The Truth Will Set You Free in Your Independent Advisory Business

Telling the truth is a tricky business. We all want to believe we’re honest people, but when it comes down to it, we often avoid telling the truth. Sometimes it’s a matter of not hurting someone else’s feelings. Other times, we’re trying to avoid taking responsibility for a mistake. In the case of many financial planners, the truth is often avoided or downplayed in an effort to not upset or lose a client. However, as an advice-based planner and true fiduciary, I’m here to tell you that you have an obligation to tell your clients the truth. Here is why the truth is so important in our industry and how you can tell the truth without damaging your relationship with your client.

Why the Truth is Important

It can help them recognize when they have their head in the sand Why do some people avoid knowing the truth? Many times, it’s so they don’t have to do anything about it. Say your client is emotionally attached to their company stock or is headed toward a late-life divorce. They can convince themselves that nothing is amiss, which means they don’t have to change what they’re currently doing. However, you and I both know that hiding from the truth doesn’t mean it goes away. It’s your job as a mentor to point out when your client is headed in a bad direction and to do the best you can to help them make a course correction.

It helps you challenge your clients If you have the right type of clients, you work with a group of folks who want to become better investors, more knowledgeable money-managers, and overall more fulfilled people. They want and expect you to challenge them in these regards. If you don’t tell them the truth, you don’t challenge them and you don’t give them the opportunity to change.

It can help them avoid retirement disasters You will inevitably come across clients who have somehow convinced themselves they can continue their current lifestyle, still retire at 65, and continue living the high life until they die—even if this is the furthest thing from the truth. If you don’t tell them they’re headed toward a rude awakening, who will? It’s your responsibility as a fiduciary to honestly assess your clients’ retirement goals and to inform them if they need to make changes to ensure these goals are achieved.

How to Tell the Truth Without Losing a Client

The truth is not always easy to tell, especially if it’s something the client has been actively avoiding or that will have a negative impact on their future. However, there are a few things you can do when delivering the truth to make it easier to swallow and that will hopefully end up deepening the relationship you have with your client in the end.

Understand that honesty does not have to be brutal  Yes, there is something known as ‘brutal honesty’, but you don’t have to use that tactic with your clients. You can tell them the truth gently without being harsh, offensive, or overly critical. Prepare them for what you’re going to say and understand they may need some time to absorb it. Above all, be supportive and empathetic, especially as they begin to wrap their mind around what you’ve just told them.

Temper it with hope No matter what truth you have to impart to your client, there is always a bright side. It’s important to make sure your client knows that all is not lost and that they have options. This leads to my next point.

Immediately create an action plan The absolute worst thing you can do is tell a client they can’t retire when they want to and then show them the door. No matter what truth you need to tell them, it’s vital that you follow it up with actionable steps to resolve the situation (or at least make it better). This empowers your client and helps them take immediate action.

As a financial caregiver, it’s important to realize that you are much more than just a hand-holder. It’s your job to tell your clients the truth—even if it’s a truth that they really don’t want to hear. If you do it properly, the truth will not only set you both free, but it will also create a much stronger client-advisor relationship. Have questions about how you can be a true fiduciary to your clients? Visit our website to learn more!

When you become a mentor to your clients, deeply understand them, and guide them toward a better future, then you've learned the ways of a financial caregiver. You've come to know what it means to be a true purveyor of advice, and how to use money as a conduit to a more fulfilling life for yourself and those you serve. 

Patrick Tucker, owner of True Measure Wealth Management and founder of True Measure Financial Advisors, has over 20 years experience in the industry and has spent the last 15 years learning the ins and outs of the fee-only advisory business. He's spent over $500,000 finding mentors, studying consulting businesses, taking courses, studying the soft sciences, running trial and error experiments, and learning how to be an entrepreneurial financial advisor. He's simplified this into an easy to use blueprint for anyone who is entrepreneurial-minded and is tired of the sales culture. Patrick has been able to acquire over $158 million under management with little to no money spent on marketing.