9 Chapter 9: When Things Go Wrong / Service Recovery

The preceding chapters of this book discuss in detail how to build a relationship with a client. In almost any relationship, there can and will be challenges, and the advisor-client relationship is no different. The good news is, much of what we have learned about building relationships can also be applied to situations where something did not go according to plan.

According to Small Business Trends, acquiring a new client can cost five times more than retaining an existing client, and it costs sixteen times more to bring a new client up to the same level as a current client (Mansfield, 2016). Preserving client relationships is critical to both the financial advisor and their employers. It is common sense that significant effort is applied to recover a customer when things go wrong.

Service recovery involves making things right with a client when an error or problem has occurred, and it is critical to react quickly to correct whatever has gone badly. The goal with service recovery is to regain the loyalty and trust of the client. When the problem is handled promptly and properly, and trust is restored with the client, the connection between advisor and client can be even stronger than it was before.

Figure 8.1 shows the what happens to customer loyalty when service recovery is successful, as opposed to when service recovery fails.

To better understand service recovery, let’s meet Mr. Pederson and work through the steps to help him resolve his issues. His case is referenced throughout the chapter.

Image generated using the prompt “Generate an Image depicting a client and an Advisor where a mistake has occured,” sourced from OpenAI, 2025.

Mr. Pederson has a $25,000.00 GIC. He left instructions that when the GIC came due, it should be cashed and deposited to his chequing account. The GIC was not cashed, but was renewed for another two years by mistake. Mr. Pederson is in the process of buying a house and gave the realtor a down payment cheque of $20,000.00.  He only realized there was a problem when the realtor informed him that his cheque was not good for the funds. He is now in your office, very annoyed and upset, and wants to “get this mess straightened out.”

What do you do in this situation? You weren’t the one to cause the problem, but you are the one that needs to help recover this client. This experience could easily cause Mr. Pederson to decide to end his banking relationship with your financial institution. When a problem like this occurs, it provides you (the advisor) with an opportunity. If you can recover this client, there is a very good chance that he will want to work with you as his financial advisor… if you handle the situation right. 

Customer Service Recovery

Image generated using the prompt “Generate an Image depicting the Customer Service Recovery Method,” sourced from OpenAI, 2025.

 

The customer service recovery steps that follow have been adapted from an article found on hospitalitynet.org (EHL, 2020). In earlier chapters, we described how people’s finances are tied to their emotions. When an error occurs, clients can quickly become furious and frustrated, and they expect an immediate resolution to the error. In some situations, the fix to a client’s problem is easy to implement, and it is possible to make the client happy with minimal time and effort. Given the complexities that surround financial problems, many cases prove to be very challenging to correct and take a significant amount of time to resolve. Clients are often not prepared to wait for a solution. These types of situations can be uncomfortable for an advisor. The problem may not have been their doing, but they need to assist the client. Proper care and empathy are required in these situations, as they can help diffuse the client’s anger and emotions and give the advisor the opportunity to address the situation.

Step 1: Apologize

Apologizing may seem an obvious first choice. When a client is upset, you need to approach the situation carefully to avoid further upsetting them. Be aware of the surroundings where the client is raising their concerns. If they are in an open space, where other clients are present, it is important to move the client to a more private space. You need to ensure other clients do not think your financial institution is unskilled at handling client finances.

Offering a genuine and heartfelt apology is the starting point, and the apology can not feel mechanical. The client should believe you mean the apology. Often, it is best to consider what it is like from your client’s perspective. How would you feel if this had happened to you?

It is important to understand the difference between the terms sorry and apologize. 

• I’m sorry – When someone says “I’m sorry”, this describes the person and their state of being. 
• I apologize – When someone says “I apologize”, they are apologizing  for a situation or an occurrence.

 While apologizing, do not give excuses, blame someone else for the error or state a company policy (the client will not want to hear about policies.) It is essential for the advisor to know that when apologizing, it does not mean that:

• I have failed.
• I am to blame.
• I am not a good person.
• I am not a professional.

Apologizing is not a sign of weakness; it acknowledges that things are not right from the client’s perspective.

When preparing to apologize, the you can approach it in the following order:

1. acknowledge the client’s feelings
2. empathize that a problem does exist (even if it is just from the client’s perception)
3. express to the client that you share responsibility for the problem
4. convey sincerity
5. ask for the opportunity to correct the problem.

If we take Mr. Pederson’s situation and apply an apology, it may look something like this:

“I completely understand how frustrating this situation is, Mr. Pederson. This is something that we need to get corrected for you. I will see what I can do to ensure that the funds get to your realtor as soon as possible. I am going to make this right for you. Does this sound like something that will work for you?”

Mr. Pederson is looking to feel heard and wants someone to listen and hear his concerns. He wants to be treated as your main priority.

Image generated using the prompt “Generate an Image showing the Advisor apologizing to Mr. Pederson,” sourced from OpenAI, 2025.

Step 2: Empathy and Respect

How exactly is the Advisor in this image showing Mr. Pederson empathy and respect?