Improving the prospective client interview process.

For the past five months my home has been a war zone! Not to worry, my wife and I are getting along fine; it has not been that kind of war. But our runaway home remodeling project has certainly frayed our emotional edges from time to time. Yet, as with most challenges in life, the endless parade of contractors and workmen through our topsy-turvy plaster-dust world has presented opportunities for insight into how better to cope with the human condition. Being on the customer side of arrangements with so many contractors has been like the experience of a medical doctor who suddenly becomes the patient. The whole process has helped me to think in new ways about my work as an advisor to retirees.

A Good Listener Is Hard To Find

In the spring of the year 3 AB (After the Bubble), deriving little joy from the pursuit of great investments, and being seduced by the apparent soaring market value of our modest though well-situated dwelling, Mary Liz and I allowed ourselves to consider increasing our investment in the ol' homestead. Meeting with local builders of good repute, our visions began to run in the direction of an addition; yes, the actual extension of the roof and foundation. In our imaginations, the happy result would be the doubling in size of our too-small kitchen and the creation of a large screened porch, where we could relax in the summer free from Maryland's perennial plague of ravenous insects.

In terms familiar to financial advisors, the builders we had selected were fee-only professionals; they did not sell windows, refrigerators or ceramic tile. So we entered our discussions naively content that their interests and ours were more or less aligned. I don't mean to malign these hardworking people; it was clear to us that Sam and Bill are essentially talented professionals of good will. But they were also excellent dream weavers, planting seeds and summoning increasingly expensive images of luxurious living at the Martin household.

At the outset, the builders had politely complimented our own rough sketches and expressed satisfaction with our budget parameters. Yet, by our second meeting we found ourselves being gently guided to curved exterior stone walls, complex roof designs and innovative window selections. These were all dramatic and exciting improvements. But, upon sober reflection (alone in the quiet recesses of our increasingly unsatisfactory abode), we realized that we were about to commit to building a wing for a country club instead of a modest improvement to the suburban nest from which our children had already sprung.

We had pictured an affordable home improvement. Bill and Sam, I think, had been imagining an exciting professional challenge, a spectacular addition to their "before & after" portfolio with which to dazzle prospective customers, and a fantastic fee. As we realized how wide the chasm had become between our expectations and the builders', we phoned them to say we "would have to think about it."

Have you ever received the "We'll have to think about it" call from prospective clients? I certainly have. And I learned quickly that it is usually a round-about way of saying, "No, thank you." As I reflected on our aborted discussions with the general contractors, I began to recall some of the prospective clients who did not hire me even though I thought we'd enjoyed good personal chemistry in our exploratory meeting. I couldn't help but wonder which of them might have become good clients if I had paid more attention to their expressed needs and the cost of services that they had envisioned. I also reflected on a few "clients from hell" who have come and gone over the years. I wondered how much of the stress in those relationships came from a mismatch of expectations that could have been headed off by a more forthright prospect interview process.

When I first hung out my "advisor" shingle many years ago, I did have minimal criteria for new clients, such as the ability to fog a mirror. You wanted help deciding whether to take the cash rebate or low-cost financing on your new Escort? I was your man! What should you do with your $10,000 inheritance from Aunt Jeanne? You've come to the right place! It took several frustrating years to learn that an advisor cannot be all things to all people at any price. Advisors in private practice gradually realize that we need to bring in a certain amount of revenue each year and that there are particular kinds of services we can offer to make that happen. As I reflected on the disappointing experience with these first builders, I gained new clarity about appropriate services and appropriate clients, and about the central importance of having a frank and wide-ranging discussion with every prospective client.

Always Two Sides

First, I am reminded that there are two parties to every discussion about professional services, the client and the professional; and their interests are not necessarily aligned. The whole purpose of the initial consultation should be to provide an opportunity for both parties to see if there is a good chance for such an alignment. A good "fit."

If you hold up your car key and look at it, you'll notice that it is double-sided and that the two sides are perfectly matched. A professional engagement needs to be double-sided in a similar way; the key to a harmonious relationship between advisor and client is a matching of their interests. On one side are the client's needs, expectations and willingness to pay for the appropriate services. On the other side are the professional's skills, support network and compensation requirements. In addition, both parties probably hope for a comfortable personal chemistry, and each may have timetable issues that need to be considered. An effective initial meeting, the kind that will most often lead to a mutually satisfying professional experience, will get all these issues on the table for consideration.

Bill and Sam told us candidly that the relationship between a remodeling contractor and customer will never be better than the day the contract is signed. Other contractors have told us the same thing. This strikes me as an unnecessarily gloomy outlook, and I hope that as personal advisors our relationship with our clients can start well and grow even better as we strive to exceed their expectations. But the key to actually engaging clients for whom this is a realistic possibility is, I think, to be as honest about our needs and skills as advisors in the initial meeting as we are thorough in trying to understand the prospective clients' needs and expectations.

Everybody Appreciates A Craftsman

Although we had put Bill and Sam on permanent "hold," Mary Liz and I did not abandon our remodeling dreams. More adventures and more lessons lay ahead as we met with and subsequently engaged a young, lightly-experienced remodeling contractor. A very confident, low-key fellow, Charlie seemed to understand that what we really wanted was a little more elbowroom in the kitchen and some more window area to take advantage of the spectacular view. He made some wonderful suggestions for breaking through the walls adjacent to the living room and the dining room and for building a window seat next to the kitchen table. So we engaged Charlie to do the work. And sure enough, the relationship was never better than the day we signed!

The good news is that Charlie helped us realize that we could achieve what we wanted without adding to the already more than adequate square footage of our home by using the space we had more creatively. To this extent he had listened better than the older, more experienced contractors had. He listened to what we really wanted and listened to our sense of financial limits for the project.

The less good news-awful news, really-is that Charlie had bitten off more than he could chew. A kitchen-remodeling project, like a comprehensive financial plan, is a complex process requiring a wide range of skills from concept and design to plumbing, electrical and carpentry skills, and the coordination and sequencing of everything. Not a project for an amateur or even for a professional skilled in a few of the component disciplines. Charlie was great at banging a hole in the brick wall and framing out a window seat. He installed crown molding and wainscoting as fast as we could buy the materials; and they looked very professional. But we had to spend a lot of our emotional energy focusing on what he did well so that we would not be too discouraged by the many things that Charlie tried to do which, in hindsight, he should have delegated.

For example, reshuffling existing cabinets to accommodate new appliances and leveling everything to receive new stone counter tops takes a lot of experience, as we all learned the hard way. A financial planning counterpart might be a situation in which we prepare a retirement cash-flow model and see that a client's current spending realities will put him in the poorhouse in 10 years. It takes more than an ability to add and subtract to guide a client through the range of possible changes he needs to consider (spend less, work longer, invest differently, etc.) in a way that is likely to actually influence his outcome. It takes experience. And it takes a genuine concern for making a positive difference in each client's life.

When an advisor accepts work for which he or she is not equipped by training and experience, or almost as bad, accepts an assignment that the advisor can do but is completely disinterested in, the inevitable result is an unhappy client, damage to the advisor's reputation and a discouraged advisor.

We really like Charlie. He is a good guy and he has a lot of raw talent. But because we were not aware of his limitations at the outset, working together was a painful experience, both for us and for him. Toward the end of the project (we kind of took over ourselves where Charlie left off) Mary Liz had a heart-to-heart discussion with the young contractor that I hope he'll look back on as turning the mistakes and conflicts into profitable learning experiences.

When Mary Liz assumed the role of general contractor (something you do not want your clients to do, believe me!) she hired a series of specialists to finish the work. Most of these were family men in their thirties and forties who were moonlighting evenings and weekends as licensed technicians providing plumbing, electrical and other mechanical specialties. And they were good, really good, at what they did. The contrast with the experience of our young contractor attempting work that was beyond his technical competence was exhilarating. I remember commenting to several of these workmen how wonderful it was to see someone who was really competent at his work. We added gratuities to every invoice because we were truly grateful for their expert service. They, in turn, wanted and appreciated the extra work, and they were intent on exceeding expectations, knowing that a satisfied customer would refer others to them. And we certainly will.

From Now On

Thanks to Bill and Sam and Charlie, I am more convinced than ever of the crucial importance of listening carefully to the expressed needs of new prospective clients and helping them articulate the full range of their hopes and expectations. And I am resolved to be as precise as possible with them about what our firm is willing and able to do for them, what we cannot do, what our timetable looks like, and exactly how we will be compensated for our work. To do anything less is to risk losing the opportunity to serve clients whose needs we really could meet, or signing up to work for clients who are destined to be unhappy with us.

Finally, after realizing what a joy it is to watch a competent professional deliver quality work on time and within budget, I am trying to become more clear in my own mind about what part of the financial advisory process I personally do best and have the most passion for. If I concentrate on that, I know I will be happier and more productive for our clients.

J. Michael Martin, JD, CFP, is president of Financial Advantage in Columbia, Md.