It finally happened. A great friend became a client. This stroke of good fortune comes with it’s own set of problems. Good clients often become good friends. In that situation, your client learned the rules of engagement when you met on a professional level. Your friend obviously engaged with you on a personal level first. They need to understand the rules.

Here’s the problem: If you create distance or behave too formally, they may feel the friendship has suffered. The object is to transition a friend into both a friend and a client. It’s not to move from friend status to client status.

Six Rules Of The Road
Drivers know about rules of the road. You pass on the left. You signal before changing lanes. Investing relationships have them too.

1. You keep office hours. It’s a polite way of saying you are not available 24/7. It’s been a rough week. You are spending quality time with your family. Late that evening, your friend calls. They want to transfer money from one account to another. They want to place a stop order on a stock they own. You need to make the right notation, then bring it into work on Monday morning and get it done. You can see the potential for mistakes is enormous.
Instead: The reverse is true. Your friend is worried a product sales pitch will come Friday night while you are doing tequila shooters. Here’s what I would do. I explain I will never call you about business outside office hours unless there is an emergency. Then I explain they are not bound by the same rules. If something is really important, you can call me. They would usually say: “Oh no. We get it. Your private time is important too. We will only talk about business during the working day. Problem solved.

2. Life is not a pop quiz. This ties into the above point. Although you can access client data on your laptop, you aren’t carrying it around all the time. When the market has a sharp move down, over dinner a nervous friend might say: “What am I worth now?” or “How am I doing?” They expect you to conjure up accurate numbers immediately, before the waiter brings the salad course to the table.
Instead: You can go for accuracy. That’s what clients want. A key point is having scheduled portfolio reviews. Quarterly is good. Remind them they have a comprehensive review scheduled in two weeks time. If this is really important to them right now, you can pull numbers together on Monday, or even the next day, assuming you have access. They will often agree to the scheduled review date or the short delay you propose. They really don’t want a vague answer.

3. Confidentiality. It’s a one-way door. They might know who your other local clients are, because those friends shared that information. You cannot talk about other clients. You are bound by confidentiality. They might ask questions like: “She acts like she’s better than us. I know she is a client of yours. How much is she really worth?” The cause might be nobler: “We are lining up prospects for the hospital capital campaign. Could he manage a $100,000 gift?” You are in an awkward position.
Instead: The questions sound so innocent, but imagine if the shoe was on the other foot! Explain you don’t talk about your clients. It’s the code of confidentiality, like doctors and lawyers have. They’ll get that. Now, put the shoe on the other foot! “If someone asked me how much you were worth, would you want me to tell them?” They will come back with a firm “No.” Now they get it.

4. Bending the rules. IRA accounts are a good example in this case. You make a suggestion to a client.  hey like it. They tell you to buy it in their spouse’s IRA account too. This is a problem if there isn’t a power of attorney on file. Extend this to moving money between different named accounts or signing someone else’s name to a document. Your friend might see it as bending the rules. It’s called breaking the rules, especially if there’s a legal disagreement later.
Instead: Anticipate the problem when opening the accounts. Ask if they want to put a power of attorney in place to act on each other’s behalf.  Worded that way, the answer might be “No.” If you are at that moment when the trade in the IRA is about to be done, give them a reasonable alternative. Lets get your spouse on the phone. In other cases like signatures, gently remind them of the risks and how these documents are stored electronically…forever.

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