The Sky Is Falling!

Your clients will be loyal if you address their concerns promptly and behave professionally.

By Mark, David, Stephen and Michael Banta

Client trust must be earned over time. Given the current environment of corporate scandals and shady financial dealings, now is no time for assumptions where trust is concerned. What can truly client-centered, highly ethical advisors do to counteract the wholesale indictment of financial services professionals by the media and assure their clients that their trust is well placed?

We believe they should be proactive rather than reactive. In fact, being reactionary can do more to raise ethics eyebrows and further shake client confidence. Here are some steps advisors can take to offer comfort to clients in today’s environment.

Don’t wait to address the problem. Just because your clients aren’t calling you with questions doesn’t mean they don’t have any. If you address these issues preemptively, they will appreciate getting answers and the reassurance they need without having to askfor them. When we see negative news in the headlines, we pick up the phone and call our clients. When time is not of the essence, we mail our Investment Alerts newsletter, which includes our thoughts and intended actions, as well as our thanks for their continued business.

Acknowledge clients’ concerns. People love to talk about a scandal. After all, good news doesn’t sell newspapers. Listen to your clients and give them a broad opening through which they can express their feelings about the matter. Don’t try to sugarcoat the situation. Although the news may not be directly related to you or your firm, your clients will feel reassured if they know it’s safe to talk about their feelings with you. Remind them that it’s the long-term thinking that is important, not the sound bites they get from television or read in the newspapers. Stay the course and don’t let negative news broadside or scare you.

Educate them. Having a code of ethics, highly respected credentials and a long track record of excellent service can go a long way toward assuring your clients that their assets are in good hands. These qualities also open the door to quality client education. Read the Sarbanes-Oxley Act of 2002 designed to hold corporations accountable and educate your clients about the Act. They should understand the Act and what your credentials and code of ethics mean to you, and they should have a basic knowledge of financial services. The more they know about financial services in general and their financial program in particular, the less you should have to explain these concepts to them.

At our firm, we keep copies of the Act in our conference room to distribute to clients during meetings. We discuss the ramifications of the Act with them to show what our industry is doing to make things better. They always leave feeling more confident of the value we provide to them, as well as with a good idea of our business beliefs and value system. For a concise, two-page outline of the Act, visit www.findlaw.com.

Offering continuing education automatically positions you as a trusted resource. The more willing you are to offer clients information and help empower them, the stronger their view of you as a trusted resource will be.

Crime does not pay. We believe keeping clients informed of judgments, and punishment against people involved in wrongdoing will increase their confidence that action will be taken against wrongdoers. Although there may be no direct connection between a particular, well-publicized situation and you or your firm, clients will feel better knowing the industry is not tolerating wrongdoing.

Turn negatives into positives. The old Chinese proverb that every crisis is an opportunity applies here, as well. What better time for ethical advisors to let prospects and clients know where they stand on these issues? By highlighting your independence, experience, credentials and code of ethics, you will provide your clients with a haven where they can go for reassurance. Point to your excellent service record and send press releases to the media proclaiming your firm’s position on any unsettling news. Mail copies to your clients. Make sure you get your firm’s permission to do this first, if appropriate.

Referral letters from satisfied clients are another powerful way to build credibility. When prospects hear of other clients’ positive experiences with you, they immediately feel confident. Offering to talk to them about issues in the news will also let them know you are available and interested in their concerns.

Look in the mirror. One of the best practices you can follow is to look in the mirror and ask yourself the following questions: “Am I truly ethical or do I subscribe to situational ethics?” “Do I truly have my clients’ best interests at heart?” “Am I my brother’s keeper?” If you answer yes to these questions, it will be difficult to stray from your ethical and moral standards, and you will always do what is best for your clients. In this frame of mind, you will be able to handle any negative headline-news that comes your way and speak with conviction about your beliefs.

Since we are a family business, ourbeliefs are based on family values, ethics, integrity, honesty and doing the best for our clients because we feel they are part of our extended family. We encourage advisors to “put their money where their mouth is” and get involved in charities, universities and community organizations that promote good business ethics.

As a result of our involvement in this area, we have aligned ourselves with the University of Redlands in California and have made a financial commitment to the advancement of ethics education. We are proud that this effort has resulted in the naming of a Banta Ethics Center at the university.

Clients will appreciate and respect your own charitable activities in areas like these, and you can set an example of philanthropy that can benefit important activities, such as the ongoing study of business ethics.

Finally, realize that mistakes are going to be made, even in the best environments. But by establishing and maintaining a high level of trust with your clients, you should be able to sail through the times—good as well as bad.

David Banta and his sons, Mark, Stephen and Michael, are principals of Newport Beach, Calif.-based Banta Asset Management, an independent, wealth-management firm. You can reach them at 800-513-5899 or banta@wachoviafinet.com or visit their website at www.banta.wbsec.com.