How to draw the line when clients challenge your approach

Three advisers reached out to me recently for coaching on how to address ultra-high-net-worth clients who want to do precisely what they hired their advisers to keep them from doing: making emotional decisions that minimize their short-term discomfort at the cost of their long-term success.

My advice? Begin slowly, by validating the invisible forces driving the challenge: “Yes, we can talk about your ideas for the portfolio. But we’ve talked a lot over the years about volatility and the discomfort it brings. Can you tell me why you feel so strongly about this change now?”

Take careful note of the client’s response and use it as a bridge to clarify and get agreement on your role as the trusted adviser: “I hear you completely. You’re worried that the current approach will [client’s words] and that [new approach] will better solve for that.”

Mirroring your client’s words back to them confirms that you hear them loud and clear and creates a space for your clients to hear you when you take the step to reclarifying your role:

“Ben, I’m here to be your trusted adviser. I take that responsibility seriously. But I’m a guide, not a guarantor. I can’t predict when markets will rise or fall. No one has proven they can do that with any certainty. What I do really well is what you hired me for — to help you plan and to be a lifelong problem-solving partner who helps you tackle whatever conditions and circumstances come up along the way.”

Now, bring the client back to their goals: “Have your goals of [be specific] changed? If they’ve changed, we definitely need to review the portfolio strategy. If they haven’t, let’s walk through what you’re proposing. If there is a strategy better suited to your goals, we’ll pivot.”

[More: Time to change the conversation on fees, referrals]

Based on what they shared, you should be able to explain why the current investment strategy remains best suited for their portfolio. But that approach doesn’t have a high probability of success. Better to take one more step back:

“I understand the appeal of making a change; I do. But every time I and much smarter minds have taken a look at it, the overwhelming probability is that timing the market to avoid capital loss is more likely to backfire than a disciplined, diversified approach. It’s not sexy, and on days like this it sure isn’t comfortable. But the data says it’s the best option we have. So I cannot in good conscience recommend a shift to the portfolio strategy.”

Then reinforce that you fully appreciate your client’s heightened emotional state: “Ben, I hear your concern. I see how worried you are that your son won’t inherit the legacy that you’ve worked a lifetime to leave him.”

With the client heard, validated and understood, you are now in a better position to serve up an alternate view of reality based more on modern economics: “I hope you can hear me when I say that I’m committed to helping you experience that legacy. If I thought there was a better approach, I’d recommend it without reservation.”

I suggest reminding clients that your conversation around investments will be the same every time it comes up: 

“Ben, I hope you always feel like I hear, appreciate and deeply consider your concerns. At times, your faith in our philosophy may waiver. I don’t take this personally. I don’t get offended. And I work hard to make sure, whenever we don’t agree, that I’m defending your goals, not my own ego. So I just want to remind you that when you feel you need to have these conversations, I welcome your call, but my response is going to be the same every time. Not because I’m stubborn, but because I’m committed to pursuing whatever course of action is most likely to help you live your legacy.”

Not all of these stories will end happily. To truly be a trusted adviser, you must be willing to draw a line between adviser and order taker. If this conversation comes up more than a few times, it means the client is looking for something else, something you don’t offer. 

[More: Rethinking client engagement to seize the day]

Stephanie Bogan is a business strategist and high-performance practice coach, and founder of Limitless Adviser Coaching. You can reach Stephanie at [email protected]

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