What can you do when it seems that too much transparency is hindering an advisor-client relationship? Consider the case of a client who is obsessive about tracking his investments almost continuously—which is easy to do on the Internet. He calls or e-mails his advisor every day asking about this or that news flash as a reason to buy or sell.
• Matt Lynch: This illustrates that the very basis between the client and the advisor needs to be defined better. If the client likes to keep score every day, and wants the advisor to outperform the market, it sounds like the goals of the client and the advisor are not aligned. The advisor needs to spell out with clarity what services will be provided and on what basis. Let’s be clear about the nature of the relationship, the value exchange, and how often we will have contact. Is this just a transaction relationship, or an advisory relationship? If you spell that out clearly, then the client is free to say, “I want this” or “I don’t want that.” Today, there’s a lot of bundling of financial services, so clients might be getting things they don’t want, or not getting them but still paying for them.
• Mark Tibergien: It’s important not to confuse transparency with information and communication. The real question here is how do you manage the expectations of the client, and how do you draw boundaries in the relationship? Eventually, you might have to say, “Either we find a way to interact that is mutually fulfilling, or we have to break up our professional relationship.”
I always suggest that financial professionals have this conversation up front in the first session or two. What are our expectations of one another? What is my way of working? How many times and in what modes do we make contact—on the phone, via e-mail, face to face? It’s easier to resolve a situation like this when an advisor defines expectations at the outset.