Jumping into the Fray with Divorcing Clients
July 22, 2014
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.
When the market is going strong, as it has been for some time now, people who should not be financial advisors do well in spite of themselves. I know it sounds harsh, but market downturns separate the strong performers from the weaker ones. My colleagues think I am crazy, because we field so many phone calls from nervous clients when the market is volatile.
I re-read your note, and I can’t find a question in it. Are you asking whether I agree with your perspective or not? Having spent close to three decades in the financial-services industry, I do agree that a rising tide has, at times, floated all boats. Having said that, I have seen advisors struggle even in the good times to obtain client referrals, to work well with centers of influence and to gather additional assets from existing clients. From a performance perspective, a rising market may hide the flaws in one advisor’s investment approach versus another, but running the business and continuing to expand can be hard in all market environments, in my experience.
When is it appropriate to recuse ourselves from a nasty divorce situation between existing clients? We are in a losing place if we take sides, and I do not prefer one member of the couple over the other. I enjoy both and what they are doing to each other – and to their investment portfolio – is atrocious.
This is a very sticky wicket, indeed! In fact, there are a number of governing rules, depending on the state you work in, that you must heed. Be sure to find out what rules there are governing financial professionals in your state. To my knowledge, from an ethical standard there is nothing “wrong” with representing both sides in the financial matters. More importantly, you have an opportunity here to have a very direct conversation with these two people that you have worked with and care about. If you are up to it, consider calling them in together and showing them – quantitatively – what their anger and upset with one another is doing to their hard earned assets. They may say they don’t care, but sometimes being shown the black and white, with projections about what’s coming next, might help them calm down a bit.
Explain that you care about both of them and are distressed by what they are doing. Explain that you understand the upset and the anger that comes along with divorce, but that you can’t sit by and watch them destroy one another.
Depending on your personal style, you could either do this in a table-banging, “stop it now!” way or an “I sincerely care about you and this is killing me” way – or a combination of both!
Sometimes people steer clear of those who are fighting, but I think you have an opportunity here to weigh in and try to bring some normalcy to these discussions.
I realize that you might find yourself on the outs with both of them as a result, but honestly, it sounds like you might wind up there anyway. Or at least, you will wind up with no assets to manage if they keep on the track they are on.
As always, I’m interested to hear from readers about how they have handled situations like this in their own practices.
Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry in 1995; in 2008 she co-founded Advisors Trusted Advisor to offer dedicated practice management resources to advisors, planners and wealth managers. She is currently an adjunct professor at Suffolk University teaching undergraduate students Leadership & Social Responsibility. Beverly is a Certified Professional Behavioral Analyst (CPBA) and Certified Professional Values Analyst (CPVA).
She has spent over 25 years in the investment industry and has been featured in Selling Power Magazine and quoted in hundreds of media outlets, including the Wall Street Journal, MSNBC.com, Investment News and Solutions Magazine for the FPA. She speaks frequently at investment industry conferences and is a speaker for the CFA Institute.
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