From the April 2005 issue of Investment Advisor • Subscribe!

I'm OK, You're Sorta OK

Honesty is the best policy, but maybe not always

Few assets are more important to a financial advisor than personal integrity. Your clients expect you to give them advice straight from the shoulder.

But sometimes it's not that easy to call a spade a spade. In fact, I'm sure you've been tempted now and then to keep quiet about awkward information that might harm a relationship. After all, your clients are paying you to use your judgment on their behalf, aren't they? Isn't a harmonious relationship what's best for them?

I'm a firm believer in compassion and tolerance, but it's important to remember that the best relationships with clients and colleagues are ultimately based not on good vibrations, but on trust. For the sake of your integrity, the foundation of trust, there are times when you may need to be forthright about that bothersome spade.

Here are some situations in which direct confrontation could be preferable to a softer touch--and vice versa.

We need to bring talented people on board for the day when our crusty old patriarch steps down, but our new hires are so discouraged by his refusal to share power that they don't stay long. When I interview job seekers, I find myself casting the company in a rosy glow to keep them from running for the hills. This isn't fair to them, but being upfront isn't fair to me and other employees who desperately need their help. Should I handle this differently? Yes, I think it would be good for you to be more open with potential new hires. Even though you need warm bodies and sharp minds, selling these folks a bill of goods won't work once they learn the true story.

As a matter of fact, you may be doing them a disservice by not giving them a more balanced picture of what they will find. New employees aren't likely to find working at your company as demoralizing as do those of you who have been worn down by your boss's rigidity. Aren't there ways to describe the challenges of working in your organization without painting a totally bleak picture?

At the same time, I would encourage you to brainstorm ways of improving the corporate culture created by your boss's power-hoarding. You may find some ideas in The Courageous Follower: Standing Up to and for Our Leaders (Berrett-Koehler, 2003), where author Ira Chaleff suggests ways to confront oblivious or intransigent bosses whose leadership style is undermining the organization's mission.

Try to get together with your boss to discuss improving internal growth opportunities so you can recruit new employees more successfully. If he resists your suggestions, don't give up. Considering the substantial costs of recruitment and training, as well as the effect on clients of a high turnover rate, he should be able to see the value of improving retention. He might be willing to call in a management consultant or conduct a staff retreat to explore solutions.

Adopting this two-pronged approach--constructively confronting your boss while being more honest with potential new employees--will begin to breathe air into what has become a stultifying system. You may find, of course, that none of your attempts to open up your company has any impact. If so, it may be time for you to look for greener pastures yourself.

Keeping this option in mind will make you feel less trapped and help lighten your spirit, even if you decide to continue working there.

Years ago, my client lent a friend $10,000 to help him recover from bankruptcy. Although the friend is doing fine now, he hasn't repaid the loan. My client is furious but won't ask for repayment, claiming that nagging the man would ruin their friendship. I can't believe it's good for my client to let his resentment fester. Can this "friendship" be saved? See if you can draw out your client more fully about how this unacknowledged "elephant in the room" is affecting the relationship with his friend.

Through gentle confrontation, I would try to help him realize that his pretense of ignoring the debt isn't doing him or his friend a favor. By speaking up, he may be able to defuse an emotional conflict that could otherwise erupt and destroy the friendship for good. Maybe you can tell him about similar situations where smoldering feelings of resentment eventually bubbled up and exploded.

Ask your client why he thinks his friend hasn't repaid the loan or even mentioned the outstanding debt. Perhaps he's still struggling with financial difficulties. Could he be deferring repayment on the assumption that your client would have spoken up if he needed the money back now? Might he simply have forgotten?

If your client is uncomfortable about mentioning the debt to his friend, you could offer to help him role-play the encounter or discuss different ways to handle the discussion. For example, he could invite the friend to lunch and confess that the unpaid loan makes him feel distant and awkward when they are together. Another possibility is to write a note, though I think this is less desirable because he can't see his friend's response, or have a back-and-forth discussion that helps resolve the tension.

I hope you succeed in getting your client to tackle this task forthrightly. His only other choice is to forgive the loan. If he opts for this, he needs to make the decision clear to his friend. Forgiving the debt is no guarantee that he'll be able to forget it, of course. For that kind of healthy outcome, he needs to broach the subject to his delinquent friend and try to get real closure.

At a women business owners' conference a few months ago, I met a divorce attorney who asked me to refer clients to her. I didn't care for her reputation, so I've never sent her any referrals. However, I've always been pleasant to her when we meet, so I was tongue-tied when she asked me in a hostile way why I won't support her as a sister professional. I don't want to make an enemy of this woman. What should I say the next time I see her? Are you concerned about this attorney's blunt, abrasive manner, or something more character-based? Is there anything she could do differently that would induce you to refer clients to her? If so, can you possibly communicate it to her in a way that wouldn't antagonize her?

I suspect your answer to the last question is no. In other words, any intervention suggesting that she do things differently would be apt to wipe out the points you'd win by being willing to send her clients. She would probably consider you patronizing as well as unsympathetic.

In a case like this where complete openness is likely to be destructive, I have no qualms about recommending a white lie. Write her a personal note saying that you were distressed by your last encounter with her and wanted to clarify the situation. Explain that you refer divorce-minded clients to other attorneys whom you've known for years, and even though you want to support other female professionals, you would feel disloyal taking your business away from these long-trusted colleagues.

Ideally, she'll get the message that your lack of referrals to her is not personal. She may never become a friend, but this tactic could help the two of you reach d?tente.

A retired client repeatedly disparaged his son to me, saying he would never amount to anything. Against my advice, he virtually wrote the boy out of his will. When the father died, his son continued as my client and has worked hard to make himself a financial success. The other day he said to me, "If only Dad could see me now!" I agreed, and tried to reinforce his pride by relating a pessimistic comment his father once made about him. My client ended the meeting and hasn't returned my calls since then. I wish I'd kept my big mouth shut. How can I repair the situation? It's sad that your attempt to support him ended up rubbing salt in an old and evidently deep wound.

Reminding him of his father's cruelty and rejection was probably fueled by your own anger at the father for undermining his son's confidence. Unfortunately, it was the wrong tactic. There are ways to signal to this man how proud he should be of his own progress, resilience, and strength in becoming successful with very limited support. Reviving his father's hurtful ridicule, however, is almost certain to make him run in the other direction.

At this point, you need to forgive yourself for your well-meaning goof, and be proactive in trying to remedy the damage. Consider calling and asking him to dinner. If he dodges this invitation, write him a heartfelt letter, telling him that you feel you were insensitive in your last meeting and would like to repair the damage. Mention that you admire his personal and professional success a great deal, and want to support him in any way you can. You could also simply answer the question he asked you earlier: "I'm sure that if your dad were alive today, he'd be extremely proud of you."

If and when he agrees to meet with you, don't repeat the derogatory comment or even allude to it unless he brings it up. If he does, it's fine to go there. But the important priorities for you are to quickly apologize for having been insensitive without realizing it, and then to note all the positive progress that he has earned and deserves to enjoy.

As something of a father surrogate, you may provide an antidote to his own parent's disdain and ultimate rejection. If he confides to you how deeply his father's negative messages wounded him, you might suggest that he seek therapeutic help so that he can begin to get Dad's voice out of his head--or at least weaken its destructiveness.

In general, I believe openness in relationships is desirable. This is especially true when you have to deal with someone who is acting in a way that's self-destructive or destructive to others. Confronting the matter constructively is often the most responsible and courageous approach.

You may need to accept the possibility of losing the relationship if your intervention doesn't work out. Despite this risk, however, honesty promises the greatest gain in terms of a true resolution of the situation.

In situations like these, try to speak candidly, but with gentleness and compassion. Your openness may generate a wonderful outcome to a difficult situation and lead to more satisfying relationships, both professionally and personally.

Olivia Mellan, a speaker, coach, and business consultant, is the author with Sherry Christie of The Advisor's Guide to Money Psychology, available through www.investmentadvisor.com. You can e-mail Olivia at om@moneyharmony.com.

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