You’d think clients paying for financial advice would listen carefully when it’s being dispensed. But in a lot of cases, you’d be wrong.
Stress, concentration problems, a packed schedule and even pure indifference can cause clients to zone out when advisors are conveying critical information. Their inattention creates risks for both sides. Clients who miss important points are more likely to make bad decisions. And advisors who aren’t getting through can get in trouble if, for example, their warnings about volatility fall on deaf ears.
Although the underlying condition behind a client’s lack of focus may be beyond advisors’ control, they can limit the potential damage, experts say. Boca Raton, Fla.-based psychologist Stephanie Sarkis, co-author of a book about personal finance for people with attention-deficit disorder, says her tips can help advisors work with any client who has trouble focusing, whether or not ADD is the issue. She recommends scheduling several short meetings — just 30 or 45 minutes each — rather than a single 90-minute session. Use visuals, the clearer the better. After you’ve discussed a topic, ask the client specific questions to make sure he or she took in the salient points. Break plans down into steps, set deadlines and check in regularly to see that they’re being met. Put everything in writing and send the client summaries via e-mail.
These techniques come in handy if a normally attentive client is distracted by illness, loss or just an emotionally challenging time. “We all have a continuum [of inattention] under stress,” says Sarkis.
Some clients are inattentive because they’re simply not interested in the nuts and bolts of money management, says Joe Ellison, senior vice president of Beverly Hills Wealth Management in Beverly Hills, Calif. Ellison, whose firm manages roughly $1 billion, has a number of clients who tell him they don’t need to know anything too specific about their investments. “Just leave us alone and don’t lose our money,” is how he sums up their attitude. Two meetings a year are more than enough for them.
Ellison makes sure he has a solid understanding of such clients’ risk tolerance. Then he takes full discretion of their accounts and does his job, minus the part about frequent communication. “I can go ahead and manage their assets with confidence,” he says, “and they won’t get in the way, and they won’t be bored to death if they hate talking about this stuff.”
Clients who have trouble focusing also tend to make impulsive financial decisions, says Sarkis. She suggests advisors head off such behavior by giving these clients a checklist to consult before acting on any investment idea — essentially, forcing them to concentrate on its rationale. In the same vein, J. Jeffrey Lambert of Lambert Wealth Advisory in Sacramento, Calif., sets himself up as a roadblock between easily distractable clients and their financially destructive impulses. “Sometimes they’re flitting from one thing to the other,” he says, “and they’re making decisions based on emotion.”
Lambert urges such clients to tell other people they can’t make a money decision without talking to their financial advisor first. “Of course I don’t insist that they do that, but I’m happy to play the scapegoat,” he says. “The primary thing I’ve done is to stop them from making stupid mistakes.” (A fee-only planner, Lambert refused to disclose his assets under management; his most recent ADV puts it around $10 million.)
In Russ Thornton’s opinion, it’s the advisor’s own fault if clients can’t keep their minds on the discussion during a meeting. “I think many advisors bring the problem upon themselves because they make financial planning too detailed and burdensome for clients,” says Thornton, who manages $35 million out of Atlanta for Richmond, Va.-based Wealthcare Capital Management. “No wonder some people are dozing off or tuning out.”
“Do everything you can as an advisor to get them to ignore everything else, which is really just noise,” he says. In an unusually graphic metaphor, Thornton recommends serving important information to clients in “easily digestible, bite-size pieces, instead of just vomiting all over them.”