When our advice goes in the wrong direction, what do we do? How do we respond? Why even bring this up?

A few weeks back, a financial professional and good friend reached out to me asking me to address this very issue, perhaps more common than we care to admit. How do we engage clients when even our most thoughtful, reasoned advice goes south, doesn’t work, or results in a poor or worse financial outcome? How indeed?!

Options abound. Some will say, “Never bring it up. And if it does come up, just say, ‘Nobody’s perfect!’”  I suspect more than a few financial professionals opt for that choice. But is the old line, “Never let them see you sweat!” our best response? Being dismissive may be synonymous with being insensitive.

Others go another direction. Rather than being dismissive, they become defensive. Defend your decision, revisit the reasons you made the recommendation, blame unforeseen market behavior, and remind the client of the many times you gave them advice that did work out. Doing so foolishly suggests you can burnish your image using the polishing cloth of memory. Like you, I’ve tumbled down that defensive, self-justifying slope, but never without injury to myself and the relationship. 

These two, oft-used responses just don’t work in the long run. Both may well leave the client asking, “What was that all about?” or worse, “I’ll be more cautious the next time they come up with an idea like that!” 

Enter Stephen Covey, from The Seven Habits of Highly Successful People – “Begin with the end in mind.” When you fail a client and you know it or when your counsel didn’t generate the results you expected, and BEFORE you say a word, ask yourself, “How will the client hear and absorb what I am about to say next?” 

Imagine them walking back to their car. What will they be muttering under their breath recalling that conversation? Confusion or Clarity? Gratitude or Disappointment? Confidence or Concern? Ask that question before you say anything, period! 

What can we say?

First, when possible, anticipate what may be a tough conversation before the client brings up the problem. You can read a statement better than they can! If you see a problematic issue in a plan or portfolio, go there before the client does. 

Second, admit you were wrong, you made a mistake, you failed to ask more questions, or whatever you need to own. Be simple and brief. Nothing compares to beginning a sentence with “I was mistaken,” Or “I needed to have asked more questions before . . .” Or, “I needed to be more cautious about . . . .” 

Third, affirm your commitment to own the problem and say you will go a better way in the future. Taking responsibility for our advice is a sign of leadership and strength clients want and value. 

When you stare a failure in the face, be more proactive than reactive, giving leadership seasoned with humility. Doing so will not insulate you from the occasional advisory misstep. Indeed, no one bats 1.000! What it will do is convey to your client your integrity, character, and commitment to serving them with care and transparency, even if it’s painful in the moment.

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