It's no surprise that advisors are losing more clients now than before the crisis. What we do not know is how bad it will get in coming months and how many clients will choose to direct their own financial futures.

After all, they are being bombarded with reasons not to believe what advisors say anymore. Modern portfolio theory is being questioned, while authorities every week charge another advisory firm or two with running a Ponzi scheme.

That's why the results of Maxfield's research are so helpful. The survey posed ten challenging scenarios advisors could possibly face with their clients in the next year as a result of troubles in the economy-problems such as a client's high credit card debt, his lost savings or even alcohol and drug problems. After asking if the advisors had dealt with any of these issues, the survey then asked the advisors three questions about how they might deal with these problems. (See the survey in the sidebar on page 88.)

Of the ten situations, Maxfield found three that could cause clients the greatest harm and that are most common at firms with high attrition rates. These are both common and costly problems, according to the survey data, but what really differentiates them from the other seven is that advisors find them especially difficult to discuss. As a result, the topics are often off-limits in client meetings.

The three challenges are:
When a client loses substantial savings or suffers a job loss and must change his financial plan;
When a client is not saving enough and spending too much; and
When a client is racking up too much debt and must change spending habits.
In the coming months, advisors should try to keep these three high-stakes issues in mind. Be sure you are identifying them and trying to address them.
Maxfield cross-tabulated the attrition rates of advisors against how well they handled these three situations, as well as how they responded to clients facing other difficult financial issues.
According to the data, 41% of advisors have "high attrition" rates if they work with many clients facing these three situations but fail to speak about the problems or solve them-high attrition being defined as losing more than 5% of clients annually in the five years preceding the market break. In comparison, fewer advisors, just 29%, report high attrition when they have many clients with these problems but proactively speak to the clients about them. Fewer advisors have high attrition when they bring up these problems with clients.

Among advisors who do not have many clients facing these three problems-but who say they proactively speak with clients about difficult financial issues anyway-just 14% have high attrition. Even those advisors who do not have many clients in trouble with these things face a higher attrition rate if they do not proactively speak about difficult issues in general-32% of such firms being plagued by an annual attrition rate of more than 5%.

Maxfield says he is sure that advisors know whether their clients are facing difficult issues. He adds that advisors with few clients affected by the three high-stakes problems are likely to have clients who face other problems. The data show that your client attrition rate is related to your ability to discuss any difficult issue with a client-whether it's one of these three challenging scenarios or something else.

Maxfield offers six tips to improve your skills at conducting crucial financial conversations with clients.

1. Ask, "What do I really want, in the long term, for myself, for the other person and for the relationship?" When you feel unsafe or think your goals are at risk, you tend to focus on yourself more and look only at the short term. You go into self-defense mode. Instead, try to broaden your perspective. Think long-term and inclusive. Decide what you really want to accomplish for the client. Then keep your focus on this positive objective.

2. Instead of judging the client, try to find out what the real story is. When you hold court in your head and find a client guilty, the verdict is bound to show on your face, in your voice and in your manner. Instead, critique the story you've told yourself about the client and his problem. Do you really have the facts to be sure of your conclusions? Would any other story fit this same set of facts? Why might a rational, reasonable and decent person do what this client is doing? Asking yourself these questions will turn you from a judge into a concerned counselor seeking the truth.