One year ago, 9/11 shook our sense of security like nothing else we’d ever experienced. Since then, the S&P 500 and the Nasdaq have ignored good economic news to continue their plunge to five-year lows, company after company has admitted cheating on earnings statements, and billions in shareholder value has vaporized while top executives waltzed off with millions in compensation. Stock analysts have shilled for investment bankers; trusted clerics have been revealed as pedophiles.
It’s no wonder so many people are losing faith in the trustworthiness of the institutions on which we all depend. Is there a way to help your clients regain a sense of balance, trust, and hope? Read on for some ideas.
I’m deluged with calls from clients wanting to dump all their stocks and move into gold or real estate. I’ve encouraged them to keep the faith, but it gets harder and harder as the market keeps falling. I feel like King Canute trying to sweep back the tide with a broom. What more can I do?
My first suggestion would be to define for yourself exactly what your philosophy and outlook are. What do you believe is the wisest action to take in the midst of this maelstrom? If you have general guidelines to share with all of your clients, state your perspective in an e-mail or letter to them.
Begin by letting them know that you understand why they feel so shaken, mistrustful, and uncertain about how to proceed. Try to reassure them about the future without being unrealistic. For example, you might suggest broader diversification, noting that the great majority of companies play by the rules. If you have taken steps with your own portfolio, you might share your course of action as a way to reinforce openness and trust. You could also point out positive signs of change, such as Coca-Cola’s and The Washington Post Company’s decisions to clean up their earnings statements by treating stock options as a compensation expense.
Dick Vodra, a financial advisor in McLean, Virginia, and author of the superbly commonsense guide Enough Money (Xlibris, 2001; available through www.investmentadvisor.com), recently wrote an excellent letter of this type. A suggestion of his that I particularly like was for clients to use some of their assets to build up their “career development fund.” This fund can be used for workshops, continuing education, improving skills in their existing line of work, or exploring a new field–anything that broadens their employability in this rapidly changing world.
Once you have written your clients about where you stand and how you think they should proceed, follow up with individual conferences to revisit their goals and needs. Whether these meetings are face-to-face or over the phone, don’t try to rush clients into action without hearing and addressing their feelings of fear and disillusionment. If you give them time to share their concerns, you’ll help calm them and reassure them of your dependability at a moment when everything else seems to be changing around them.
When my client wanted to sell his telecom stocks last year, I recommended that he hold onto them. Since then, he’s lost a bundle. He says that after this experience, he finds it hard to trust my judgment. Should I address this with him, or just let it blow over?
I feel for you–he’s certainly put you in a tough position. I think it would be a fine idea to conciliate him, perhaps by inviting him to lunch at a good restaurant to acknowledge that you truly regret his losses. (If you lost money too, let him know he wasn’t alone.)
But don’t grovel unduly. Even the smartest analysts in the business were misled about the strength of some of these companies’ earnings. To make sure he doesn’t heap all the blame on your shoulders, you may also need to remind him that while your recommendations are based on your best professional judgment, the ultimate decisions are always up to him.
Finally, remind him of the contributions you have made in the past toward his financial security and peace of mind. Ask what it will take to restore his trust in your advice, which for the most part has served him well so far.
By encouraging him to remember the advantages of working with you, you may succeed in bringing him back to a more balanced perspective in assessing your relationship. Once he is given an opportunity to fully express his sense of loss and disappointment, he may be able to move past these feelings to continue honoring your expertise in the future.
A single mother who has consulted me seems to be deeply upset about her abrupt job loss. Although it was a result of company-wide layoffs, she told me she feels personally betrayed and keeps reliving the scene where she was let go. She’s aware of the need to make financial plans, but her response to my suggestions is either apathy or rage at the unfairness of the CEO’s pay raise while she and many others lost their jobs. I’m not sure how to deal with this. Is there a way I can help her get moving?
This client appears to be suffering from a combination of depression and a mild form of post-traumatic stress disorder. You’ll need to do a lot of compassionate handholding while she voices the shock and outrage she is experiencing.
Once she feels you have heard her fully, I’d suggest several steps. First, help her connect with an affordable job placement service, if her employer hasn’t provided assistance in this area. I would also recommend counseling to help her move past her emotional trauma. Reassure her that this doesn’t mean there’s anything wrong with her; it’s simply that someone in her situation needs more support than you can realistically provide.
That said, you may be able to act somewhat in the role of a life planner in helping her overcome her feelings of betrayal and hopelessness. Suggest that she explore sources of hope and healing. More time spent with her child? More walks in the park, or contact with friends? It could help a great deal simply to turn off the constant flow of negativity from TV news and local newspapers. You might suggest that she try a magazine called Hope (www.hopemag.com), whose short inspirational articles focus on people who are working to make the world a better place. Reading this lightens my own spirit and energizes me enormously.
Good luck! Once you soothe your client’s distress and get her some much-needed help and support, she may well thaw enough to take your financial advice and move forward.
Recently, a wealthy couple who are interested in socially conscious investing came to me for advice. Their portfolio has not done well, since many of their previous picks were high-tech companies. They’ve asked me to select new socially responsible investments that will do better. They also want my words of wisdom on which CEOs and companies have honesty and integrity they can trust. I’d like their business, but how should I handle this?
As you’ve probably already pointed out to them, any advisor who could infallibly pick winning stocks would long ago have moved to Hawaii and bought her own island.
Nonetheless, you could share with them the criteria you use in determining good investments. For example, an advisor answered this question for me by saying, “I would trust companies that are not merging, buying, selling, or entering new fields where they can create their own rules. I look for solid companies with good track records, where I know something about the corporate leadership.” These seem like good guidelines to me.
Be honest with these clients about your view of socially responsible investing. Are you for it? Ambivalent about it? How much experience do you have with it? If you think they might do better investing in more diversified stocks and contributing directly to favored charitable causes, tell them so.
In the event that they’re determined to invest solely in socially responsible stocks and you aren’t the best person to advise them, consider referring them to someone else who is. Your selfless honesty could lead this couple to refer other clients to you.
I’ve been talking with a couple whose former broker embezzled over $80,000 from their account. Though he has been caught and is awaiting trial, they feel burned by the entire system. How can I help restore their trust? People who come to you traumatized by dealings with dishonest professionals are like wounded children. They need to be healed before they can move forward, and they’ll need your help to walk again before they can run.
So when you meet with them, take time to explore their hurt feelings. Empathize with their shock, betrayal, and moral outrage. Then gradually differentiate yourself and your business methods from the way they were treated by their broker. Share information about your background, your experience, and your communication practices. Consider providing references from other clients or colleagues. You might also offer them a short-term agreement that would limit their risk if they don’t feel comfortable with you.
Just remember that whether or not you deserve their distrust, it may flare up and be projected onto you. If you are patient in reassuring them of your desire to serve their interests rather than your own, you may find you’ve earned the trust of two loyal and grateful clients.
These days, our beliefs in people’s basic honesty and integrity, and in the value of our institutions and economic system, are under stress. Take time to identify sources of faith, hope, and healing in your personal life, and anchor yourself in that positive place so you can help clients heal from their own disillusionments and losses. By listening fully to their pain, anxiety, and disappointment, empathizing with their feelings, and then gently urging them forward, you can help them move beyond financial security to true serenity.
Olivia Mellan, a money coach and money therapist, is the co-author with Sherry Christie of Money Shy to Money Sure: A Woman’s Road Map to Financial Well-Being (Walker & Company, 2001). E-mail Olivia at firstname.lastname@example.org.