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The Affluentialist: What Do Counselors Think About Clients?

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As we’ve explored in several previous columns, the financial planning part of advising affluent families is often the easiest piece of a workable solution. More often, advisors find family dynamics and client psychology the most challenging facet of their jobs. Family issues can halt the implementation of the most logical financial plan on page one–if the advanced planning team hasn’t taken these immense factors into consideration. The team can’t be expected to resolve decades of dysfunction and miscommunication, for example, but they can create a plan that works with the important family factors in mind.

It takes a special breed of advisor to work effectively with wealthy clients–and the non-financial skills he or she brings to each meeting have a direct impact on the success of the practice. As we discussed in the November column, the key soft skills for successful advisors include Emotional Intelligence and the four areas of emotional competency: self-awareness, self-management, social awareness, and relationship management.

Emotional Intelligence is a key differentiator among advisors. Those who have more developed skills can help guide their clients toward making the right decisions for themselves, their families, their businesses, and their charitable interests. Such skills don’t make advisors better financial experts, but they do allow them to have greater influence with their clients to help those clients reach better outcomes.

The challenges in advising wealthy families and the importance of dealing with non-financial matters is the subject of a new study, From Wealth Counselors to Wise Counselors: A Dialogue with Leading Advisors to Wealthy Families,” from Wise Counsel Research, Inc. The study collects the experiences of 20 advisors with financial or legal backgrounds and 10 others highly experienced in counseling or therapy backgrounds. All work primarily with very wealthy families, which they define as those with more than $25 million in assets. In the study, many of the participants noted that an essential feature of their work is helping families with the personal challenges associated with their wealth. The financial advisors see many others in the field as too focused on just the money details and missing essential information that would lead to more appropriate solutions.

One of the respondents who thought her main value to wealthy clients was her experience in finance and knowledge of economic theory discovered otherwise. “I was very experienced in business, I had run family offices, and I had an academic expertise in economics. But as I got to know the people more and more, I realized that the issues central to them were about much more than the money. Money was not the sole issue. My business changed in short order to deal with issues around wealth, not the wealth itself.”

Advanced Listening Skills Required

Listening, client dynamics, and complex wealth planning issues are issues the study author, Keith Whitaker, PhD, president and founder of Wise Counsel Research, has had direct experience in addressing. He is a Certified Trust and Financial Advisor and headed Wells Fargo’s (and Wachovia’s) Family Dynamics practice. He is currently a Research Fellow at Boston College’s Center on Wealth and Philanthropy. (He also reviewed my book, The Middle-Class Millionaire, for The Wall Street Journal,which is how we met.) “What was very interesting was how much the issue of listening came up as an essential tool,” he notes. “The advisors emphasized listening as a skill [necessary] to be a good advisor.”

As one advisor in the study commented, and we’ve explored in previous columns, an essential skill for working with affluent families is the ability to listen carefully and think beyond the actual words spoken in order to reach a true understanding. “Often it is what they don’t tell you that is as, or more, important than what they have told you,” this advisor observed. This skill comes into play especially in the early stages of a client relationship. In fact, one of the major findings of the study is the significance placed on “listening empathically and with understanding amidst a host of various and often confusing legal, financial, and emotional concerns.” Many saw the degree of listening skills a wealth advisor brings to client interaction as important as technical knowledge in distinguishing a practice.

Whitaker views the ability to listen as deriving from being comfortable in difficult situations, which requires an advisor to be emotionally centered and strong. When he coaches or trains advisors, Whitaker tells them that they can’t expect clients to be able to listen if they as professionals aren’t able to do the same. Advisors have gotten frustrated and told him, “Of course I listen to my clients.”

“Are these professionals in the place to be able to hear and to encourage thorough communication? That’s where experienced advisors really excel,” Whitaker notes. “Clients want to be heard, but they want to know that their advisors are in the place to actually receive what they’re offering.”

One of the advisors connected the skill of listening to influence. “I don’t work for wealthy clients because I’m grateful that they use me,” he said. “I don’t work with wealthy clients for my own self-worth. I work with wealthy families because these families can influence the world, and I have a special knack at influencing them.”

Family Dynamics

Good listening leads to trust, but as another advisor looked at the trust issues she’s observed in her clients, she also saw the challenges of damaged family interactions–something many advisors will recognize from their own experiences. “People don’t talk about preparation for wealth because they don’t know how [to offer such preparation],” she noted. “They send their kids to Harvard, Yale, etc.–the most esteemed places where they get excellent educations–MBAs, CPAs, law degrees–and they expect that will prepare them to manage the family business or wealth. But it doesn’t–they don’t trust each other, and it destroys the estate. The problem is that these degrees, while they are good, don’t address the core issues of communication and trust.”

When advisors analyze a client case with other team members, the challenges of the family dynamics inform any planning and implementation. Solid plans will never be implemented if they don’t account for the relationships between the parents and their children’s spouses or a business-owner and her partners, for example.

“All of the folks in this study see themselves as working with families on the non-financial aspects of their wealth,” says Whitaker. “So family dynamics are a huge part of it–the individual motivation and goals and then family business organizations. Everyone we spoke to sees themselves or participates in some way in the education of younger family members, for example. A big part of the work is especially around motivation, around trust, helping them develop their own life goals and such. That’s the positive side–in addition to the horror stories that one can come up with.”

Part of communicating effectively with clients is the filtering that advisors have to do to really understand what clients are actually telling them and diplomatically, but fearlessly, following up with questions when necessary. In addition to having a list of questions they think will get at the heart of the family and financial matters, they need the ability to steer the conversation to the right point. It’s a tall order for advisors who themselves are not in the right emotional place to manage these topics with clients.

Whitaker sees the importance of advisors managing their own anxieties–many advisors he coaches will tell him that they don’t like to ask questions, since they don’t know where the answers will lead. Like lawyers in a courtroom examining someone on the witness stand, they want to know how the person will answer any question before they ask it. As Whitaker observes, “The point is that you have to trust yourself and your own emotional reactions to these folks and recognize that you’re being paid not just to manage assets but to manage relationships with people.”

Importance of Teams

This study revealed to advisors who work with affluent clients the importance of a planning team approach and of the commitment of each individual team member to the joint efforts. It’s a process I call “high performance collaborations” and which I’ve brought up in many previous columns. Any single advisor can’t learn everything and certainly can’t become an expert in all necessary disciplines. “One of the practice recommendations that we could take from this study was the importance of a team effort and collaborating with other folks with different areas of expertise,” notes Whitaker.

“One of the things that we saw generally throughout the advisors in the study was that the teams were of particular sorts where they combine the knowledge of counseling or family systems with expertise around investments or the legal side of things, reports Whitaker. “That’s the basic team dynamic that a lot of these folks have tuned in to that’s very successful for them. The trick is you have to have the psychological folks who are open to some financial knowledge and you have to have hard folks who are also respectful of and open to the emotional softer issues.”

One advisor noted the importance of bringing in other experts to enable him to understand the family dynamics better: “Key skills [in this work] are listening and empathy. We have brought in consultants to help us with cases when we were over our heads, and that has really increased our understanding. There are cases where you start with one issue–like a case with a kid overspending, and then that moves into the mother’s relationship with the daughter-in-law and eventually the whole family systems issues need to be addressed. In that case, we do family meetings a few times a year, and bring in a consultant.”

Lewis Schiff is the principal of Advanced Planning Group, a private wealth specialist for advisors and their clients, and the author of The Middle-Class Millionaire. He can be reached at [email protected].

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