely anonymous, or traditional routes like talking to a recruiter can shed light on this option and help frame your decision.
Joining a new firm not allows you to distance yourself from the mistakes of your old company, it can also open up new opportunities for you to reach out to your network. Instead of finding your prospect pool shrinking, you may find it growing as people want to learn more about your choice to change firms.
When faced with negative press generated by other parts of your company, you have several options to revive client trust. Even though the underlying event was outside of your control, you are in complete control of managing your response.
The biggest mistake you can make is to do nothing. Whatever strategy you ultimately use, you have to take control over your future.