I've recently closed four cases doing the unthinkable: keeping my mouth shut and telling clients to wait before making financial decisions. Here’s what happened.
Case No. 1
A client from St. Paul, whom I’ll call Barry, got his annual insurance statement and was surprised to see the expenses of his policy. Barry called me, quite upset. Now I had advised Barry on many occasions of the high expenses in the first 10 years and had numerous sets of notes to document the fact. Unfortunately Barry didn’t seem to remember any of it. My team and the insurance company spent hours pulling together information for him in prep for what I expected to be a difficult meeting.
At the meeting, I wanted to make sure Barry had a chance to vent and share his feelings. After he did that, I went through the mountains of research I had for him. It did absolutely nothing to satisfy him. Barry was still upset.
Barry then asked me about getting a policy on his daughter. I ran through the estimated numbers for her and stated: “So you can see, if you stick with this plan, someone will get your money back. Either your daughter will get it to use for retirement income or your family will get a death benefit.”
Barry stopped cold. His demeanor changed from agitated to befuddled. He said: “So you are saying I can get my money back?” I could tell his brain was working very hard about this concept.
My answer was one word: “Yes.” I then shut up and sat there quietly while he thought this through. I was determined to not open my mouth until Barry had processed this information.
After a minute or two, Barry said: “OK, I can see this could be really good for her. I will apply for a policy on her next year.” He walked out of the office comfortable and at peace. He has since sent me a number of warm and friendly emails.
My takeaway: Sometimes the best thing you can do is to not overwhelm clients with data and explanation, but just let them process the information while you keep quiet.
Case No. 2
I had met about five times with George and Sue from Minnesota. They are a professional couple in their early 60s who had about $4 million in investable assets. It was a very complicated case. George had been doing all their investing since they were first married.
In fact he hadn’t done a bad job. Yes, we could have done 1% to 2% better per year, but frankly George had done much better than the average do-it-yourselfer we see. Unfortunately, doing it himself, the portfolio was unwieldy, too risky, with too many holdings and too little tax planning.
We could save him many thousands in taxes and help him grow his money a little better. At a previous meeting George mentioned he might transfer over a small account to us and then he recanted. So frankly I wasn’t expecting much.
We identified the accounts that we suggested moving over to our management. It was less than a fourth of their investable assets. George then told me he wanted to continue to manage these accounts himself. But then he stopped and started thinking out loud: “So if I do transfer them to you, the worst case scenario is that you will do about the same as I have been doing and there is always the chance you will do a little better.”
At this point I could tell George was processing this new thought. I followed my own advice: I kept my mouth shut.
It took George a minute or two to think this through as I sat quietly across the table. Much to my surprise, he ended up transferring all the accounts we suggested he move.
My takeaway: Don’t rush clients. Give them a chance to think.
Case No. 3
One of our clients, Sam, had finally finished his training and would be moving his family and starting his job making about $270,000 a year. We had been planning for this day for over a year, because he could start his investing strategy we had been working on. We had our last face-to-face meeting the day before the movers were coming.
Sam and his wife Sarah were stressed. In addition to twin daughters, a big move, board exams and a new job, there was a lag between paychecks. Their emergency fund was down about 35% to cover moving expenses and income shortfalls.
The meeting that was going to kick off their investment strategy got completely derailed. We needed to regroup. As I was trying to help them, I realized it was just too stressful for them to come up with a savings strategy at this time. They really didn’t know what it was going to take to live in their new location and what their expenses were. I could tell they were having a hard time making any decisions about the amount to save and the level of risk they were willing to take.
I told them I felt they needed to wait for two months before making any decisions. They should let the dust settle, see how much they have left over and then regroup.
You could see the relief on their faces. I had taken this huge burden off their shoulders and given them “permission” to wait. They were so happy they hugged me as they left.
My lesson: Sometimes the best thing you can do is give clients permission to take a breather.
Case No. 4
John and Jill, some of my favorite clients, emailed us, canceling an appointment and saying they can’t work with us now and will probably find a new advisor when they move to a new town in Minnesota.
Now this is the same couple that six months ago, completely unsolicited, asked me to go back to their university and work with the new doctoral candidates there because I had been so helpful to them. They even offered to help me cater the event.
Many advisors would have been devastated with such I’m-out-of-here correspondence. Not me. I just got into John’s head. What I knew about him: He is overwhelmed. They have a month-old baby. John is taking his boards and moving to a new job with an iffy income arrangement. He also has a tendency to get overstressed. No sleep plus lots of stress is a prescription for making bad decisions.
My solution: I called him and said: “Sounds like you are really stressed with all that is going on right now.” I then kept quiet while he vented about his recent life.
Then I said, “Say, you know our staff spent over 10 hours putting together your financial plan, but I think you have too much going on now to really focus on it. What do you think?”
He agreed and seemed pleased that I recognized the stress in his life. My final thought: “How about if we postpone this meeting to the fall, after the dust has settled?”
His response: “Great idea. We should know more by October or November.”
My takeaway: Their top priority is not necessarily our top priority. Let clients focus on finances when the time is right.
One parting thing I have learned about keeping quiet: Occasionally I will get a couple who is arguing about their finances. One is a saver and the other is the spender. In the old days I would use my marriage counseling skills to try to resolve the dispute. Today I just sit tight and let them work it out on their own. This is much less stressful for me and then I know they will come up with a solution that works for both of them.