(Dow Jones) How advisors to the rich feel about wealth and its owners has a significant impact on their ability to build lasting professional relationships and provide sound counsel.
"Every conversation about money is emotional," says Gary Shunk, a Chicago-based consultant to ultra-high-net-worth families and wealth managers. "So it is vital for advisors to understand their emotions about wealth and about their wealthy clients."
Shunk tells of an advisor who was so overcome by the celebrity of a particular client-one he'd been a fan of since childhood-he simply couldn't concentrate during meetings. "He told me he'd spend the whole time smiling and perspiring and thinking, 'I can't believe he's here talking to me; I can't hear anything he's saying.'"
Dennis Jaffe, a professor of psychology at Saybrook University in San Francisco and a family-dynamics consultant, says it's just as common for negative emotions come into play. A corporate trustee's contempt for inheritors can show up in the form of disdain for the beneficiaries' desires. On the other hand, a worshipful attitude toward self-made men can lead to a desire to make friends with the client, and so agree with everything he says rather than giving good advice.
The problem with runaway emotions isn't just that advisors can be perceived as dismissive or groveling-though Jaffe says clients pick up on these things. Feelings of awe, contempt or jealousy can amount to conflicts of interest as glaring as anything with a more direct bearing on the advisor's bottom line. In short, they can skew advice.
Here though, disclosure isn't recommended.
"Clients don't want to hear about their advisor's problems; they want advice," says Jaffe. "The wealth advisor has to examine and understand his feelings about wealth, but not let it spill over into his work."
The process begins with a desire to probe such issues. "Advisors have to overcome the desire to be a wholly rational financial advisor," Jaffe says, and develop an awareness of their attitudes toward wealth. He calls this "a necessary skill."
Consultants like Jaffe and Shunk usually start by helping advisors understand what prompted them to work with the wealthy in the first place. This can be as straightforward as the notion that wealth management is a lucrative business, a sense of enlightened altruism or a simple desire to see what makes successful people tick. It can also come down to a Machiavellian impulse to influence, however marginally, the influential.
This self-awareness is supposed to make advisors more empathetic with clients. They'll be less likely to wind up across from the weeping, newly widowed wife of a long-time client without a clue what to do or say. "As you open up within, you also open up on the outside," Shunk says.