Oftentimes advisor woes are completely unrelated to the actual investment aspect of their day-to-day work and are instead rooted in client relations and managing expectations. Sometimes it’s one big problem or a million little ones, but at the end of the day there are some client/advisor relationships that just won’t work no matter how much you want them to.
If 2020 can be summarized in a single word, that word might just be “stressful.” Unfortunately, it turns out advisors are still somehow getting the shortest end of the stick; in FlexShare’s 2019 Advisor Wellness Survey, they found that advisors reported “an average stress level that was 23% higher than national norms.”[1] Oftentimes advisor woes are completely unrelated to the actual investment aspect of their day-to-day work and are instead rooted in client relations and managing expectations. Sometimes it’s one big problem or a million little ones, but at the end of the day there are some client/advisor relationships that just won’t work no matter how much you want them to. Here are a few red flag behaviors advisors should keep in mind as they interview new clients and consider existing contacts.
Zip Tie Negotiators
Zip tie negotiators wait until they’re “in” before raising any concerns, even fundamental disagreements on investment strategies; they might pass initial screening and agree with everything you say until suddenly they don’t, and you’re met with significant pushback, questioning, or micromanagement. Some level of negotiation is fairly normal as strategy details are discussed, the market fluctuates, or personal and financial goals shift and change; it’s natural that investors may have questions or even misgivings to raise with their advisor.
However, like their name suggests, it’s easy to get into these zip tie relationships and hard to break free. Keeping these clients on plays into the sunk-cost fallacy; you’ve already spent time, money, and effort working with this client so you may keep forging ahead regardless of the difficulties, thinking of the time you would have wasted in the past if you scrap everything now. Zip tie negotiators come in all shapes and sizes, and the area of friction can vary from investment philosophy mismatches to simple mistrust or personality clashes. Regardless of the reason, these clients will only continue to require large amounts of time and attention the longer they remain with an advisor, so unless advisors have a deep well of patience (or, perhaps, the client has deep pockets to make it worth their while), it’s often best to cut these business relationships off as soon as possible to save yourself many headaches in the future.
Calvinball Players
A nonsensical game played by the titular characters of Bill Watterson’s iconic Calvin and Hobbes comic strip, Calvinball is a lawless mishmash of random sporting equipment and energetic chaos where players make the rules as they go along, and no rule can be used twice. Just like this frenzied free-for-all, no goals, nebulous objectives, or the dreaded “I’ll know it when I see it” mentality are all signs of someone who doesn’t know what they want and therefore cannot be pleased because their goalposts (if they exist at all) are constantly moving. No matter how hard an advisor may try to offer guidance to these clients, people who simply aren’t sure what they want, when they want it, or why, can require ten times the energy for one-tenth of the results or satisfaction on either side. In these cases, regardless of past decisions, advisors may find themselves frequently redrawing plans as the client again changes their mind, or as Calvin himself put it, “sooner or later, all our games turn into Calvinball.”[2]
Neo of the Matrix
While modern technology is surely a marvel, what’s not quite as fun is our always-on culture; just because we couldalways be online and working doesn’t mean we should. Coupled with the COVID-19 quarantine, it can often feel more that we’re living at work than working from home. More and more people are getting into investing in 2020 and keeping up with client needs can be difficult at the best of times, so when clients expect quick turnaround and near-instant replies, it may be time to pump the breaks on these unrealistic expectations. Just because they’re plugged into the Matrix doesn’t mean you should be. It’s true that some people work best at odd times and will send 2 AM emails they don’t expect to be replied to until normal business hours, but those clients who expect immediate responses 24/7 or who display chronic violations of personal and professional boundaries that no amount of reasonable redirection can correct, can seriously contribute to the stress and burnout many advisors face.
Advisor/client relationships are integral to business and can be long-term arrangements, so curating a client base is a key factor in setting the tone of any advisor’s work experience. While each person is different, knowing what type of clients they want to attract, as well as what type of clients and behaviors my cause additional friction, can help any advisor avoid the additional burden of managing interpersonal relationships that are more trouble than they’re worth for both parties.
[1] https://go.flexshares.com/wellness
[2] https://www.nytimes.com/2020/01/06/crosswords/heck-calvinball-crosswords.html
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
Before leaping into the unknown, we recommend a thorough examination of your plan. Because we are experts in the field, we know the marketplace and know what your existing vendor is capable of offering. Through this examination, we can help you optimize the service you receive.
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