A new calendar year represents a fresh beginning and an opportunity to think anew about the advisor-client relationship. Financial advisors know that their annual planning conversations with clients may need to address sensitive topics related to the changing regulatory environment, particularly as we near the proposed timing for implementation of the Department of Labor rule. These issues will certainly be on the agenda if you are transitioning to a fee-for-service model. But the ability to engage clients in potentially difficult discussions is always key to building a successful business.
We know that as a financial advisor, your commitment is to serve as a trusted counselor to your clients. Working in a client's best interest isn't something new that rules require – it's what you've always done. You need to convey this commitment clearly and consistently in order to build and maintain the kind of trust that allows for open dialogue. By reminding clients of your commitment to them, and connecting your actions to that commitment, the value of your relationship and services should always be top of mind for them. This way you can raise sensitive issues when the client can hear and process them fully, not simply because a deadline requires it of you.
We're big proponents of the "radical candor" used at Silicon Valley companies like Facebook and Google. For advisors, this means demonstrating that you care personally about each client, while also directly addressing how DOL-related changes will affect them. Be a straight-talker. Don't beat around the bush: be clear that this is a difficult subject but the new services you offer are commensurate with what the client needs. Telling clients about the products and services you are not recommending is also important. Transparency is key. When you reveal information that's not necessarily in your best interest, but is clearly in the best interest of the client, you build trust.
Strong negotiation skills will help you communicate more effectively in all your interactions. Demonstrating that you are credible, candid and committed will put you in a position to better navigate the sensitive topics that are inherent to financial advice, including fees and regulatory concerns. And this is a good time to start strengthening those skills, as you begin scheduling the conversations that will guide your client relationships throughout the new year.
Professor Richard Shell is an award-winning teacher and scholar at the Wharton School of the University of Pennsylvania, where he is a leader of the Wharton Executive Negotiation Workshop. He is consistently ranked as a top business school professor in Business Week's Guide to the Best Business Schools. Professor Shell is the award-winning author of "Bargaining for Advantage."