Have advisors ever wondered about sending a letter to clients that paints the full, unvarnished truth about wealth and what should be expected from advisors? A senior figure in the sector has an example to ponder.

Here is a brief comment by Charlotte Beyer, a figure well known to readers of Family Wealth Report and the North American wealth management sector. (See previous commentary from her here.) She imagines the kind of letter that a financial advisor could and perhaps should send to their clients. She takes on a number of claims, such as that the “customer is always right”. Her way of framing the issue by writing an imaginary letter is very clever, and it is good to imagine how advisors ought to communicate. After a year such as 2020, when client/advisor conversations have had to go virtual, the insights here are even more pertinent. 

The editors are pleased to share articles from outside contributors; the usual disclaimers apply. As always, the editors welcome readers to jump into the conversation on this, and other topics. Email tom.burroughes@wealthbriefing.com and jackie.bennion@cleaviewpublishing.com

Dear Client

We have worked hard to please you over the years, and now it’s time to speak ‘truth to power.’ You are the power, you pay my bills and, of course, “the customer is always right”. Still...dare we speak the truth? Yes, we do, because you, my dear Private Client, will ultimately lose unless a more honest conversation can start…now. 

At risk to my revenues and in the spirit of trying, perhaps in vain, here are four truths:

1.    You are addicted to “free.”  You assume that my advice is free in the same way that you get goody bags at the benefits you attend. Goody bags are filled with free items promoting a resort or a luxury item, but did you ever think how obvious it is that you are the product being sold to that sponsor? In our relationship, you feel entitled to take as much time as you like to review trades or portfolios, discuss politics or your grievances at any time 24/7, never asking me if the timing is convenient for me.
  
2.    You harshly criticize my firm and speak rudely to my staff. You are a nitpicker, finding fault in any mistake, no matter how small, and you let us know in a long, angry email or vent to one of my team on the phone. But, please consider - all of us make mistakes. No firm is perfect, and I admit most mistakes are careless ones.  Even the Wall Street Journal publishes corrections daily, some quite shocking. Fixing mistakes promptly is a far better use of my time than listening to your long complaints. Make it short and sweet, and I will fix it!

3.    You do not read our client reports The thick binder we give you chock-filled with economic forecasts, cliches, and many, many rows of numbers in tiny print takes us a long time to produce. We are just mimicking what every other firm provides their clients. BUT, if you don’t like the format of these reports, if they are unintelligible, boring and unhelpful, please just tell me! Together we can design a shorter, more meaningful report.

4.    You expect to be treated as my only client – or certainly as my most important client. This is probably the most damaging truth. Of course, marketing and sales people from other firms will promise you that you are their most important client. That’s false and even dangerous. Beware! One multi-millionaire investor shared this tale of woe with me – no sooner had he hired the boutique firm who assured him he was their biggest client, the firm was acquired by a big bank. The boutique had given assurances that he was their most important client (yes, his assets dwarfed those of the other clients), then used that boost to their AUM to put themselves up for sale! Let go of the illusion, and face the truth. You are an important client, yes, but not our only client for whom we should drop everything to take your call or change a scheduled meeting at the last minute.  

You realize that no sane advisor would ever send this letter to you. We do not wish you to be unhappy with us; we cannot afford to lose you as a client. However, is our relationship ripe for a more candid dialogue? Are you willing to engage in such a conversation?

I admire advisors who’ve told me they opened up such a conversation by asking, “What should we do when we vehemently disagree?” “What should I do if I feel you are about to make a move with your investments that is not in your best interest?” 

Engaging on these and other hypothetical situations can pave the way for us to have a better relationship. If we are honest with each other, we can bring up sensitive issues and find solutions that work – for both of us! 

Sincerely

Your Financial Advisor