How to manage hyper-engaged clients

3 min read 20 Jul 22

Some clients contact their adviser more often than they need to, and the Covid-19 pandemic may not have eased anxiety levels. In a difficult 2022 for the economy, financial adviser Matthew Denne, director of Holyrood Asset Management, discusses the rise of the hyper-engaged client, and how to help lay their fears to rest… 
How do you feel about working with hyper-engaged clients?

I doubt there is an adviser out there who enjoys clients contacting them continuously to enquire about where their money is invested and how it is doing. Even when it’s done with the best of intentions, it isn’t enjoyable to be under that kind of scrutiny. For example, I’m not sure my dentist would be thrilled if I contacted them between appointments, checking whether their forceps had been treated with a particular disinfectant, or ‘why that mouthwash in particular?’ My perfect client is one who says: ‘I trust you’.

Are any types of clients more likely to fall into this category, in your experience?

The advice industry hears often about the advice gap, but some people are difficult to advise. One of the reasons for this is that some clients may not need financial advice as much as they think they do. In other words, I don’t have many clients who are, say, university lecturers or engineers. Some clients can be so adept at carrying out their own research that it is worth considering how much value you can add. I have known some clients over the years where I had wondered from time to time why I was being retained; they were making their own investment decisions and were set on them.

For understandable reasons, it does tend to be those in retirement who are more likely to be hyper-engaged, but it has also applied to clients who are sustainably minded. I have sat with clients before and we have considered portfolios which I believed were very ‘green’, but which were not green enough for them. Perhaps it was a particular holding or a particular company but, towards the end of the conversation, there was a realisation that perhaps I can’t offer them what they need.

Did the Covid-19 pandemic have an impact on engagement levels?

It’s interesting – the pandemic and the lockdowns that came with it presented more time for some people to consider their finances. Saving time on commuting, for example, helped some people do things they had been putting off, such as looking into the value of their pensions or checking to see how much of their ISA allowance they had left.

What has your experience been with hyper-engaged clients in 2022?

I have stories about the global financial crisis in 2007/8, the tech bubble in the early 2000s, and others but, if I’m being frank, I believe that what we’re seeing in 2022 is more worrying than anything I’ve experienced in my career. Yet the level of anxiety among clients isn’t as high as I thought it would be, and to some extent I think this is a legacy of the pandemic. Clients saw in March 2020 that markets fell rapidly and then rose again just as rapidly, and so may think their adviser will oversee something similar this time. However, we should remember that the pandemic wasn’t a financial crisis, but a health crisis that became a financial crisis. With the cost of living, energy prices, inflation, this is very much a financial crisis in origin.

What impact is technology having?

It may be a bit of a double-edged sword as financial services providers ramp up their technology. It is great to have transparency and line of sight, but some clients wake at midnight worrying about the value of their GIA and, thanks to technology, can now log on to an app and, in an instant, re-affirm what had been keeping them awake. Not so long ago, clients relied on the meetings they had with their adviser and on statements that came through the post. A client messaged me recently because he had noticed on a provider’s app that some of the trades we had discussed hadn’t yet settled. I had to remind him that it can take a little time for settlements to come through.

Are hyper-engaged clients and financial advisers a good match?

In some respects, I think the market already caters for investors who I would consider hyper-engaged. Thanks to technology and the plethora of apps out there, investors can access all the fund factsheets they wish, and even some where they can research the Sharpe ratios for every instrument within an investment.

How do you manage hyper-engaged clients?

One simple question to ask hyper-engaged clients is whether they would like to change their investment time horizon from 10 years, or whatever we have agreed, to one week. I say to them that it appears they are uneasy about things and may be paying more attention than necessary to certain aspects of their financial plan. We have run through investment objectives, time horizon, capacity for loss, and plenty more, and I think it’s fair to ask if we need to look again at these to ease their anxiety.

When it comes to dealing with hyper-engaged clients, you can hide away from it, but it will keep on happening. A mini review every 48 hours isn’t in anyone’s interests. There may be some expectations that I’m not managing as well as I could be. For some hyper-engaged clients, when markets are not running in their favour, it may feel a little like they’re in a rip tide, and they’re fighting against it. But letting things take their course, letting the tide take them, and then swimming around it and back in, uses less energy and causes less stress.