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What To Do When Clients Aren’t Honest With You

What To Do When Clients Aren’t Honest With You

May 31, 2016

by Beverly Flaxington

Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues. To submit yours, email us here.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

Dear Bev,

I cannot believe I am writing to say this, but I have a longtime client who has been a good friend as well. We’ve gone golfing together, and once, he asked me to help his son-in-law who wanted to go into financial services after graduate school. I spent a couple of hours talking with this young man as a favor. My issue is that this client and his wife are now getting divorced. They have been living separately for almost two years. He has not shared this with me! I don’t meet with them as a couple. Early on they both made it clear that she has no interest and no time. I have never pushed it because he seemed to represent both of their perspectives, so there was no need to follow up with her directly. I found out about the impending divorce because I gave a lead to the son-in-law, and he mentioned something about it. I think he assumed I knew. I don’t know how to approach my client. Why wouldn’t he share information like this? I’m his financial advisor, and if there is a divorce, I should know. There are substantial assets and he needs a plan. I called him right away to ask what was going on. He said he just hadn’t got around to telling me. They each have lawyers and “it’s under control.” I don’t know if I am upset that he doesn’t trust me enough to share this or because I am so helpless to do anything at this stage. How can a guy meet with me twice over two years, talk to me about his portfolio and talk to me on the phone several times in between but not let me know about this significant life event?

K.P.

Dear K.P.,

I’m wondering if you have done any holistic financial planning with this couple? It sounds like some flags could have been showing up in their budget given the increased expenses from a separate household. I realize it can be hard to force a relationship with two people when one says they don’t want to be involved, but this situation also illustrates the importance of having a good relationship with both people in the couple. I know it isn’t uncommon for one person to be more dominant in the planning process, but you had to know you were at some level of risk having virtually no contact with the wife since the early days of opening their account.

One of my favorite sayings from trainings about getting into the client’s mind is that “prospects and clients lie.” They don’t necessarily lie in an overt and deliberately deceitful manner; they lie by omission. They lie because sometimes they are embarrassed or don’t want to reveal too much. They lie because they don’t fully understand their own motivations, and they lie because they want to paint a rosier picture than what is real. Unless you are using a planning process that includes having clients share their cash flow, you are dependent on them telling you the truth about what they have and what’s going on in their lives.

I have seen people hide impending divorce for a long time from even close friends and family. One person in the couple may be hoping for reconciliation, or they may have done something like cheat or steal and don’t want others to know about. They might also just not want to discuss their bad news. It doesn’t necessarily mean that you aren’t close; it can be more about the person who hopes to keep things quiet.

That said, as their financial advisor, you might have been one of the first people he consulted with. Divorce can destroy financial plans, and talking with you about different scenarios might have been helpful before obtaining a lawyer. Is there a way you could ask his permission to reach out to the lawyer? Perhaps you have a chance to provide some insight or information there.

This is a reminder that knowing whether you’ve reached the level of “Trusted Advisor” isn’t that easy. You want clients who will share what they are thinking about before they do it. While this situation may be painful for you, I suggest taking it as a reminder to review your other relationships. Be sure you are keeping in touch and know what is happening in their lives. This could be a good catalyst to focus on deepening existing relationships. Remember not to assume that golfing and having a good meeting necessarily mean a deep relationship – to achieve a level of connectedness, you need to talk about life issues, obstacles and concerns.. Do this on a regular basis, and hopefully you can avoid future surprises.

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What To Do When Clients Aren't Honest With You

What To Do When Clients Aren’t Honest With You

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