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Can You Handle the Truth?

By David Richman, National Director of the Eaton Vance Advisor Institute and Alan Parisse, President of The Parisse Group, Inc.

Remember the classic Nicholson line from the movie A Few Good Men? "You can't handle the truth!!!"

It is time to ask yourself if you can handle the truth.

You and your clients have been living through an extremely difficult period. While the recent market upturn has been a source of hope, many clients are still filled with fear and uncertainty. More than a few harbor a strong sense of being betrayed, even if they cannot figure out by whom. There is a lot of emotion, often lurking just below the surface.

As an advisor, you have a choice. You can do what many advisors do: “let sleeping dogs lie.” Sweep client emotions under the rug. Paste numbers, charts and promises on top of it all and hope the market makes it better before all that stuff comes out.

 As we discuss in the third edition of our book, This Is Your Time, pre-released in late May, we believe this moment represents an extraordinary opportunity for advisors who can “handle the truth.” For them, there is another, more proactive, approach.

Instead of avoiding the issues, you can set up a system that invites your clients to decide to clear the air of old grudges and concerns. Develop your own kind of "stress test." Add an agenda item to every client review entitled "Advisory Relationship Gut Check."

You might want to back up a bit with each client and explain why you have decided to place this on the agenda.

"Bob and Sally, this past year has been extraordinary. Our practice has tried to be proactive, responsive and professional. Now it is time to move to the next level so we can serve you better. To get a better sense of how and where we might improve, I would like to ask you a few questions. But please do not sugarcoat your answers. Be open and frank with me. In these times we need an unrestrained conversation. So don’t hold back out of reticence, sympathy or mercy. And certainly don’t worry about hurting my feelings. Let them be my concern.”

 If you can handle the truth, try asking the following questions:

  1. What words come to mind when you think of me, my team, and how we have responded to the challenges of the markets?
  2. To what degree do you feel we were successful in reasonably calibrating your tolerance for risk prior to this downturn?
  3. Have the events of these past months changed your perspective on risk tolerance? Plans? Dreams? Fears? Life? Has it created any pressing financial issues, for example my parents need financial help? Can’t fund my child’s college education? Can’t live on my retirement income? Can’t retire? Have to go back to work? Lost my job?
  4. Have you felt that our team has maintained perspective and helped you to do the same?
  5. Do you feel we have been there for you emotionally? Please elaborate.
  6. Are there any particular teammates of mine (or me) that you feel could be better? If so, who and how?
  7. Do you feel a sense of confidence that together we will get through this difficult period?
  8. If there were one or two things that I could do a better job at for you and your family, what might they be?

During these interviews, don't become defensive. Take in their feedback with complete openness and sincerity. Perhaps come up with a list of key takeaways, specific actions or procedures that you will set in motion to improve your working relationship.

So that is your choice. Sweeping it all under the rug may work; it will be a lot less hassle and you won’t have to hear what could be some tough words.

Then again, you might get lucky. You might find that your clients aren’t as upset as you imagined. It could be that after they air a few gripes, there isn’t much else there.

Switching actors and movies on you, ask yourself what Clint Eastwood asked that bad guy in Dirty Harry: You've got to ask yourself one question: 'Do I feel lucky?'

Let your clients give you the truth.....you CAN handle it! Even those conversations that turn ugly are likely to provide an opportunity to hit the reset button. If they need to vent, let them vent.