Client care and communicating risk – a confusion conundrum!

Financial Advisory

James Goad

BehavioursCorporate GovernanceFinancial AdvisoryJourneyReputationalRiskWinning Advisers

Advisers need to take a holistic approach to client engagement and communication to strengthen the client’s understanding of risk and capacity for loss and to ensure optimum customer care and customer loyalty.


  • Advisers must provide a level of reassurance on risk and return. Ensure risk discussions are always a part of the client conversation and utilise risk profiling as a tool for communication.
  • Digital solution can partially help, but how do you digitalise “trust”?
  • Advisers need to take more time to understand how clients prefer to be communicated to.
  • Majority of firms use annual reviews and regular newsletters as communication tools. Future communication strategies will be a combination of human and digital.
  • Consider different methods of communication for different groups of clients.
  • Cash flow forecasting has developed into a key communication tool and cash flow tools have become prevalent in the communication of risk.

Key issues and challenges:

  • Communicating risk when markets have fallen.
  • Ensure drawdown clients are aware of the risk in their investments.
  • Ensuring clients are kept regularly informed of investment valuations.
  • Financial planning businesses have changed and the focus is on tax and financial planning not investment performance.
  • Clients will have different strategies for understanding communication, some would prefer verbal and others written, some with numbers, others with words. It is important we distinguish between these.
  • Pension freedoms have opened the door to new investors who have only been savers in the past, these new investors will need additional help with understanding risk.
  • Pensions now dominate the advice process and the benefits of the long term investing and the associated risks that are now a key part of all client conversations.
  • Clients will look for reassurance from their IFA in periods of volatility. How do you communicate volatility in a way that’s understandable for the client?
  • To understand how the client wants/needs to be communicated to, to understand the concept of risk.

Conclusions and solutions:

  • Introduction of client portals (online) have enabled clients to review their investment valuations 24/7.
  • Advisers must focus on financial planning and risk when conducting annual reviews.
  • GDPR is a great opportunity to strengthen client relationship, use additional questions to your basic GDPR permission set to capitalise on this opportunity.
  • Communication skills for an adviser are extremely important and the emphasis for clients has to be on trust and care.
  • Cash flow forecasting tools have become an essential communication tool, helping clients understand risk/volatility and capacity for loss.
  • Consider communication strategies that engage clients and the next generation. Undertake personalised communication and review communication tools, including email, digital and screen to screen.
  • Review current use of risk profiling tools and ensuring they become a tool/basis for a detailed discussion on risk and capacity for loss. Ensure that Risk is a major discussion point in annual reviews and client newsletters.
  • Clients are interested in the total returns on investment portfolios and generally don’t get concerned on individual components.
  • Take time with new investors as a result of pension freedoms, to clearly explain risk and capacity for loss.


Expert: Henry Jones – Carmignac, Dave Robson - Carmignac
Facilitator: John Chapman - Owen James Group