Clients having trouble understanding your message? It's probably your fault. Effective advisor-client communication is one of the bulwarks of a successful wealth-management practice. It follows then that poor communication -- whether characterized as inconsistent, ineffective or downright inept -- is one of the main reasons that advisor-client relationships go bad.

In fact, 28% of advisors SEI surveyed say that client relationships fail because of a "lack of understanding," according to an SEI poll of about 100 of its Advisor Network users. On the other hand 53% of them say that "frequent, proactive communication was at the heart of their strongest client relationships.

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The advisors SEI polled say communication trumps investment performance and competitive pressure as a make or break with clients. But then poor communication can feed clients' overblown hopes -- about investment performance, service levels or whatever -- which can in turn lead to "competitive pressure" as clients flee in search of advisors they feel comfortable interacting with. The point is, advisors may peg "lack of understanding" or "unrealistic expectations" -- as 40% of those surveyed do -- as the main ingredient for the demise of an advisor-client relationship, but these are really symptoms rather than causes. It all points to ineffective communication.

The solution is to get very good at communicating with clients. "Clients should receive advice from you; they shouldn't have to ask for it.," SEI says in a press release. "Even low-maintenance clients expect you to counsel them before they feel pain."

Though nothing beats a having a natural way with people, there's outside help available as well. There are myriad customer-relationship-management applications, some of them tailored to the needs wealth-management firms. Client Opinions and Moss Adams provide advisory-specific client surveys to help firms uncover their clients' view, expectations and preferences. (For that matter you could throw one together on the cheap at Survey Monkey -- if you can trust yourself to compile an effective questionnaire and interpret the resultant data, and if you can stand providing your clients with links to an outfit called Survey Monkey.) There are even software programs that let you mass produce "hand-written" notes: "Hey, thought you might like this article on structured notes on Papua-New Guinean copper futures..."

Mansfield, Ohio-based Pinnacle Wealth Planning Services, a client of SEI's Advisor Network, has gone in for video conferencing, both as a communication tool and a way to save on shoe leather.

"Pinnacle emphasizes a team-based orientation when working with our financial-planning clients," says Keith Heichel, Pinnacle's investment-advisory head. "So often times we include the client as well as their CPA and attorney, all via video conference. Everyone is on the same page. We save on travel time and keep the meeting personal."

Should such measures fail, SEI provides a helpful template of warning signs of client dissatisfaction. These include demands for certain measures to be taken (rather than requests for advice). "When you're relegated to the order-filling role, you become less valuable and more dispensable to your clients," according to SEI.

Another bad sign -- perhaps the death knell -- is being the last one to learn about a major event in your client's life, be it "a child's engagement, an extended vacation, even a new car," says SEI. "Not every client is going to call you with news in the middle of the night, but if they're making major life decisions without you, chances are they're getting their advice somewhere else."

Oaks, Pa.-based SEI administered or managed $513.8 billion in assets at the end of September 2006. -FWR

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