When Advisors Should Be Quiet

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.