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Clients sometimes say the darndest things.
Whether they share a "brilliant" investment idea, want to lend all of their money to siblings or sell everything to buy gold, good advisers will hear them out--even if they heartily disagree.
Also in Wealth Adviser:
Short-Term Bonds Gain Traction with Advisers
Placing Real Estate in Retirement Accounts
Visit the Wealth Adviser page
With that in mind, below advisers and a therapist share some of the unrealistic ideas and requests they have heard from clients and how they have handled them.
Enlarge Image
Bari Goodman
Tell a Joke
Neal McGrath, partner, Carson Institutional
The request:
A few clients wanted to sell 100% of their portfolios to buy physical gold.
How he handled it:
He used a little humor to help them realize it's not a good idea. "So, the natural thought progression of having all of your money in physical gold is that, in the near future, when we're all living in caves, we'll go around shaving off pieces of this gold in exchange for goods and services," he'd say to them. And talking through their idea with a smile helps clients get back on track.
Take Back Control
Karol Ward, psychotherapist and confidence expert
The request:
Wanting to be in control, some clients constantly call with the latest great stock pick or other idea about how their money should be managed. At the other end of the spectrum are the risk-averse clients who get confused and indecisive when their advisers make investment recommendations.
How to handle it:
Try to get to the source of the client's anxiety, and try to reinforce your position as the trusted adviser in the process. Say something like, "I noticed you're bringing in lots of suggestions for me regarding your investments. While I appreciate your enthusiasm, I also wonder if you are concerned about some of the choices I'm making for you?" Indulging a client's endless suggestions isn't in anyone's best interest, Ms. Ward says.
Show Them the Research
Mike Sander, vice president, the Creative Planners Group
The request:
A client wanted to buy Iraqi dinars. His "reasoning" was that if Iraq revalues the troubled currency, he would become a millionaire with as little as a $5,000 investment.
How he handled it:
To make his point that a revaluation wouldn't produce huge profit margins, Mr. Sander conducted an Internet search and assembled something of a history of some recent revaluations. It helped to underscore his point: Currency speculation is a dubious approach to investing, and really isn't a way to get rich quick.
Relate It to Their Profession
Larry Mathis, president, Mathis Financial
The request:
"Sell everything! I'm buying real estate!" or "Sell everything! I'm loaning it all to my brother, and he's buying real estate!" are some of the choice requests has heard.
How he handled it:
Try to relate their suggestion to their profession. For example: "Bob, you've been a firefighter for 20 years; I know you would never think about throwing water on a grease fire. We'll that's exactly what you're suggesting. Let's talk about this some more."
Compliment Them
Robert Fross, chief executive, Platinum Advisor Strategies
The request:
Mr. Fross recently had a client who had moved his money from a money-market account into a short-term bond fund. Six months later, the client decided he wanted to move it all into a hot biotechnology fund.
How he handled it:
The adviser praised the client's intelligence in singling out a high-performing fund, but suggested they conduct a risk-tolerance review first. In that review, Mr. Fross asked the client if he could stomach the volatility--that is, the considerable declines as well as rises--the fund was likely to display. Instead, they agreed on a more balanced fund.
"Don't ever talk down to them or make them feel stupid for doing their own research," Mr. Fross suggests. "If anything, commend them for it."
Clients sometimes say the darndest things.
Whether they share a "brilliant" investment idea, want to lend all of their money to siblings or sell everything to buy gold, good advisers will hear them out--even if they heartily disagree.
Also in Wealth Adviser:
Short-Term Bonds Gain Traction with Advisers
Placing Real Estate in Retirement Accounts
Visit the Wealth Adviser page
With that in mind, below advisers and a therapist share some of the unrealistic ideas and requests they have heard from clients and how they have handled them.
Enlarge Image
Bari Goodman
Tell a Joke
Neal McGrath, partner, Carson Institutional
The request:
A few clients wanted to sell 100% of their portfolios to buy physical gold.
How he handled it:
He used a little humor to help them realize it's not a good idea. "So, the natural thought progression of having all of your money in physical gold is that, in the near future, when we're all living in caves, we'll go around shaving off pieces of this gold in exchange for goods and services," he'd say to them. And talking through their idea with a smile helps clients get back on track.
Take Back Control
Karol Ward, psychotherapist and confidence expert
The request:
Wanting to be in control, some clients constantly call with the latest great stock pick or other idea about how their money should be managed. At the other end of the spectrum are the risk-averse clients who get confused and indecisive when their advisers make investment recommendations.
How to handle it:
Try to get to the source of the client's anxiety, and try to reinforce your position as the trusted adviser in the process. Say something like, "I noticed you're bringing in lots of suggestions for me regarding your investments. While I appreciate your enthusiasm, I also wonder if you are concerned about some of the choices I'm making for you?" Indulging a client's endless suggestions isn't in anyone's best interest, Ms. Ward says.
Show Them the Research
Mike Sander, vice president, the Creative Planners Group
The request:
A client wanted to buy Iraqi dinars. His "reasoning" was that if Iraq revalues the troubled currency, he would become a millionaire with as little as a $5,000 investment.
How he handled it:
To make his point that a revaluation wouldn't produce huge profit margins, Mr. Sander conducted an Internet search and assembled something of a history of some recent revaluations. It helped to underscore his point: Currency speculation is a dubious approach to investing, and really isn't a way to get rich quick.
Relate It to Their Profession
Larry Mathis, president, Mathis Financial
The request:
"Sell everything! I'm buying real estate!" or "Sell everything! I'm loaning it all to my brother, and he's buying real estate!" are some of the choice requests has heard.
How he handled it:
Try to relate their suggestion to their profession. For example: "Bob, you've been a firefighter for 20 years; I know you would never think about throwing water on a grease fire. We'll that's exactly what you're suggesting. Let's talk about this some more."
Compliment Them
Robert Fross, chief executive, Platinum Advisor Strategies
The request:
Mr. Fross recently had a client who had moved his money from a money-market account into a short-term bond fund. Six months later, the client decided he wanted to move it all into a hot biotechnology fund.
How he handled it:
The adviser praised the client's intelligence in singling out a high-performing fund, but suggested they conduct a risk-tolerance review first. In that review, Mr. Fross asked the client if he could stomach the volatility--that is, the considerable declines as well as rises--the fund was likely to display. Instead, they agreed on a more balanced fund.
"Don't ever talk down to them or make them feel stupid for doing their own research," Mr. Fross suggests. "If anything, commend them for it."
