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You’ve trained your entire professional life to deal with market crashes. You scrupulously know the data. You expect clients to call you worried, anxious and distraught.
You feel supremely confident in your ability to allay their concerns.
Unfortunately, the premise underlying your advice may be flawed. You might be doing them (and yourself) a terrible disservice.
Here’s why.
Advice is often unwelcome
Giving advice is highly pleasurable – for those giving it. I know. My entire life has involved giving advice for a fee – initially as a lawyer, then as a financial advisor, coach to advisory firms and author.
If you were in a supermarket and observed a child misbehaving, would you volunteer parenting advice to the caregiver?
Of course not.
Giving unsolicited advice is almost always inappropriate. Giving solicited advice often stands on the same footing. Just because someone calls and expresses concern doesn’t mean they’re looking for advice. They may have an entirely different agenda. Yet, because the role of “all knowing guru” is such a positive experience, we tend to assume our advice is being solicited and immediately start dispensing it.
Data doesn’t persuade
Once we are on a roll of giving advice, what’s the advice we dispense? Typically, it’s data-driven.
There’s a lot of data on past pandemics. For example, we know that within six months of the start of the swine flu, the S&P 500 rose 18.72%. Surely, that would be comforting to anxious investors, right?
If this premise was correct, data on climate change, gun control, vaccinations and other hot-button issues would persuade those holding views different from ours to change them.
How often have you had an experience speaking with someone who disagreed with you when they said, “Now that I’ve heard the data you presented, I’ve changed my mind?”
That’s never happened to me.
If you’re still in doubt about how data doesn’t change minds, think about all those times you discussed the reams of studies supporting passive management. Have you been successful persuading someone to abandon stock picking? When I was an advisor, I can’t think of one time when I prevailed in this discussion.
Data polarizes. When you tell your clients about historical data, they’re just as likely to respond that its “different this time” as they are to find it comforting.
A better way
When you rush to provide advice, you’re unlikely to be addressing the real issue, since you don’t understand the complete context. The research is clear: You can only give helpful advice when you understand the perspective of the other person. The egocentric mindset inherent in advice-giving is what makes the advice so bad. It doesn’t incorporate the other person’s perspective. It quickly escapes our lips before we can even gather information.
Why would you assume a client is calling to discuss concerns over whether (and when) the market will recover? Maybe they are worried about their health, or the health of their loved ones.
You’ll never know unless you ask.
Stop dispensing advice. Instead, ask questions.
Asking questions underlies The Solin Process℠. It’s the key to having successful relationships in any context.
Here’s my recommendation for dealing with client calls during the market crisis (and otherwise). Don’t prepare by arming yourself with data and advice that’s the equivalent of don’t worry, be happy.
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Don’t assume your client wants advice. Maybe the client just wants to be heard.
Start by preparing a list of questions. Don’t offer any advice unless the client asks a specific question.
Here’s a start:
- Can you tell me more about your concerns?
- Why do you feel that way?
- What information can I give you that you might find helpful?
Listen intently to the response, and then ask appropriate follow-up questions, like:
- Do you need more details?
- What else can we explore?
Here’s my prediction:
When you substitute this approach for the one you are using, you may never have to give any advice, and you will enhance your relationship with your clients.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
