As an aspiring lawyer interviewing for an associate position at one of the top law firms in 1991, I received some interesting feedback.   Rather than being told that I was the most brilliant candidate they had ever interviewed, I got the message that I would be “good with clients.”  Now in some industries, such as marketing and sales, that would have been considered the highest compliment.  However, I knew that the message wasn’t quite as simple, or positive, given its source.  Back then, the top law firms took great pride in the IQ of their associates. Relationship skills were far down the list of qualities sought; the concept of emotional intelligence was still in its infancy.  Accounting firms had a similar view, while financial services firms were somewhat ahead in recognizing the importance of people skills.

 

Two Decades Later

Fast forward two decades, and things are quite different in the private wealth management industry.  Not only do most top law firms have marketing teams, they also train lawyers on how to attract and retain clients.  Today, being “good with clients” is undoubtedly a qualification sought in all applicants to law, accounting, financial services and other firms serving private clients.  However, recognizing an issue isn’t the same as mastering it.  Indeed, there’s still a gap between clients and their advisors that can get in the way of the development and implementation of estate and financial plans.  This can be frustrating to advisors and clients alike.  For an advisor, it can be disheartening when a client balks at pursuing the best plans, to the client’s detriment.  Clients’ skepticism about the financial services industry is at an all-time high, and, well, there are enough lawyer jokes to last generations.  This seems bleak, but it doesn’t have to be this way.  The time has come to better understand the reasons for the existence of the gap and work on developing ways to reduce it.  This column will be devoted to exploring the gap between an advisor and her clients and suggest ways to “build bridges” between professionals and the individuals and families they serve.

 

Questioning Assumptions

Where to start?  Well, as Julie Andrews would recommend, “let’s start at the very beginning.”  One of the primary causes of the client-advisor gap stems from the place where advisors begin-that is, the assumptions that lie behind the work they do for clients.  Advisors enter a client relationship with assumptions about the client’s personal circumstances, goals and objectives.   These assumptions color every aspect of the advisor’s development of recommendations for the client and their interactions throughout the course of the relationship.  While the assumptions are often accurate, they’re not necessarily universal.  If the assumptions are inaccurate, they can lead to plans that are unhelpful at best and harmful at worst.  Here are four of the most common assumptions that may not apply to all clients or all engagements:

Field of dreams.  Most lawyers and accountants assume that the client’s primary goal is reducing taxes, while investment advisors assume that clients want to maximize financial returns.  While these goals are certainly important to clients, they’re rarely the sole, and, frequently, not the primary goal of many clients.  Over the many years that I’ve asked clients what they want to accomplish, rarely is the answer a simple one.  Most often, they throw out a mix of goals, usually starting with taking care of those who depend on them, financially or otherwise, and then moving to other concerns before ending with saving taxes and increasing the value of their portfolios.  A plan that merely saves taxes or focuses solely on financial assets without addressing more important goals can widen the client-advisor gap. 

Leave it to Beaver. I’m repeatedly surprised at how often advisors assume that the 1950s Cleaver family is still the norm:  primary wage earner husband, stay-at-home wife and a few children from their single marriage.  Demographics are changing-and fast.  The composition of many families is far more complicated and diverse, often including blended families, same sex couples, unmarried partners and other configurations.  The Tax Code is struggling to catch up with this reality.  Advisors must adapt, or they risk widening the gap for clients who have to explain that they don’t fit into the advisor’s “norm.”    

Father knows best. In the past, the majority of private wealth clients were male “heads of households.”  The father would drive the process with lawyers, financial advisors and accountants.  Today, more members of the family expect to be involved, and advisors who reach out to these family members have a better chance of understanding the entire picture and developing sustainable plans. 

Who wants to be a millionaire?  Studies have shown that, above a certain level, more money doesn’t necessarily translate into happier lives.  Anecdotal evidence from professionals working with the top 1 percent can attest to this reality.  Advisors working with the wealthiest, and even with clients of more modest means, would do well to acknowledge that other goals may drive their client’s estate and financial plans.  In my many years of interviewing clients about their definition of “wealth,” rarely has someone replied that it can be found in a bank account.  More often, the answers include “well-being,” “family,” "health” and “good relationships.” True wealth planners must acknowledge and act on their client’s definition of wealth, rather than an assumed one.

 

Ask Detailed Questions

How to bridge the gap?  For a start, advisors must begin each client engagement by asking detailed questions to better understand that client’s particular circumstances and goals.  An advisor must learn to be alert to the automatic thinking that imposes expectations on clients, rather than solicits information from them.  Merely stating an assumption and asking for client feedback would go a long way toward developing the right plans.  Being “good with clients” begins with listening and trying to understand who they are and what they really want to accomplish.  This is one way to build a bridge across the client-advisor gap; in future columns I will explore other ways to do so.