No doubt, you’ve heard about your clients’ hopes and dreams when you’ve met to discuss financial strategies that can help them achieve their retirement goals. For some advisors, the relationships formed with clients go beyond time spent in the office. Perhaps you’ve sat next to them at your child’s sporting events. Maybe you stop to chat with them at the grocery store or volunteer together at a favorite charity.
As a result, the connections formed with some clients may blur the lines between financial advisor and friend. So, what happens when one of those encounters reveals that your client is facing a difficult time?
Restore the Lost Art of Listening
It can be difficult to know how to respond when hard times fall on a client. While showing empathy and understanding is a given, it’s sometimes easier said than done. Yet, it could be the difference between helping or hurting your relationship, both professionally and personally.
The art of listening is a core principle for financial advisors who want to avoid causing tension in a client relationship. It may require putting aside the urge to share your expertise and, instead, simply be an empathetic listener, which is one of the kindest gestures a person can make when someone faces difficulties.
Be cautious about using your power of persuasion, giving untimely advice or appearing to want to capitalize on the situation. As an advisor, it’s important to find a balance, as a gesture to help someone address the financial implications of a circumstance may be premature or come across as opportunistic.
While the first step in any situation is to be an active listener, consider additional ways you can be supportive in the following situations.
One of the most important aspects of a client’s financial wellbeing is likely his or her career earnings. When that income stream suddenly disappears due to unexpected job loss, it may prompt some investors to make irrational decisions. You may get a frantic call to discuss withdrawals in order to make ends meet without consideration of the long-term implications.
Depending on the situation, removing funds may be necessary. However, help your client make informed and level-headed decisions by sharing the potential pitfalls, such as early withdrawal penalties, tax implications and decreased earnings down the road. Outline alternative strategies that may be better options both in the short and long term.
Upon first hearing of a client’s job loss, it may be tempting to bring up rollover options for their previous employer’s retirement plan, but doing so is likely ill-timed and could foster mistrust. Instead, look for ways to strategize together to determine next steps.
Where appropriate, consider leveraging your professional network through LinkedIn, or recommend career websites or workshops for updating a resume and skills. Workers are in high demand, but if a client had a long tenure at their previous employer, they might not be aware of the latest techniques that may help them find their next job opportunity.
Having recognized the importance of career earnings as part of a sound financial plan, some investment firms have developed a network of career coaches to provide guidance for their clients. These professionals may be able to help a client transition to a next chapter, whether that’s reentering the workforce in a set field or changing industries.
Loss of a Loved One
Losing a job may be worrisome and create a temporary setback; losing someone you love, however, brings with it an entirely different level of grief that may be sustained for years to come. In some cases, the loss of a spouse or other family member can also bring financial hardship and uncertainty over how to handle financial matters in their absence. The uncertainty can be heightened if the surviving spouse or loved one wasn’t very involved in financial matters or wasn’t an active participant in the client/investor relationship.
In addition to your heartfelt condolences, let your client know that, when they’re ready, you’re available to help them sort through the many financial details that need to be dealt with. They’re likely overwhelmed with lots of questions: What should I do with joint accounts? How do I handle insurance? Which financial documents need updating? What are the tax implications?
Some advisors have developed a financial checklist to help a surviving spouse sort out their finances and minimize the burden of not knowing whether they’ve missed important details. Extend your care, concern and compassion, but also extend a helping hand.
A Medical Crisis
If you’ve worked with a client for some time, ideally you’ve already discussed the importance of planning for healthcare costs in retirement. But when a serious medical condition like cancer arises at any age, it will likely catch them off guard, despite nearly 40% of men and women being diagnosed with cancer at some point during their lifetime.1
Don’t discount how impactful your kind gestures can be in such situations. Your calls and cards of encouragement can go a long way in expressing your concern. Some advisors go a step further and stop by with a meal or chip in to help with a project around the house. These kinds of gestures help you demonstrate genuine concern and build trust.
Those who are faced with their mortality may feel an urgency to get their financial house in order and ensure that others are taken care of in the future. It’s an opportunity to help ease the burden they already feel by discussing options for managing their estate according to their wishes or updating estate plans as needed. They may also want to discuss gifts made to family members, reporting requirements for claiming disability or insurance, business partnerships that may be impacted, or trusts that need to be reviewed.
You can be there for clients in more than an advisory role by offering help and listening with no expectation of gain – but the help you offer can include guiding their decisions toward the best possible financial outcome for them and their loved ones, too. The key is in finding the right balance.
Emotions can get the best of anyone when faced with a crisis, and understanding your role in navigating through them can be a challenge. Access our complimentary guidebook, Defusing Emotions: An Advisor’s Role in Disciplined Long-Term Investing, to glean insights that may help you build stronger relationships with your clients. Simply click the link below.
1National Cancer Institute, Cancer Statistics, No date cited