Taking the Negativity Out of “No!”

As advisors, we have all found ourselves in situations where a client believes he knows better. The advisor-client roles suddenly appear reversed as the client holds forth about what strategy or investment plan must be implemented. It may be, for example, that your professional experience and training dictate a resolute financial plan to be fully invested in equities for long-term growth regardless of short-term market turbulence. When the market shows signs of volatility, your client demands that you sell even though it is the worst possible time. You just know that this can’t be good!

In this kind of situation, many of us avoid saying “no” even though we should. We become anxious about how our clients may take it, and the defensiveness and anger that it may cause. We may deal with this by trying to avoid the issue to the extent possible. Even worse, we sometimes acquiesce when we really should be saying a resounding “no!”

Knowing how to say “no” constructively and positively is a skill that we all need in order to manage our relationships with authenticity and transparency. In this month’s column, we offer a four-step formula to say “no” without the negativity associated with it, and in fact, without even uttering the word.

1. Acknowledge the Client’s Point-of-View

There is a vast difference between understanding and agreeing. Many people are reluctant to make an effort to understand for fear of it being misconstrued as agreeing. It is possible to understand another’s opinion immaculately and even to argue the other party’s case more articulately than he could himself – and yet disagree vehemently. Moreover, the other party is far more likely to listen to you and take your point-of-view seriously when he knows that you have listened and understood his point of view.

When confronted with a client that challenges your professional judgment, resist the urge to immediately contradict him. First show him that you are listening and have understood. In our example above, you may do this by paraphrasing his concern: “If I am understanding you correctly, the continuing market volatility is a cause of great concern and you would like to do something proactive. Is that accurate?” This will indicate that you are fully present and engaged, walking right alongside the client figuratively speaking. When you vigilantly apply this first step, the client will be much less defensive and resistant to what you have to say.

2. Explain Your Concerns

After having demonstrated clear understanding of the client’s views, explain your own concerns and constraints. When you convey this in a reasonable and legitimate way, the client will understand that you are not stubbornly unwilling to comply, but rather unable — an important distinction when saying “no”. You might say: “As your financial advisor, I take my fiduciary responsibility very seriously. Based on my professional expertise, knowledge and experience, I cannot advise you, in good conscience, to sell all your equity investments now because I feel that this will set you back enormously in the long term.”

3. Invite the Client to Suggest Alternatives