Seven Tips for Delivering Bad News

June 17, 2014

by Megan Elliot

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Advisors need a plan for delivering bad news to clients.

Whether you are facing a replay of the 2008 recession or have made a mistake that cost your clients money, it is critical that you communicate the news in a way that increases the chances that you will maintain a positive relationship with the client.

Before a crisis hits, you need a plan

One reason that delivering bad news can be so stressful for many advisors is that they do not have a plan for addressing a problem proactively when it happens. That lack of a plan leads to panic, panic leads to disorganized communication and disorganized communication leads to client anxiety and dissatisfaction.

In the worst-case scenario, poor communication of bad news causes clients to leave your firm. Here are ways to leave clients reassured that you are able to take charge in a difficult situation.

Seven tips for communicating bad news

You can better communicate bad news to clients by keeping the following tips in mind:

  1. Do not delay or ignore the problem. Communicate bad news to clients as quickly as possible. Delaying communication on important issues will erode client trust.
  2. Be calm and direct. Don’t couch your bad news in jargon, bury it in the fine print or offer overly complex or technical explanations. Communicate bad news as simply and directly as possible so clients understand what is happening. Even if you are feeling overwhelmed or panicked, remain professional. Straightforward communication will reassure your clients even when the news they are receiving is bad.
  3. Treat the bad news with the seriousness it deserves. Bad news can take many forms. While you don’t want to make a minor issue more serious than it really is, you also don’t want to minimize a truly important problem. Don’t make jokes or make a big error seem like no big deal in a misguided attempt to reduce conflict or save clients from fear.

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