I’ve heard clients speak about their accountants and say something like “My accountant is very good.  I get a tax refund of around $1,000 each year”. 

Does this mean he’s done a good job?  Did the accountant actually do anything to influence the $1,000 tax refund, or would the client have received the same refund regardless of who prepared their tax return? 

Is it right to judge them based on results that are largely outside of their control.

A couple of weeks ago I was visiting a lawyer who commented he’d had a small win earlier that week.  One of his clients was being sued for $3M but my friend managed to negotiate so they could settle for ‘only’ $2.5M.  Only $2.5M!  In the eyes of his clients, he’d achieved a very good result and perhaps in that case it was fair to judge his value based on that result.

We get it in our financial planning business.  I’ve had clients say “I’m really happy with my adviser – the funds we’re invested into did really well last year”.  “Really well “ – compared to what? 

What if they made 15%?  Would that be good?  What if other similar funds made 20%?  Would that make the comparison different?

Ultimately, it’s the wrong measure and I make sure I tell clients that.  There’s no way I want them to judge my value based on things that are out of my control.  If I take credit for the years that their investments rise in value, I’d better also take the blame when the decline.  No way!

When I see a new client, I ask them a couple of questions to help them focus on how they’re going to judge the success of the relationship.  Some questions I like to ask are:

• What would you like to achieve from our meeting today?
• If we were sitting here five years from now, what would need to have happened to make you feel that our professional relationship had been worthwhile?
• What are you looking for from us?
• How do you envisage we can work together?
• How will you be making a decision about who to work with?

I love the last question.  I usually ask it if a client indicates they’re shopping around.  I explain to them that I’m happy to prepare some recommendations, but it would help me greatly if they told me how they were going to make their final decision.

They’ll generally start to talk about things like price, returns, fund selection etc, but eventually they’ll decide things like trust, confidence and peace of mind are more important.

Being upfront with clients about what you will and won’t be responsible for is the only way to ensure realistic expectations are set and can be managed.

I believe it all comes down to being able to define your value to the client…on your terms.  Be open about the things you can and can’t control.  Take credit for the things you’ve done for them.  Don’t be afraid to ask questions about what they value in the relationship.

How do you do it?  What things do you say to clients to ensure their expectations are realistic and manageable?