Can Clients Handle The Truth?

One of my favorite quotes is, “The truth, the whole truth and nothing but the truth should not be three different things.” It is by Dianna Booher, author of What More Can I Say?

Consider how the following conversation I recently had with an advisor might help you more effectively use the truth to influence your clients to make better choices.

Bob: How was your Thanksgiving?

Bill: Good. And yours?

Bob: My Thanksgiving was really good, but the day after and since then has been very difficult.

Bill: What happened?

Bob: Friday after Thanksgiving, I found out that one of my clients, a 48-year-old and healthy mother of two young children, had a brain aneurism. She’ll be out of work for at least a year and who knows if she’ll ever be the same. That was hard. What made it even harder is the grilling I got from her mother about whether or not I had spoken to her daughter about disability and life insurance. When I told her I had, the grilling continued because she wanted to know if I had been forceful enough about how crucial it is for a working mother to have both of these insurances. I assured her mother that I had strongly advised her daughter to buy these insurances. But her daughter had refused to buy either disability or life insurance because she was superstitious that if she bought them that it would increase the odds of her becoming disabled or dying.

I feel like I did everything I could have done, Bill. What would you have said to her to get her to buy the coverage she really needed to protect herself and her family?

Bill: Yes, it’s challenging when a client is irrational. There’s no guarantee that anything will work all the time, and it sounds like you did a good job trying to convince her to do the right thing. In addition to what you did, I probably would have said something direct and candid like, “I simply can’t allow you to make decisions as important as this based on superstition. That’s fine for a 20-year-old whose brain is not fully developed and is hardwired to make bad decisions. But you’re 48 years old and have to recognize that the statistical probability of dying or becoming disabled is exactly the same with or without insurance. Having this insurance coverage is simply too important for you and your family. I have prepared the documents. Sign here.”

Bob: What if she still refused?

Bill: Yep, that’s a bit tricky. On the one hand, you can lead a horse to water, and adults have to be responsible for the consequences of their choices. That said, from my point of view, it’s a deal-breaker. The evidence that you are truly someone’s advisor is that they follow your advice, right? When someone chooses to not follow the advice, I view that as effectively being fired. Again, there isn’t an absolute right or wrong way to respond in this situation, but a direct, candid approach is usually the best path. Consider this: “We can’t do business together if you are not going to follow my advice. The reason you pay me is for objective advice about what’s best for you and your family. My greatest value to you is the fact that you get advice that is unburdened by emotion or false or limiting beliefs. Tens of thousands of ‘financial professionals’ and ‘wealth managers’ can write plans, sell you products and manage your money. What I do is bigger than that. My commitment to you is to actually hold you accountable to implement the advice because that’s the only way you get the benefit of my advice. If you are going to go against my advice, then you’re going to have to find another advisor … hopefully someone whose advice you will follow and not someone who will just tell you what you want to hear or present options and let you choose whether or not to act. What would you like to do?”

There’s a pretty good chance that most people have never been fired by their advisor because most advisors are so busy puckering up to keep their clients at all costs. So the conversation that follows will be interesting. Don’t be surprised if they do an about-face and implement your advice. I’m sort of a hard-ass on this subject. I believe that an advisor who does not have full conviction about their advice should find another career.

However, if that’s more courage than you can muster at this point, then at least do this: “I’m sorry that you are making a decision that is so blatantly bad for you and your family’s future. As a matter of business practice, my lawyers have prepared a binding legal disclaimer document that you’ll need to sign today. What it basically says is that I have given you specific advice that’s good for you and your family’s future and that you are choosing to ignore the advice. Your signature on this document releases me from any future claims by you or your family regarding this matter. Please sign here.”