From the July 2005 issue of Investment Advisor • Subscribe!

Les Liaisons Dangereuses

Hanky-panky on the job doesn't affect just two people. Here's some advice on a subject that isn't covered in the CFP ethics course

Several years ago, a friend of mine objected to higher-ups about an ongoing affair at his company between a senior executive and a lower-level employee.

The liaison was hardly a secret in the firm, with opinion divided between those who denied that the couple's dual relationship (boss/employee and intimate partners) made any difference, and others who considered it to be unprofessional and destructive. When my friend, a man of great integrity and devotion to his work, pointed out publicly that the affair had resulted in special benefits for the department where the junior employee worked, his forthrightness cost him his job of 18 years.

In the sea of human relationships, it's not unknown for advisors, too, to sail a little close to the wind. Dating a client can compromise one's ability to think straight and do an honest, trustworthy job, not only with that person but with others. Moreover, as my friend's case demonstrates, opening this Pandora's box can lead to unforeseen consequences, not only for yourself but for others.

According to Linda Gadkowski, an advisor who teaches the required ethics courses for the Certified Financial Planner Board of Standards, there is no explicit reference to job-related sexual indiscretion in the CFP Board's ethics code. This strikes me as odd. Is male-female attraction in the workplace still such a taboo subject that no one wants to talk about it?

After more than 30 years as a therapist, I have some opinions on the subject that may be valuable if you yourself are in such a relationship--or are confronted with one where you work.

If a therapist has an affair with a client, even after therapy has been terminated, it is a serious breach of ethics because the very nature of the therapeutic relationship is unequal.

It's common for clients, viewing their therapist as a professional authority figure, to transfer to him or her the attributes of a parental figure. This may occur in an attempt to recreate the past or forge a new and improved relationship with maternal or paternal authority. Either way, "transference" blurs the professional connection with elements of the parent/child relationship. Thus, an affair would be highly unethical, no matter who initiates it.

When it comes to life coaching, transference is diluted because a coach is generally seen as more of an equal. It's not frowned upon to have a limited social relationship. In my opinion, however, it would still be highly unprofessional for a coach to have an intimate relationship with a client. I would have less concern about an affair with someone who is no longer a client.

Many financial advisors encourage their clients to view them not as an authority figure but as a partner on the journey of financial empowerment. In so doing, they may create a relationship that is more evenly balanced and falls into the same ethical gray area inhabited by life coaching.

The outcome is complicated when powerful instances of transference occur between more authoritative advisors and their clients, or between colleagues who work together. Dual professional and personal relationships are fraught with difficulty, and should be evaluated in terms of the emotional cost to the individuals involved and those who work with them.

Transference Is All Around Us

As a therapist friend said to me, "Our relationships are awash in a sea of transference." In simple terms, we all have patterns of behavior, attitudes, and needs that begin with our earliest relationships: our parents, siblings, and other powerful figures in our lives. We transfer these early imprinted ways of acting, reacting, believing, and needing to our later relationships. When we choose a spouse, according to the renowned therapist and educator Harville Hendrix, we are attracted to someone on whom we can project the positive and negative qualities of our parents--and then we hope to get from that mate what we never received from our mother and father.

At work, we often react to authority figures just as we did to one of our parents. (And it may be a woman boss, not necessarily a man, who reminds us of Dad. Our needs and expectations have more to do with personality and approach to life than with gender.) Similarly, other colleagues may come to resemble a parent, a sibling, or another strong influence in our early lives. The longer we stay in a particular work environment, the more likely our co-workers are to become a "work family," reawakening past experiences, hurts, wounds, and even traumas.

When these relationships represent something negative, such as dashed hopes, critical judgments, or rejection, they create negative transference. When they're good, or recreate positive feelings, they constitute positive transference.

Because you are an authority whom clients approach for help, you will almost inevitably be put in the role of an authority figure from the past. Depending on your style and personality, this relationship may evolve into a strong transference, either positive or negative.

And there are two sides to the coin. Some clients may remind you of powerful relationships in your own past, such as a too-demanding parent or a sibling who worshipped you. You may also relate to work colleagues through a transferential lens. How do you know when this is happening, and what can you do about it?

When you have an immediate and intense reaction--positive or negative--to new clients or colleagues, transference is occurring. You may feel at the first meeting as though you've known them forever, because they echo earlier parental or sibling relationships. Someone who "sets you off" right away is almost surely reminding you of another person in your past with whom you've been in conflict.

In a long-established work family, you probably will be able to identify who are the "parents" and the "siblings," and which colleagues recreate your own family of origin. These issues are explored in "The Power of Transference," an article in the September 2004 Harvard Business Review by Michael Maccoby, a psychoanalyst, business consultant, and Harvard professor.

To responsibly manage transferential issues in an organization, Maccoby stresses the importance of knowing yourself as well as you can in order to minimize tendencies toward rationalization or denial. One way to foster honest self-evaluation is to get feedback about yourself from family, business colleagues, and outsiders.

His second recommendation is to promote mutual understanding by making sure people see you clearly and know you well. I often recommend regular work retreats that allow everyone to view workplace relationships through another set of lenses. Openly share your vulnerabilities, strengths, and weaknesses with colleagues you trust. Be open to feedback about how your relationships may be affecting them. If you are in a position of power, make your expectations as obvious as possible, and try to understand as clearly as possible what others expect of you.

Affairs of the Heart

At the beginning of a sexual relationship, most people are in an altered state, variously known as being in love, being infatuated, or being in lust. In this honeymoon phase of the relationship, you are literally in a trance. A bubble separates the two of you from the rest of the world. Imagine trying to do your job properly when you are in no condition to think clearly, see clearly, view each other clearly, or see the effect of your relationship on others around you!

That's why I support setting internal boundaries that preclude advisors from dating clients and co-workers. In the first situation, you are compromising your professional relationship with the client. If you are invested in continuing the affair, the least you can do is to refer this client to a colleague (not, ideally, in your own company).

Sadly, a more common behavior is for those in this trance state to tell themselves that they can manage the situation. They continue to serve as the client's advisor, hoping news of the dual relationship won't leak out. If it does, I guarantee that other clients will feel jealous, repulsed, unsafe, creeped out, or all of the above, depending on their own transference with you as well as their personal history. Your colleagues, too, will have doubts about your competence and professionalism.

If your intimate relationship involves someone you work with, the bond you forge with this person will change your relationships with everyone else. Just as children of divorcing couples pick up on conflict even if their parents try to hide it, many sensitive colleagues will sense that "something weird" is going on, well before they discover the truth. If you do professional favors for your lover (or allow a partner superior to you to favor you), you risk arousing the resentment and anger of colleagues.

As you can tell, I strongly advise against engaging in these dangerous relationships in the first place. But if you do, it's critical to be honest with yourself and others about it. Terminate your client and refer him to another advisor. If the relationship is between co-workers, one of you should leave the organization. This may sound harsh, but I believe that anything else will create havoc for years to come.

How Much Should You Share?

What about non-sexual relationships in the workplace? How friendly can you be with clients or other colleagues without trespassing over professional boundaries?

This is a much subtler and more complicated area. Many advisors have a friendly, open style and seem to easily manage having friends as clients. In fact, I imagine there may be more advisors who juggle these dual roles than those who never mix business with friendship.

Sometimes it's easier to confront a client who is a friend. At other times, it's more difficult. If you try to intervene with a friend who is engaged in financially self-destructive behavior, you have more to lose than if your role is strictly professional.

Similarly, many advisors have close friendships with work colleagues. If there is a disparity in income or power between you, you have to deal with this. It also makes a difference whether the friendship is a secret or is openly acknowledged. And you need to be open to feedback about how it may be affecting your co-workers.

Negotiating these relationships is complicated, yet many advisors appear to handle it well. To some extent, one lives and learns.

I can testify to this from my own experience. During the 1970s, when I was trained as an experiential "feminist therapist," it was okay to share aspects of one's own journey when appropriate. I would attend my clients' weddings and concerts, but didn't socialize further. This seemed to work well.

Years later, I bent my own boundary rules by allowing myself to have a "light" friendship with a former client. I invited her to my house for a party and we had lunch together a few times. But then she referred a friend to me for therapy, and the relationship didn't take. Our friendship dissolved soon afterward. In retrospect, I wish I had held the line I created for myself and not allowed my "mushy boundary" tendencies to take over.

I certainly don't endorse excluding clients from all aspects of your personal life. But along with the danger of sexual intimacy, I do caution against obliviousness to the effects of closeness and bonding, between advisor and client or advisor and co-worker.

There is no perfect way to negotiate all the complexities of closeness and distance in the workplace. But if you try to stay aware of your own transferential relationships, you will evolve toward seeing the people you work with as themselves, not as revenants from your past. By cultivating an open, curious attitude about the effect of your relationships on others and on the overall firm's morale, you will know how to keep the right professional balance between yourself, your clients, and your colleagues.

This challenging task reminds me of the advice that therapist and author Sheldon Kopp once gave his sons. "When you hurt someone," he counseled, "I hope you do it consciously." He didn't counsel his sons to hide in a corner and never take the risk of hurting anybody. He was telling them to be mindful of the results of their actions.

I agree completely. Be conscious of what you do and how it affects others. That may not be the Golden Rule, but I think it is one of the best ways to become a better advisor.

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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