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Failure to Communicate: When ‘Informed’ Clients Challenge Advisors

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Kent Grealish wrote a thoughtful comment to my Jan. 29 blog “Taking a Look at Measuring Advisors’ Performance,” which, among other things, raised the issue of how advisors should talk to their clients about what they do and how well they do it. In this regard advisors can find parallels to the medical profession, which is also struggling with how to talk to their patients, especially in our Information Age. 

Back in the day, doctors’ education and professional knowledge placed them in such a superior position that most patients followed their prescribed treatments without question. That’s not to say that all patients were fully compliant—taking their full course of antibiotics even after their infections seemed to be cured, or that they stayed off of their sprained ankles or aching backs as long as instructed. With virtually no information to the contrary, however, patients tended to take the drugs or have the operations that were recommended without question. 

The Internet—combined with the media’s penchant for focusing on the relatively few bad medical outcomes rather than the millions of good results—has changed all that. Armed with WebMD and myriad other online sources of medical information, today’s patients are far more likely to challenge their doctor’s recommended prescriptions, and even to seek “alternative” remedies. We’ve even seen recent outbreaks of diseases once thought to be eliminated—such as pneumonia and mumps—because people stopped inoculating their kids, based on information they read on the Web. This loss of their “expert” status among much of the lay public has caused doctors to rethink their relationship with their patients, particularly how they talk about their “recommendations.” 

“The patients are now better at advocating for themselves. They are more critical of their options. They have the resources to make better-educated choices,” according to an article posted on  “Now, physicians are learning to be better listeners, and to translate what they hear into more personalized care for their patients. This is a shift from the old relationship, in which doctors took paternalistic roles and patients merely followed their directions.” 

Financial advisors have never had the level of trust that doctors had from their patients, but they do struggle with many of same communication issues that the medical profession is currently facing: clients possessing much more “information” about investing and advisors, and consequently, demanding more information from their advisors. A “track record” is one of those bits of information that clients and prospects are increasingly being told to demand from their advisors. 

Here’s what Grealish had to say about that: “On the question of how to measure advisor performance in terms of returns though, the real answer is: don’t try… …Because historical returns cannot reliably predict future performance, we can’t identify in advance those who will beat the market. So clients shouldn’t base their decision simply on advisor performance, rather they should choose the advisor based on more mundane criteria such as competence and experience, investment philosophy and strategy, risk management and costs and deliverables such as an Investment Policy Statement and a written Investment Plan.” 

Certainly true, as far as it goes. Yet as physicians (and other “experts”) are increasingly finding, people who are in possession of some knowledge, however incomplete or even inaccurate, tend to be resistant to hearing that they don’t know as much as they think they do. Consequently, a better communication strategy might be to remind clients, or potential clients, about things they also “know to be true.” Such as that both they and their circumstances are unique, so that the strategy an advisor recommends for them probably won’t be comparable to that of any other client; and that working with clients who face at least some of the same challenges that they do makes their advisor better able to foresee the opportunities—and the pitfalls—which lie ahead.