3 Guardrails for Business With Friends

Here’s what worked for me: When we got our country place years ago, we had an entire new circle of friends who were clients. I told them: “I respect your leisure time. If I want to talk with you about business, I will call between 9 and 5 on a weekday. I won’t approach you on the weekend.

Then I added a twist. “You are not held to the same rule. If something is really important to you, you can bring it up on the weekend. I’m OK with that.” The result was amazing. The response was: “No, we respect your free time too. We will hold business discussions until Monday morning too.”

2. Reporting Performance

Lots of insurance clients also own investment products. They see the market soaring or plunging on TV. (It doesn’t rise or fall, it soars or plunges!) They go into a panic and want an immediate valuation. If they call you at your office on a weekday, that’s pretty easy. It’s not on a Sunday on the golf course. You don’t carry these figures in your head.

Here are two approaches: The first is to have a schedule of portfolio reviews on the calendar. They might be monthly phone calls or quarterly 1:1’s in your office. When they ask at the 9th hole, you might remind them you are scheduled to meet (or talk) in 10 days for a scheduled review.

The second example shows how you can be flexible. You mention, “If this is really serious and you want this addressed as quickly as possible, I can pull together the numbers on Monday morning.” You are letting them know you don’t carry all this information around in your head. They will likely be happy with the formal review date 10 days from now or a proper answer on Monday.

3. Respect for the Rules

This is a nicer way of saying “Don’t break the law.” Friends think friends can just look the other way. If something blows up and friend meets friend in court, they will take a totally different point of view. Your friend and spouse both have IRAs with you. You have an idea for your friend. They love it. “Buy some for my husband too.” If they don’t have a power of attorney, this can come back to haunt you. How about signing documents? “My wife isn’t here, but I sign my wife’s name all the time. Just look away.” This is called forgery. If it ever came up in court, they would say: “I never signed that document. Look, it doesn’t even look like my signature.” Guess who gets caught in the middle.

It’s better to anticipate these problems. Ask if either spouse expects to act on the other’s behalf. If so, get powers of attorney in place. If they want to buy a security for their spouse and don’t have a power of attorney, have them get them on the phone. People carry their Smartphones everywhere. Being honest might sound like an inconvenience, but your clients will respect you for it.

Friends can be great clients. You just need to set some ground rules.

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