When the client expresses anxiety about a new influx of wealth, don't rush the conversation, because you can learn a great deal about a client's risk tolerance in such discussions. To be productive, the advisor must respond to that anxiety by making plan adjustments and clearing out the "autumn debris."
Trust And Fear
The
stress created by a big financial gain can be difficult. Change can be
frightening. Certainly it can be uncomfortable. You may notice your
client calling you more or calling you less. They may be more snappish
with you or demanding. Do they trust that the new money will not upset
their relationships? Did the money come from someone with whom the
client has an emotional bond? Sometimes money is imagined to carry the
qualities of the person who bequeathed it. Money that comes from an
estranged father, for instance, can intensify feelings of guilt and
anger.
Consequently, the heirs might start furiously spending their inheritance-because they're trying to be rid of it.
What Can The Advisor Do?
Remain
calm, even if the client aims his or her feelings at you. When such a
client retreats or criticizes, it is an opportunity to recreate the
relationship. Remember, you are building a long-term reputation for
yourself and your firm. You want your clients to tell others, "I trust
my advisor completely."
As you witness your client's fear and mistrust, you gain clues about their emotional response to the inflow of money. Read a few books on how people handle change. Talk about it with your clients. Invite them to educate themselves. If you get a clear sense they are overwhelmed, you may consider encouraging them to seek professional psychological help-preferably a counselor or therapist who is familiar with money-related issues. But be careful not to move too far into the emotional struggles of the client. Clients need to trust the advisor will remain focused on financial tasks.
Curiosity And Resistance
What
kind of energy does your client have? What kind of ideas? What new
priorities? What new possibilities is he or she seeking? Studies show
that people with curiosity respond to change better. On the flip side,
a person resistant to change may shut down. Just waiting for wealth can
trigger purposelessness. In the case of an inheritance, many clients
describe feeling a dampened motivation, as if they were hiding in the
"murky depths." Their lives are "on hold" until the money comes. When
it does finally arrive, the new wealth can stun their identity and
derail their calling, as well as alter their character or cause it to
disintegrate.
What Can The Advisor Do?
Curiosity
is the winning quality. Respond to questions from your client even if
they seem strangely off-topic or inconsistent with his previous
identity. Liquidity creates undercurrents. Answering a client's
question does not commit you to an idea. Rather, you feed the curiosity
with positive feedback. Once you get a sense of a topic area, ask
open-ended questions like, "You taught scuba in your early teens? I'd
like to hear about that."
Take for example, a woman we worked with who with her sister inherited $400 million from the sale of family real estate. Because their advisor promoted curiosity, the two siblings came through the emotional stages of having new money and used it to start a scuba program for teenagers. The sisters grew closer. Their financial advisor earned trust, future business and referrals.
You may have to dive a little deeper to elicit curiosity in a resistant client. You may also have to wait. Sometimes it takes a long, long time for a personality to absorb change.
We recently consulted with a wealth manager whose client was a widow who refused to adjust a financial plan that would cause her to lose significant money. The widow's advisor nearly lost her business by trying to push for a better plan. But then the advisor started asking open-ended questions and gained a vital nugget of information: The widow felt it was an insult to her dead husband to change any of his financial decisions.