Managing Clients That Use Other (Conflicting) Sources Of Advice

Managing Clients That Use Other (Conflicting) Sources Of Advice

Humans are social creatures, and as such, we like to make decisions when we are backed with social support. This very much includes financial decisions, and research has often documented this human tendency in the context of investments and portfolio behavior. Simply said, it is normal and common to get advice from multiple sources when making an important decision. Which for financial advisors who are aiming to be the ‘quarterback’ or primary source of advice for their clients can be frustrating as the client seeks out and incorporates other (potentially conflicting) advice.

Yet, what is often not discussed is how to benefit when ‘other’ advice – given to the client by someone other than the financial advisor – finds its way into the financial planning relationship. After all, while seeking out and incorporating multiple opinions from various sources is not common in financial planning, the medical field tends to actively encourage patients to seek second opinions and even to work with multiple doctors! As ultimately, seeking out and finding additional sources of guidance to affirm – or alternatively, finding conflicting sources and eventually reconciling them – can actually build the client’s confidence that it is the ‘right’ course of action and that it is time to take action! Or stated more simply, the truth of the matter is that people are often happier about their decisions when lots of people agree with them!

Still, though, clients seeking out other (and potentially conflicting) sources of information can create frustrations and challenges in the advisor-client relationship. Accordingly, the starting point when it comes to dealing with ‘other’ advice is to get a handle on what ‘other’ advice their clients are getting, and to have a way to discuss it (and even to incorporate it into the client’s own financial plan, if it’s good advice that should be followed!).

For instance, a client who has relied on financial advice from a close family member, who they hold in very high esteem, may mention one of their recommendations that they would like to implement. In this case, it would behoove the advisor to treat the recommendation with respect and, if possible, to incorporate this ‘advice’ into the client’s plan. If the recommendation is not sound, or deemed not to be in the client’s best interest, the advisor can still delve further to explore the clients’ sources of advice and even leverage the client’s existing blocking points to help them find a better path (e.g., if the client received a hot stock tip from their brother and is asking their advisor’s opinion about it, clearly they’re not yet sold on the idea or they wouldn’t be asking, and simply reflecting back to the client that they’re hesitating from acting and inviting them to consider why can help them talk themselves out of the problematic advice!).

Ultimately, though, the key point is simply to recognize that when clients seek out advice from others, it’s not necessarily a negative statement about the financial advisor, and can actually help the client build momentum towards taking action. As a result, being able to candidly discuss this other advice can be useful for advisors, either to support their consensus-seeking exercise, or at least to better understand their clients and how they make decisions. Additionally, by making small changes to the ways that advisors learn about their clients’ other relationships, financial advisors can elucidate important relationship dynamics between clients and those sources, which can result in opportunities to create more holistic plans that make clients happier!

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